Workday Inc. reported strong fiscal second-quarter 2027 results on August 27, 2026, highlighting accelerating adoption of artificial intelligence solutions alongside continued growth in its enterprise software platform. The company’s performance reflects broader corporate demand for AI-powered workforce management, financial planning and operational automation tools.

As organizations increasingly integrate AI into business processes, Workday is positioning its platform as an enterprise operating layer where companies can deploy intelligent agents, automate workflows and improve decision-making across human resources and finance functions.

Subscription Growth and Financial Performance Remain Strong

Workday reported subscription revenue of $2.471 billion, representing 14% year-over-year growth. Total revenue reached $2.649 billion, increasing 13% compared with the same period last year, while professional services revenue contributed $178 million.

The company maintained strong customer retention, with gross revenue retention reaching 97% during the quarter. Subscription visibility also remained robust, with 12-month subscription revenue backlog (CRPO) reaching $9.03 billion, increasing 14.2% year over year. Total subscription revenue backlog reached $27.4 billion, growing 8% from the prior year.

Workday continued improving operational efficiency. Non-GAAP operating income reached $824 million, representing a 31.1% non-GAAP operating margin. Operating cash flow totaled $520 million, while free cash flow reached $460 million during the quarter.

AI Adoption Becomes a Major Enterprise Growth Catalyst

A central theme of Workday’s earnings report was the acceleration of artificial intelligence adoption across its customer base. AI products generated more than $100 million in new annual contract value during the quarter, accounting for more than 25% of all new ACV closed.

Workday’s AI ARR reached nearly $600 million, increasing more than 200% year over year. The company also reported rapid adoption of its AI agents, with more than 5,500 customers using one or more agents, representing growth of more than 35% from the previous quarter.

New AI capabilities are gaining traction, including Adaptive Decision Intelligence, which has attracted 170 customers since launch, and Adoption Agent, which exceeded 200 customers within its first three days. The company also reported strong early interest in Sana Enterprise, where users created thousands of custom AI agents through the platform.

Global Expansion and Platform Strategy Support Long-Term Growth

Workday continued seeing demand across both geographic markets and customer segments. U.S. revenue reached $1.97 billion, increasing 12% year over year, while international revenue grew faster, reaching $682 million, up 17%.

The company’s open platform strategy is also gaining momentum, with custom applications built on Workday increasing spending by more than 90% year over year. Developers have created more than 3,000 custom applications and AI agents since the company’s developer-focused initiatives expanded.

Workday is also targeting broader enterprise adoption, with medium enterprise customer activity increasing significantly compared with the previous quarter. AI-related solutions represented nearly one-third of new ACV in EMEA, highlighting growing international demand for intelligent enterprise software.

What Investors Should Monitor as AI Strategy Develops

Going forward, investors will monitor Workday’s ability to convert AI adoption into sustained subscription growth, expand agent-based solutions and maintain profitability while continuing investment in innovation. The company increased its fiscal 2027 non-GAAP operating margin guidance to 31% and expects free cash flow of approximately $3.18 billion, representing 15% growth.

Key factors shaping Workday’s future performance include enterprise AI spending trends, customer adoption of new products, international expansion and competitive dynamics within cloud-based business software. While AI presents significant growth opportunities, execution and the ability to deliver measurable value for customers will remain central to Workday’s long-term strategy.