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Geoffrey Seiler, The Motley Fool
Tue, May 26, 2026 astatine 11:35 AM CDT 4 min read
Workday (NASDAQ: WDAY) has arguably been the poster kid of the software-as-a-service (SaaS) sell-off. A person successful fiscal and quality superior absorption software, the institution is astatine the intersection of aggregate bearish arguments. Not lone does it run a bundle level that has the imaginable to beryllium disrupted by artificial quality (why does an enactment request Workday if an AI cause tin grip expenses and payroll done an AI exemplary API?), but its seat-based bundle is besides straight tied to endeavor hiring. That's a triple whammy.
Given the headwinds successful the SaaS sector, Workday has been 1 of the hardest-hit stocks, with its shares much than halved implicit the past year. However, the banal popped much than 5% past Friday (May 22) aft the institution reported different coagulated 4th of gross growth.
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Let's instrumentality a person look astatine Workday's results and prospects to spot if the banal tin proceed to rally.
Solid maturation continues astatine Workday
Despite a pugnacious hiring environment, Workday continues to nutrient coagulated growth, led by AI merchandise adoption. In the archetypal quarter, its caller yearly relationship worth (AAV) from its agentic AI products surged 200% twelvemonth implicit year, and it's nearing $500 cardinal successful yearly recurring gross from those offerings. The company's Flex Credit pricing exemplary is starting to summation traction, helping enactment AI adoption among its customers and simplifying monetization.
This helped Workday turn its wide Q1 gross by 13.5% twelvemonth implicit twelvemonth to $2.54 billion, with subscription gross rising by much than 14% to $2.35 billion. Adjusted net per stock (EPS) climbed 19% to $2.66. That was up of statement estimates for gross of $2.52 cardinal and EPS of $2.51, arsenic compiled by LSEG. The company's 12-month subscription gross backlog jumped by 15.5% to $8.81 billion, portion its full subscription gross backlog grew by astir 11% to $27.3 billion.
Looking ahead, Workday absorption forecasted Q2 subscription gross to turn by 13% to astir $2.455 billion, which was conscionable up of the $2.45 cardinal consensus, arsenic compiled by StreetAccount. It maintained its full-year subscription gross outlook of betwixt $9.925 cardinal and $9.95 billion, representing 12% to 13% growth. It present expects operating margins of 30.5%, which was supra its anterior 30% forecast.
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