Workday Inc. Reports Strong First Quarter Results for Fiscal 2026

Workday reported total revenues of $2.240 billion, marking a 12.6% increase from the first quarter of fiscal 2025. Subscription revenues were particularly strong, reaching $2.059 billion, which represents a 13.4% increase year-over-year. This growth reflects the company's continued momentum in the cloud-based enterprise software market, driven by demand for its innovative solutions.

Despite the revenue growth, Workday's operating income was $39 million, or 1.8% of revenues, a decline from $64 million or 3.2% of revenues in the same period a year ago. This decrease was primarily due to restructuring expenses totaling $166 million. However, on a non-GAAP basis, the operating income showed significant improvement, amounting to $677 million or 30.2% of revenues compared to $515 million or 25.9% in the prior year.

The diluted net income per share for Workday was $0.25, down from $0.40 in the first quarter of fiscal 2025. Similar to operating income, the net income was adversely affected by the aforementioned restructuring expenses. In contrast, the non-GAAP diluted net income per share rose to $2.23, up from $1.74 in the same quarter last year, showcasing the company's strong operational performance when excluding such costs.

Workday's 12-month subscription revenue backlog grew to $7.63 billion, reflecting a 15.6% increase from the prior year. Additionally, the total subscription revenue backlog rose to $24.62 billion, an impressive 19.1% year-over-year growth. These figures indicate robust demand for Workday's subscription services and a solid foundation for future revenue.

The company reported operating cash flows of $457 million, up from $372 million in the previous year, while free cash flows increased to $421 million compared to $291 million a year earlier. This positive cash flow situation underscores Workday's strong operational efficiency and financial health.

As part of its commitment to returning value to shareholders, Workday repurchased approximately 1.3 million shares of Class A common stock for $293 million during the quarter. This strategic move aims to enhance shareholder value amidst the company’s growth trajectory.

As of April 30, 2025, Workday maintained a robust financial position, with cash, cash equivalents, and marketable securities totaling $7.97 billion. This strong liquidity provides the company with ample resources to invest in growth initiatives and navigate market challenges.

Workday's first-quarter results for fiscal 2026 illustrate a company that is expanding its revenue streams and strengthening its market presence while also facing the realities of restructuring. The significant growth in subscription revenue backlog and non-GAAP earnings paints a positive picture for investors and stakeholders. As Workday continues to innovate within the AI and cloud sectors, it remains well-positioned to capitalize on future opportunities.