Summary
Workday closed fiscal 2026 with fourth-quarter revenue of $2.532 billion, up 14.5% from the prior-year quarter. Full-year revenue was $9.552 billion, up 13.1%. The quarter's operating income was $174 million, up 132%. Full-year operating income was $721 million, up 73.7%. Net income was $145 million in the quarter, up 54.3%, and $693 million for the full year, up 31.7%. Full-year diluted EPS was $2.59, up $0.64 or 32.8%.
Profitability improved at both the quarter and full-year levels. Fourth-quarter operating margin was 6.9%, up 3.5 percentage points from the prior-year quarter. Full-year operating margin was 7.5%, up 2.6 percentage points. Deferred revenue at January 31, 2026, was $5.081 billion, up 11.7%. Operating cash flow was $1.278 billion in the quarter, up 14.9%, and $2.939 billion for the full year, up 19.4%. Capital expenditures were $60 million in the quarter, down 30.2%, and $162 million for the full year, down 39.8%. The company also reported non-GAAP free cash flows of $2.8 billion for fiscal 2026. Non-GAAP operating income was $2.824 billion for fiscal 2026, or 29.6% of revenues. Non-GAAP operating margin was 29.6%, compared with 25.9% in the prior year.
Operational highlights included two acquisitions. Workday acquired Paradox in September 2025 for $1.1 billion and Sana in November 2025 for $1.1 billion. The acquisitions expanded Workday's AI and knowledge tools capabilities. The company repurchased approximately 12.8 million Class A shares for $2.9 billion during fiscal 2026. Headcount was 21,070 at January 31, 2026, up 3% from 20,482. Workday serves more than 11,500 customers. Its gross revenue retention rate was approximately 97% as of January 31, 2026. Subscription services accounted for approximately 92% of total revenues for the fiscal year ended January 31, 2026, and represented 97% of total unearned revenue as of January 31, 2026. For fiscal 2027, management guided capital expenditures to approximately $270 million, mainly for office facilities.
Restructuring remains part of the story. The fiscal 2026 plan was announced in February 2025. It cut about 7.5% of the workforce and exited certain owned office space. In February 2026, the company announced a fiscal 2027 restructuring plan expected to reduce about 2% of the workforce and impair certain office space and long-lived assets. Those actions aim to align resources with priorities, but they carry execution risk.
Macroeconomic conditions are a clear risk. The 10-K cites tariffs, elevated inflation, fluctuating interest rates and foreign currency exchange rates, and geopolitical instability. These pressures have caused deal scrutiny, longer sales cycles, especially for net new opportunities, and reduced growth in headcount-level commitments on renewals. Extended sales cycles are most evident in government, higher education, and healthcare, which are tied to federal funding. Workday has also provided flexible payment terms. Tax risk includes Pillar Two global minimum tax rules at 15% for large multinational corporations, which could affect the effective tax rate. The 2025 Tax Act did not have a material impact on the annual effective tax rate and reduced domestic cash tax outflows for fiscal 2026. The company continues to evaluate the impact of the 2025 Tax Act's provisions that take effect in future periods. Integration of Paradox and Sana adds another layer of risk.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.53B | $2.43B | +4.1% | $2.21B | +14.5% |
| Research & development | $691.0M | $666.0M | +3.8% | $674.0M | +2.5% |
| Sales & marketing | $675.0M | $677.0M | -0.3% | $628.0M | +7.5% |
| General & administrative | $250.0M | $234.0M | +6.8% | $211.0M | +18.5% |
| Total operating expenses | $2.36B | $2.17B | +8.5% | $2.14B | +10.4% |
| Operating income (loss) | $174.0M | $259.0M | -32.8% | $75.0M | +132.0% |
| Operating margin | 6.9% | 10.7% | -3.8 pp | 3.4% | +3.5 pp |
| Net income (loss) | $145.0M | $252.0M | -42.5% | $94.0M | +54.3% |
| Net margin | 5.7% | 10.4% | -4.6 pp | 4.3% | +1.5 pp |
| Diluted EPS | $0.54 | $0.94 | -$0.40 | $0.35 | +$0.19 |
Risks
MD&A states recent macroeconomic events including tariffs, inflation, and fluctuating rates continue to disrupt the global economy, causing deal scrutiny, lengthening sales cycles, particularly in net new opportunities, and reduced growth in headcount-level commitments upon renewals, especially in government, higher education, and healthcare tied to federal funding; Workday has also provided more flexible payment terms.
Risk factors state the markets for enterprise cloud and AI-powered applications are intensely competitive, and Workday may face greater competition from non-specialist solutions relying on generic large language models, generative AI, and general-purpose agents; competitors may also use capabilities such as vibe coding and agentic AI, which could pressure pricing and revenue.
In February 2026, Aneel Bhusri assumed the role of CEO and Carl Eschenbach ceased to serve as CEO; the filing says key employee and executive leadership changes have the potential to disrupt the business, impact culture, and negatively affect the ability to attract and retain talent.
In August 2025 Workday was targeted in a social engineering campaign against many large organizations, resulting in unauthorized access to some internal systems including commonly available business contact information in its third-party CRM platform; the filing also discloses a July 2025 issue impacting reporting from high-volume data sources for certain customers.
Workday faces evolving AI regulation including the EU AI Act and is defending a lawsuit alleging certain AI-related products and services enable discrimination; the majority of claims have been dismissed, but the filing warns the plaintiff may also litigate against Workday customers and that AI regulation and litigation can be lengthy, expensive, and disruptive.
Workday incurred approximately $303 million in restructuring costs in fiscal 2026 under a plan that reduced about 7.5% of its workforce and exited certain office space, and in February 2026 announced an additional plan expected to reduce about 2% of its workforce and impair office space and long-lived assets.
In fiscal 2026 Workday acquired Paradox for $1.1 billion and Sana for $1.1 billion; the filing cites risks from integrating acquired AI technologies, retaining key personnel, and realizing expected benefits, including potential impairment of acquired goodwill and intangible assets.
Workday depends on its network of partners to drive additional revenue growth and provide deployment services; if partners fail to perform, favor competitors, or if acquisitions of partners by competitors end strategic relationships, Workday's ability to sell and distribute its products may be impacted.
Evolving privacy and data transfer rules, including the EU-U.S. Data Privacy Framework facing legal challenges, GDPR penalties up to 4% of worldwide revenue, the EU Data Act, and the U.S. DOJ Data Security Program restricting transactions involving bulk U.S. sensitive personal data with countries of concern, create compliance and operational risks.
Workday faces global expansion risks including tariffs, trade disputes, data localization, and laws favoring local vendors over U.S.-based companies; the filing notes these factors have negatively impacted and may continue to impact its ability to sell applications globally and increase operating costs.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Non-GAAP Operating Income
Total Customers
12-Month Subscription Revenue Backlog
Gross Revenue Retention Rate
Free Cash Flows
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q4 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.