NEW YORK, Aug. 28, 2026, 10:45 EDT
- Shares of Workday climbed 2.9% to hit $199.26 as of 10:29 EDT.
- Over 25% of new contract value for the quarter came from AI agents.
- Free cash flow dropped by 21.8%, easing the pace of growth.
Workday Inc. (NASDAQ: WDAY) stock climbed 2.9% on Friday, lifting its market capitalization by roughly $1.4 billion following quarterly results that indicated notable demand for AI offerings.
At 10:29 EDT, the stock was trading at $199.26. It rebounded from an intraday low of $188 and climbed to a session high of $200.99. A total of 1.29 million shares changed hands.
The shift is significant as investors had wondered if AI could undermine established software providers. Workday, however, said that agents generated over 25% of new annual contract value.
Over 5,500 customers are now utilizing at least one Workday agent, up by more than 35% compared to the previous quarter. CEO Aneel Bhusri stated AI was “driving more than 25% of our new ACV.” Workday results
Subscription revenue for the fiscal second quarter climbed 13.9% to reach $2.471 billion. The twelve-month subscription backlog expanded by 14.2%, totaling $9.034 billion. Both figures outpaced the overall revenue growth.
| Quarterly measure | Q2 FY2027 | Q2 FY2026 | Change |
|---|---|---|---|
| Total revenue | $2.649 billion | $2.348 billion | up 12.8% |
| Subscription revenue | $2.471 billion | $2.169 billion | increased 13.9% |
| Non-GAAP operating margin | 31.1% | 29.0% | gained 210 bps |
| Free cash flow | $460 million | $588 million | down 21.8% |
Management projects third-quarter subscription revenue at $2.515 billion, representing 12% growth. For the full year, guidance is set between $9.940 billion and $9.950 billion, with an adjusted operating margin of 31%.
Customer data bolstered the AI case, with over half of net new wins purchasing at least one AI offering. These products handle tasks such as automating payroll and financial forecasting.
Cash generation proved weaker. Operating cash flow dropped to $520 million from $616 million. Free cash flow decreased by $128 million even though revenue increased.
During the quarter, Workday bought back 9.8 million shares at a total cost of $1.3 billion. The company’s board has also approved an additional $4 billion in share repurchases with no set expiration. This new authorization represents roughly 8% of the market capitalization as of Friday.
Wall Street opinions differ. Citi assigns a Neutral rating and a $201 price target to Workday. Overweight ratings come from Barclays and Wells Fargo, with respective price targets of $224 and $225. Morgan Stanley maintains its Underweight rating and a $180 target. Capital One lowered the stock to Equalweight while holding its $219 price target.
Shares at $199.26 are trading close to Citi’s price target and around 40 times past earnings. Friday’s action indicates investors recognized the value of established AI demand, but did not award a higher premium.
Risks: Next quarter, subscription growth is expected to decelerate. AI adoption will need to translate into stable renewals and sustained cash generation. The valuation could also be affected by rivalry, investment in research, and ongoing takeover rumors.
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