Workday Inc (NASDAQ:WDAY) announced solid results for FY26 Q2, reporting $2.35 billion in revenue and earnings per share of $2.21, both surpassing analyst expectations. The non-GAAP operating margin reached 29% for the quarter and free cash flow remained healthy at $588 million. Workday’s growth rates stayed in the low to mid-teens, and its strong customer retention rate held at 97%. While international revenue growth slowed, it remained solid at 11% year-over-year. Management noted that geopolitical tensions could pose a headwind for future international expansion.
Management raised its full-year guidance for subscription revenue to $8.815 billion and its non-GAAP operating margin to 29%. This increase is notably not a direct result of the company’s Q2 performance alone. Instead, it is attributed to the planned acquisition of Paradox, which is expected to close in Q3 and begin contributing to revenue in the Q4. This clarification raises questions about the strength of the positive trends highlighted in the quarter, such as the uptake of new AI products and early contract renewals, which seemed to be the primary drivers behind the beat in Q2. The modest nature of the beat, coupled with the reliance on the acquisition for future guidance, suggests that the underlying organic growth may still be facing some challenges.
For more details, key highlights, and commentary, check out the high-level earnings summary.
