Workday's Q2 2026 Filing: Revenue Up 13%, Operating Income Doubles

Workday, a key player in cloud-based finance and human resources software, recently filed its quarterly report for the period ending July 31, 2025. This document gives us a fresh look under the hood at the company's financial performance. Let's dive into the numbers from their latest 10-Q filing to see how the business is faring.

Steady Growth at the Top Line

Workday's revenue continues its upward climb, driven by the strength of its core subscription model. For the three months ended July 31, 2025, the company reported total revenues of $2.35 billion, a solid 13% increase from the same period last year.

The real engine of this growth is subscription services, which brought in $2.17 billion, up 14% year-over-year. This recurring revenue stream is the lifeblood of any SaaS (Software-as-a-Service) company, and its consistent growth is a positive sign. Professional services, which primarily involve implementation and training, remained relatively flat at $179 million.

To better understand how this revenue flows through the company's operations to become profit, the following flow diagram visualizes the income statement for the last three months.

A Closer Look at Profitability and Expenses

While revenue growth is crucial, profitability tells another part of the story. Here, Workday shows significant improvement. GAAP operating income more than doubled to $248 million for the quarter, compared to $111 million in the prior year. This pushed the company's GAAP operating margin from 5.3% to 10.6%.

So, what's driving this? A combination of revenue growth and disciplined cost management. However, it's important to note the impact of a recent restructuring plan. For the six months ending July 31, 2025, Workday recorded $167 million in restructuring charges, primarily related to workforce and office space reductions. While these charges impact short-term results, they are intended to create long-term operational efficiencies.

As with many tech companies, the largest operating expenses are in:

• Product Development: $660 million
• Sales and Marketing: $641 million

Share-based compensation also remains a significant expense, totaling $391 million for the quarter, reflecting the competitive market for tech talent.

Future Outlook and Financial Strength

Looking ahead, Workday's subscription revenue backlog—a key indicator of future revenue—provides a healthy outlook. The company reported a 12-month subscription revenue backlog of $7.9 billion, up 16% from the previous year. This metric represents contracted revenue that is expected to be recognized over the next year, giving the company strong visibility into its future performance.

Workday also maintains a robust balance sheet, ending the quarter with $8.2 billion in cash, cash equivalents, and marketable securities. The company is actively returning value to shareholders, having repurchased $592 million of its common stock in the first six months of its fiscal year.

In conclusion, Workday's latest filing paints a picture of a company executing well. It is delivering consistent double-digit revenue growth while making significant strides in profitability, partly through strategic restructuring. With a strong backlog and a solid cash position, Workday appears well-equipped to navigate the competitive landscape of enterprise software, even as it invests in new technologies like AI, which the company notes as both an opportunity and a potential risk.