Workday Q2 revenues rise 13% as AI drives acquisitions, guidance up

Workday has reported financial results for its fiscal 2026 second quarter, along with updates on acquisitions and business relationships.

Earnings overview

For the quarter ended 31 July 2025, Workday recorded total revenues of USD $2.348 billion, reflecting a 12.6% increase year-on-year. Subscription revenues were USD $2.169 billion, marking a 14.0% rise compared to the corresponding period in the previous fiscal year.

The company reported an operating income of USD $248 million, or 10.6% of revenues, up from USD $111 million and 5.3% of revenues last year. Non-GAAP operating income stood at USD $680 million, or 29.0% of revenues, compared to USD $518 million, or 24.9% of revenues, the prior year.

Diluted net income per share was USD $0.84, up from USD $0.49 in the same period last year. Non-GAAP diluted net income per share was USD $2.21, compared to USD $1.75 a year ago.

The 12-month subscription revenue backlog was USD $7.91 billion, a 16.4% increase year-over-year. The total subscription revenue backlog rose 17.6% to USD $25.37 billion. Operating cash flows for the quarter reached USD $616 million, up from USD $571 million in the previous year, and free cash flows increased from USD $516 million to USD $588 million.

Workday repurchased approximately 1.2 million shares of Class A common stock for USD $299 million during the period. The company's cash, cash equivalents, and marketable securities were reported at USD $8.19 billion as of the quarter's end.

Leadership comments

"Workday delivered another solid quarter, driven by our AI and platform innovation, international momentum, and an ecosystem that continues to grow alongside us," said Carl Eschenbach, CEO, Workday. "Customers are choosing Workday because we help them unlock value today and prepare for what's next - whether that's navigating AI transformation, streamlining operations, or creating more meaningful work for their people."

Zane Rowe, Chief Financial Officer, stated, "Our second quarter results reflect the strength of our platform and our continued progress across several of our growth initiatives. Following our first half momentum - and also incorporating the acquisition of Paradox - we are increasing our fiscal 2026 subscription revenue guidance to USD $8.815 billion, representing growth of 14%, and increasing our fiscal 2026 non-GAAP operating margin guidance to approximately 29%."

Acquisition of Paradox

Workday has announced its intent to acquire Paradox, which supplies a candidate experience agent that utilises conversational AI to simplify the job application process, especially for high-volume frontline industries. According to Workday, Paradox's technology has produced improved candidate response times and has resulted in employee conversion rates in excess of 70%.

The addition of Paradox will provide Workday with an AI-powered talent acquisition suite, aiming to enhance the efficiency of finding, hiring, and onboarding workers across multiple roles and employment types. This move is positioned by Workday as part of its intention to offer a unified platform for talent discovery, candidate engagement, and onboarding processes.

Acquisition of Flowise

Workday has also acquired Flowise, a low-code platform for building AI agents, from chatbots to complex automated workflows. The acquisition is expected to allow Workday customers and partners to create and manage AI agents more rapidly and with increased control and flexibility.

Flowise's platform supports the entire AI development process, including prototyping, building, debugging, evaluation, and analytics. Its visual builder and integration features have contributed to its adoption across industries such as consulting, finance, healthcare, and customer support. Built on an open-source base, Flowise has processed millions of chats and workflows and has achieved more than 42,000 stars on GitHub.

"Making AI agent development reliable and accessible is a major technical challenge," said Peter Bailis, Chief Technology Officer, Workday. "By bringing Flowise into Workday and investing in its open-source foundation, we are empowering our customers and partners to build and deploy their own AI agents on Workday. Flowise's powerful platform makes this process simple, intuitive, and transparent."

"We built Flowise to make AI development easier for everyone - and our open-source community has been key to bringing that vision to life," said Henry Heng, CEO and co-founder of Flowise. "By joining Workday, we can build on that incredible momentum - accelerating our vision of enabling anyone to create powerful AI agents, without needing deep technical expertise."

The acquisition is intended to deliver benefits to Workday customers, including faster AI innovation, increased flexibility and transparency for custom agent development, and reinforced commitments to responsible AI development practices through features such as observability, human-in-the-loop checkpoints, and secure deployment capabilities.

Expanded relationships

Workday also announced expanded relationships with several enterprises, including Google, Nationwide Insurance, Qantas Airways, Randstad, and Tokyo Electron, as part of its ongoing ecosystem growth efforts.