WDAY jumped after a stronger-than-expected quarterly report, as the market saw AI beginning to improve profitability rather than remaining only a growth narrative.
📌 Workday reported Q1 FY2027 results after the US market closed on May 21, with revenue reaching $2.542 billion, up 13.5% YoY; subscription revenue reached $2.354 billion, up 14.3%, while non-GAAP EPS came in at $2.66, above market expectations.
💡 The stronger price reaction came mainly from profitability. Non-GAAP operating margin reached 31.8%, up from 30.2% a year earlier, while the company also raised its full-year margin guidance to 30.5%, showing that AI is starting to support operating efficiency more clearly.
🔎 Workday’s AI story also gained more concrete data, as the number of customers using AI agents more than doubled from the previous quarter, with over 4,000 customers using at least one agent. This helps reduce concerns that AI in enterprise software is only a marketing theme.
⚠️ Still, the key point to watch is that subscription growth remains around 14.3%, while full-year revenue guidance was not raised significantly. In other words, AI is currently showing a clearer impact on margins, while its ability to accelerate revenue still needs a few more quarters to be tested.
✅ In the short term, WDAY may continue to be supported by positive sentiment around enterprise AI software, especially after the strong after-hours reaction. But over the medium term, the market will need to see backlog remain solid and AI monetization become clearer so that margin improvement does not become the only growth driver.