Workday, Inc. (NASDAQ:WDAY) reported fiscal second-quarter revenue of $2.65 billion, up nearly 13% year over year and above the $2.64 billion analysts expected, Reuters reported, citing LSEG data. Subscription revenue rose 13.9% to $2.471 billion. Chief Commercial Officer Rob Enslin said, “Over half of our net new wins in the second quarter signed up for one or more AI solutions,” and AI products drove more than $100 million in new annual contract value, over 25% of all new ACV closed in the quarter. Non-GAAP operating margin expanded to 31.1%, up 212 basis points year over year. CFO Zane Rowe said Workday expects fiscal 2028 subscription revenue to grow by nearly 11%, in line with the pace expected for the second half of fiscal 2027.
Bull Case
The beat came with quantified AI monetization behind it. AI products already account for more than 25% of new annual contract value and are approaching $600 million in annual recurring revenue. It is evidence that customers are paying for AI capabilities today rather than Workday simply promising future upside.
Profitability is expanding at the same time growth continues, not at growth’s expense. Non-GAAP operating margin rose to 31.1%, up 212 basis points from a year earlier. It shows Workday’s AI investment is being absorbed without eroding the bottom line, a combination that strengthens the case that AI is additive rather than just a cost center.
Workday, Inc. (NASDAQ:WDAY)’s reporting is directly countering the disruption narrative that has weighed on enterprise software stocks. Reuters described the results as “easing investor fears of artificial intelligence disruption,” and Enslin’s comment that AI is now “a key reason companies are modernizing their core on Workday” shows AI is pulling customers toward Workday’s platform rather than away from it.
Forward revenue visibility is improving, not just this quarter’s headline number. The 12-month subscription revenue backlog grew 14.2% to $9.03 billion. It gives Workday a larger, growing pipeline of already-contracted future revenue to draw on.
Bear Case
Workday’s own forward guidance points to deceleration despite the AI enthusiasm. Fiscal 2028 subscription revenue growth is guided to roughly 11%, below the current 13% to 14% range. It means management itself expects growth to slow even as AI adoption climbs.
Workday, Inc. (NASDAQ:WDAY)’s own executives describe AI adoption as substitutive rather than purely incremental. Management said on the earnings call that AI adoption is currently more substitutive than incremental. It means some AI revenue may simply be replacing revenue Workday would have earned another way, rather than representing entirely new demand.
New consumption-based AI pricing models could delay how quickly usage turns into reported revenue. Workday’s Flex credit model, used for some AI products, may push recognition of revenue later than a traditional subscription would. It adds uncertainty to how cleanly strong AI use changes into near-term financial results.
The fact that Workday needed to actively address disruption fears at all signals the skepticism was significant. Framing this quarter as evidence against AI disruption implies investors had genuine doubts about whether traditional enterprise software platforms like Workday can defend their business against AI-native competitors. It is a concern one strong quarter does not fully resolve.
Hedge Fund Data
Insider Monkey’s database shows Workday, Inc. (NASDAQ:WDAY) was held by 57 hedge funds in the second quarter of 2026, down from 63 in the first quarter, with total holdings valued at $3.12 billion, up from $3.01 billion, and a notably high 10.3% ownership concentration.
Among enterprise software peers, Salesforce was held by 99 funds worth $6.44 billion, down from 101, and ServiceNow by 115 funds worth $5.05 billion, up from 108. Workday was the only one of the three to see its hedge fund count decline even as its holdings value grew.
Conclusion
Workday’s results strengthen the case that AI can become a growth driver rather than a threat to its core business, with strong AI adoption, expanding margins and a growing subscription backlog. However, slowing subscription growth and management’s acknowledgment that AI remains more substitutive than incremental limit the upside. Workday now needs to prove that AI can generate meaningful incremental demand and sustain growth as enterprise software markets mature. Investors should therefore focus on whether rising AI adoption translates into durable revenue growth rather than simply supports Workday’s existing business.
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