Workday FY27 Q2: revenue up 12.8%, GAAP EPS inflated by tax benefit
Workday's fiscal 2027 second quarter was a solid operating quarter dressed up by an accounting event: revenue rose 12.8% to $2.649 billion and non-GAAP EPS reached $2.75, but the $2.57 GAAP figure leans on a $1.52-per-share tax benefit. Free cash flow fell to $460 million, so read growth and margins as steady, not accelerating.
1 · Expected vs. Actual
Free preview belowGAAP diluted EPS was $2.57 versus $0.84 a year ago, and non-GAAP diluted EPS was $2.75 versus $2.21. The GAAP jump is mostly a $1.52-per-share tax benefit tied to an internal transfer of intellectual property rights, which also produced a $374 million deferred tax asset. The non-GAAP number, which adjusts out income tax effects of $(1.89) per share, is the better guide to the operating quarter.
Total revenue rose 12.8% to $2.649 billion, with subscription services at $2.471 billion (up 13.9%) and professional services at $178 million, essentially flat versus $179 million a year ago. Gross margin was 75.4%, meaning about $0.75 of every revenue dollar survives cost of revenue. The mix keeps tilting toward subscriptions, which is the higher-quality line.
For the fiscal 2027 third quarter, Workday guides subscription revenue of $2.515 billion, or 12% growth, with a 30.0% non-GAAP operating margin. For the full fiscal year it guides subscription revenue of $9.940 billion to $9.950 billion, 13% growth, and says it increased its non-GAAP operating margin guidance to 31.0%. That Q3 subscription figure is not comparable to the $2.753 billion consensus next-quarter revenue estimate, which is a total-revenue number.
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Figures on this page come from the company's original SEC filings. The analysis is generated automatically and checked against validation rules, but may still contain errors or omissions. Not investment advice. · Generated 2026-09-17
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