Workday (1WDAY) AI Stock Analysis

Company Guidance

Workday delivered detailed FY‑2027 guidance: subscription revenue of $9.94–9.95B (≈13% growth), Q3 subscription revenue ≈$2.515B (≈12% growth) with Q3 CRPO growth of 11–12%; Q3 professional services $175M and FY professional services $710M. They raised FY‑2027 non‑GAAP operating margin to 31% (Q3 ≈30%), expect GAAP margins ~18–19 points below non‑GAAP (Q3 ≈18 points lower) and a FY non‑GAAP tax rate of ~19%. Cash‑flow and capital guidance: operating cash flow ~$3.45B, capex ≈$270M, and free cash flow ≈$3.18B (≈15% growth). As context, Q2 results included subscription revenue $2.407B (+14%), total revenue $2.649B (+13%), non‑GAAP operating income $824M (31.1% margin), 12‑month subscription backlog (CRPO) $9.03B (+14.2%), total subscription backlog $27.4B (+8%), gross revenue retention 97%, net expansion ~60% of subscription revenue growth, Q2 operating cash flow $520M and free cash flow $460M; the company repurchased $1.3B this quarter (completing a $5B plan), now has a $4B open‑ended repurchase program, $3.4B in cash/marketable securities, and 20.9k employees. Looking ahead, they see FY‑2028 subscription growth roughly consistent with an ≈11% second‑half FY‑27 exit rate and at least a 2‑ppt expansion in non‑GAAP operating margin.