Workday (WDAY) Reaps Returns From AI; Stock Climbs

Workday Inc. (NASDAQ:WDAY) saw its share price jump by 5.76 percent on Friday to finish at $204.72 apiece, as investors cheered its strong earnings performance in the second quarter of the year, thanks to the rapid growth in artificial intelligence.

In a statement, the listed firm said that it was able to grow its net income during the period by 177 percent to $632 million from $228 million in the same period last year.

Total revenues increased by 12.8 percent to $2.6 billion from $2.3 billion, primarily driven by a 14 percent increase in subscription revenues.

Subscription revenue backlog for the 12-month period also stood at $9.034 billion, up 14.2 percent year-on-year, bringing the total subscription revenue backlog to $27.4 billion, or an 8 percent increase.

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“We had a strong [second quarter], with AI driving more than 25 percent of our new ACV and more than 5,500 customers now using at least one of our organic agents,” Workday Inc. (NASDAQ:WDAY) Chairman and CEO Aneel Bhusri said.

“Because of Workday’s deterministic rails, customers can trust our agents with the work that matters, and you’re seeing that in the numbers,” he noted.

13% Revenue Growth Target

Encouraged by the strong results, Workday Inc. (NASDAQ:WDAY) issued a subscription revenue target of $9.94 billion to $9.95 billion for the full fiscal year 2027, marking a growth of 13 percent year-on-year. It also increased its operating margin guidance to 31 percent.

For the third quarter, subscription revenues are projected to end at $2.515 billion, or an implied growth of 12 percent.

“We continue to prioritize investment in our agentic AI roadmap and our platform opportunity while driving operational efficiencies as we scale,” Workday Inc. (NASDAQ:WDAY) Chief Finance Officer Zane Rowe said.

Hedge Fund Positioning

Institutional sentiment turned mixed for the company in the second quarter of the year.

During the period, 57 hedge funds held positions in the stock, down from 63 in the first quarter of the year.

However, their combined holdings increased by 3.5 percent to $3.119 billion from $3.014 billion quarter-on-quarter, signaling that existing investors have become more optimistic about their outlook for the company amid the larger capital commitments.

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