Workday Inc (NASDAQ:WDAY) reported solid results for FY26 Q4, with $2.53 billion in revenue and earnings per share of $2.47, both surpassing analyst expectations. The non-GAAP operating margin reached 30.6% for the quarter and free cash flow remained healthy. While subscription growth stayed in the mid-teens and customer retention held at 97%, the slowing backlog growth remains a concern especially given the “vibe coding” disruption currently gripping the software sector.
The FY27 subscription revenue guidance of $9.925 billion to $9.95 billion reflects a deceleration to 12% or 13% growth, failing to align with the aggressive AI growth story previously sold to investors. Despite a massive $188 billion total addressable market (TAM), Workday’s small market share and slowing backlog suggest they are struggling to capture the immense growth opportunity at pace. The $1.57 billion in annual stock-based compensation remains a significant drag on margins. While such dilution is acceptable for hyper-growth firms, it is increasingly difficult to justify for a company whose organic growth is moderating toward the low teens.
For more details, key highlights, and commentary, check out the high-level earnings summary.
