Workday reported growing commercial traction for its artificial intelligence products during the fiscal second quarter of 2027, with AI accounting for more than one-quarter of new annual contract value and adoption of Workday agents accelerating among existing customers.
More than 25% of Workday’s new ACV during the quarter was driven by AI.
At the same time, more than 5,500 customers were using at least one of Workday’s organic agents.
That customer total increased by more than 35% sequentially.
The metrics provide an important indication that AI is moving beyond product development and into commercial contribution for Workday.
Rather than measuring only product launches or experimental usage, the company is seeing AI directly contribute to new contracted business.
The increase in customers using agents also suggests that adoption is broadening across Workday’s installed base.
The AI momentum came alongside continued growth in Workday’s core subscription business.
Total revenue increased 12.8% year-over-year to $2.649 billion.
Subscription revenue grew faster, increasing 13.9% to $2.471 billion.
Profitability also improved.
GAAP operating income increased to $313 million from $248 million.
GAAP operating margin reached 11.8%, compared with 10.6% a year earlier.
Non-GAAP operating income increased to $824 million from $680 million.
Non-GAAP operating margin expanded 210 basis points to 31.1%.
Workday’s contracted subscription base continued expanding.
Twelve-month subscription revenue backlog increased 14.2% to $9.034 billion.
Total subscription backlog reached $27.403 billion.
Those figures provide visibility into future subscription revenue while the company develops additional AI-powered services that can potentially increase customer spending.
Workday is expanding its AI portfolio across several areas.
Products and capabilities include Developer Agent, Agent Passport, Adaptive Decision Intelligence and Financial Audit Agent.
The company is also integrating Workday Data Cloud with AWS.
Workday separately expanded its Google Cloud relationship so Workday agents and Gemini Enterprise agents can operate across HR and finance workflows.
These partnerships are strategically important because enterprise AI agents will often need access to information and workflows across multiple software platforms.
Workday sits on large amounts of HR and financial data, giving the company an opportunity to position its platform as a source of trusted enterprise context for AI-driven workflows.
Management increased its fiscal 2027 non-GAAP operating-margin outlook to 31%.
Full-year subscription revenue is expected between $9.94 billion and $9.95 billion, representing approximately 13% growth.
Workday also repurchased approximately 9.8 million shares for $1.3 billion during Q2 and authorized another $4 billion stock-repurchase program.
GAAP diluted EPS reached $2.57, although the figure included a $1.52-per-share tax benefit associated with an intra-entity transfer of intellectual property rights.
Non-GAAP diluted EPS was $2.75.
The most important forward-looking indicator remains the AI contribution to ACV.
AI already driving more than 25% of new ACV suggests it is becoming a meaningful commercial growth engine rather than simply a feature layered onto Workday’s existing applications.
KEY QUOTE:
“We had a strong Q2, with AI driving more than 25% of our new ACV and more than 5,500 customers now using at least one of our organic agents.”
Aneel Bhusri, Co-Founder, CEO and Chair of Workday
