Workday (WDAY) Stock Soars 12% on Strong Q1 Results and AI Growth

Key Highlights

• Workday’s fiscal Q1 adjusted earnings per share hit $2.66, surpassing Wall Street’s $2.51 projection
• Total revenue reached $2.54 billion, marking a 13% annual increase and exceeding analyst forecasts
• Subscription revenue climbed 14% year-over-year to $2.35 billion, beating expectations
• Shares of WDAY jumped 12% in extended trading after ending regular hours down 3.8% at $121.85
• Management maintained its full-year subscription revenue outlook of $9.925B–$9.950B

Workday showcased impressive fiscal first-quarter performance on Thursday, sparking a significant rally in its share price. The enterprise cloud software provider saw its stock leap 12% during after-hours trading following results that exceeded Wall Street projections across key financial metrics.

During regular trading hours, WDAY shares had declined 3.8% to close at $121.85, continuing a challenging period for the stock. Year-to-date, shares have tumbled 43% in 2026 amid investor concerns that artificial intelligence technologies might diminish demand for conventional software solutions.

Workday, Inc., WDAY

However, Thursday’s financial results challenged that bearish sentiment, demonstrating the company’s resilience.

For the fiscal quarter ending April 30, Workday posted adjusted earnings of $2.66 per share, representing a substantial increase from $2.23 in the year-ago period and comfortably beating the analyst consensus of $2.51. Total revenue expanded 13% compared to last year, reaching $2.54 billion and narrowly surpassing the $2.52 billion Street forecast.

Subscription revenue—the metric investors monitor most closely—totaled $2.35 billion, reflecting 14% growth and exceeding the $2.33 billion analyst estimate.

The company’s 12-month subscription backlog expanded 16% to $8.81 billion. Meanwhile, total subscription backlog grew 11% to $27.29 billion, though this figure fell short of Wall Street’s $28.38 billion expectation.

Accelerating AI Adoption

A particularly noteworthy development: Workday’s AI agent user base more than doubled quarter-over-quarter. The company’s Recruiting Agent facilitated 14 million hiring processes, representing a 44% increase from the previous year.

CFO Zane Rowe attributed the robust subscription growth to expanding customer adoption throughout the platform.

CEO Aneel Bhusri, who resumed leadership in February after succeeding Carl Eschenbach, expressed confidence in the earnings statement: “Workday is ready for this AI moment. Our core business is strong, our AI strategy is working, and we’re moving with the speed and focus required to lead.”

Analyst Perspective

Morgan Stanley analysts indicated the quarterly performance provided investors with “solid evidence” countering worries about growth sustainability and margin protection following Bhusri’s leadership transition.

“Investors likely need more than one quarter to buy in, but at current valuation the downside appears limited,” the analysts observed.

Looking ahead to Q2, Workday projected subscription revenue of $2.455 billion—matching the $2.45 billion analyst consensus and indicating 13% growth.

The company confirmed its full-year subscription revenue guidance range of $9.925 billion to $9.950 billion, representing 12%–13% annual growth. Additionally, management elevated its full-year non-GAAP operating margin target to 30.5% from the previous 30%, citing improved operational efficiencies.

Current Wall Street estimates for full-year subscription revenue stand at $10.66 billion—exceeding the company’s official guidance.

In premarket trading Friday, WDAY shares were changing hands around $134.71, up approximately 10.5% from Thursday’s closing price.

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