Workday, Inc.

Workday operates in the highly competitive and rapidly evolving market for enterprise application software, including AI-powered solutions, where competition is based on brand recognition, product quality, price, and innovation. The industry is subject to changing technology, shifting customer needs, and frequent introductions of new products, with relatively low barriers to entry for some applications or services. Workday provides more than 11,500 organizations with cloud solutions powered by artificial intelligence, serving more than 75 million users under contract around the world and across industries, from emerging and medium-sized businesses to more than 65% of the Fortune 500.

Primary competitors named in the filing include Oracle Corporation and SAP SE, as well as Anaplan, Inc., Automatic Data Processing, Inc., Coupa Software Inc., Dayforce, Inc., Microsoft, NetSuite, ServiceNow, Inc., and UKG Inc. Workday believes it competes favorably based on factors such as level of customer satisfaction, ability to innovate and rapidly respond to customer needs, speed to deploy and ease of use, breadth and depth of application functionality, and adaptive technology platform. The company's ability to remain competitive will largely depend on ongoing performance in product development and customer support.

Workday generates revenue primarily through subscription services, which accounted for approximately 92% of total revenues for the fiscal year ended January 31, 2026, and represented 97% of total unearned revenue as of that date. Subscription services revenues consist of fees that provide customers access to cloud applications with standard and enhanced customer support, while professional services revenues include fees for deployment services, optimization services, and training. Subscription contracts typically have a term of three years or longer and are generally noncancelable, with customers invoiced annually in advance.

Workday offers a suite of cloud-based enterprise solutions including Human Capital Management, Financial Management, Spend Management, and Planning, all built on a unified platform designed to be open, extensible, and configurable. The HCM suite allows organizations to manage the entire employee lifecycle from recruitment to retirement, with AI-powered talent acquisition solutions including HiredScore AI for Recruiting, Candidate Experience Agent, and Paradox Conversational Applicant Tracking System. The Financial Management suite helps manage core financial processes such as payables and receivables, financial consolidation, and internal controls, while Spend Management solutions streamline supplier selection, contract management, and expense management. Planning solutions provide active planning processes that can model across finance, workforce, sales, and operational data, and Workday also offers industry-specific solutions for sectors including financial services, government, healthcare, higher education, hospitality, manufacturing, professional and business services, retail, technology and media, and transportation. In fiscal 2026, Workday launched Workday Government designed to serve the unique needs of the U.S. government, and introduced Workday GO, a simple and scalable HCM and finance solution designed and priced for medium-sized organizations.

In fiscal 2026, Workday expanded its AI capabilities through the acquisitions of FlowiseAI, Inc., a low-code platform for building AI agents; Paradox, Inc., a candidate experience agent using conversational AI, for purchase consideration of $1.1 billion ¹; Sana Labs AB, a leading AI company building enterprise knowledge tools, for purchase consideration of $1.1 billion ²; and Pipedream, Inc., a leading integration platform for AI agents. Workday also introduced new Workday AI agents to accelerate hiring, enhance frontline worker experiences, simplify financial processes, and improve employee information access, and announced new Workday AI agents expected to be available in fiscal 2027. Additionally, Workday announced Workday Build, a new open developer platform, and Workday Data Cloud, a new data service based on open architecture and industry standards such as Apache Iceberg, expected to become available later in fiscal 2027. During fiscal 2026, Workday repurchased approximately 12.8 million shares of its Class A common stock for $2.9 billion ³ as part of its share repurchase programs. In February 2025, Workday announced a restructuring plan (Fiscal 2026 Restructuring Plan) resulting in the reduction of approximately 7.5% of its workforce and the exit of certain owned office space, and in February 2026, announced an additional restructuring plan (Fiscal 2027 Restructuring Plan) expected to result in the reduction of approximately 2% of its workforce. For fiscal 2026, Workday incurred approximately $303 million ⁴ in costs related to these restructuring activities.

Total revenues were $9.552 billion ⁵ for fiscal 2026, compared to $8.446 billion ⁶ for fiscal 2025, an increase of 13% ⁷. Subscription services revenues were $8.833 billion ⁸ for fiscal 2026, compared to $7.718 billion ⁹ for fiscal 2025, an increase of 14% ¹⁰. GAAP operating income was $721 million ¹¹, or 7.5% ¹² of revenues, in fiscal 2026, compared to $415 million ¹³, or 4.9% ¹⁴ of revenues in fiscal 2025. Non-GAAP operating income was $2.824 billion ¹⁵, or 29.6% ¹⁶ of revenues, in fiscal 2026, compared to $2.186 billion ¹⁷, or 25.9% ¹⁸ of revenues in fiscal 2025. Net income was $693 million ¹⁹ for fiscal 2026, compared to $526 million ²⁰ for fiscal 2025. Operating cash flows were $2.939 billion ²¹ for fiscal 2026, compared to $2.461 billion ²² for fiscal 2025. Free cash flows were $2.777 billion ²³ for fiscal 2026, compared to $2.192 billion ²⁴ for fiscal 2025.

Workday is focused on investing in strategic growth areas including developing innovative AI solutions, expanding internationally, growing its partner ecosystem, deepening its presence in industry verticals and the emerging and medium enterprise market, and exploring strategic acquisitions to complement organic innovation. In fiscal 2026, Workday introduced new Workday AI agents and announced new Workday AI agents expected to be available in fiscal 2027, purpose-built to assist with complex HCM and finance processes such as performance reviews, workforce planning, and financial close. Workday also announced Workday Build, a new open developer platform that will give customers and partners the ability to create and share AI-powered solutions directly on the Workday platform, featuring Workday Flowise Agent Builder, a low-code tool expected to be available to early adopter customers in fiscal 2027. Additionally, Workday announced Workday Data Cloud, a new data service based on open architecture and industry standards such as Apache Iceberg, expected to become available later in fiscal 2027, which includes key partnerships allowing organizations to share data to and from certain other platforms with Workday.

Workday is focused on expanding its operating margin by driving scale and building efficiencies across the business through investments in people, processes, and systems. As a result of this focus, Workday expects its product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as it grows revenues and invests in a disciplined manner to support long-term growth objectives. Non-GAAP operating margin was 29.6% ²⁵ in fiscal 2026, compared to 25.9% ²⁶ in fiscal 2025, an increase of 368 basis points ²⁷.

Workday expects capital expenditures will be approximately $270 million ²⁸ in fiscal 2027, primarily including investments in office facilities to support continued growth. The company's global workforce consisted of over 21,000 employees ²⁹ in 36 countries as of January 31, 2026, of which approximately 58% were located in the U.S. and 42% were located internationally. In February 2025, Workday announced a restructuring plan (Fiscal 2026 Restructuring Plan) resulting in the reduction of approximately 7.5% of its workforce, and in February 2026, announced an additional restructuring plan (Fiscal 2027 Restructuring Plan) expected to result in the reduction of approximately 2% of its workforce, intended to better align people and resources to highest priorities.

Workday invests significant resources in research and development to grow its suite of solutions and capabilities, and also selectively acquires companies consistent with its design principles, existing product set, corporate strategy, and company culture. During fiscal 2026, Workday repurchased approximately 12.8 million shares of its Class A common stock for $2.9 billion ³⁰ as part of its share repurchase programs. As of January 31, 2026, Workday was authorized to repurchase a remaining $2.9 billion ³¹ of its outstanding shares of Class A common stock under its share repurchase programs. Workday has never declared or paid cash dividends on its capital stock and currently intends to retain any future earnings to finance the operation and expansion of its business, not expecting to declare or pay any dividends in the foreseeable future.

Recent macroeconomic events including increased tariffs, elevated inflation, and fluctuating interest rates and foreign currency exchange rates, as well as geopolitical instability, continue to impact the global economy and create uncertainty, volatility, and disruption of financial markets. As a result, Workday has experienced, and may continue to experience, a moderation of revenue growth rates due to deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, as well as reduced growth in headcount-level commitments upon renewals of existing customers. The extended sales cycles are particularly evident in the government, higher education, and healthcare industries which are tied to federal funding. Workday has provided, and may continue to provide, certain customers with more flexible payment terms.

Workday faces risks from the use of new and evolving technologies in its offerings, including generative and agentic AI capabilities, which may result in reputational harm and increased litigation. The European Union's AI Act puts new requirements on providers and deployers of AI technologies, and Workday is currently working to ensure compliance with corresponding deadlines. Workday is currently defending against a lawsuit alleging that certain of its AI-related products and services enable discrimination, and although the majority of the claims have been dismissed, legal proceedings can be lengthy, expensive, and disruptive to operations and customers.

Any compromise of Workday's information technology systems or unauthorized access to customer or user data could disrupt operations, expose the company to regulatory obligations and enforcement actions, litigation, and result in loss of customer confidence. Workday has been targeted as part of a social engineering campaign in August 2025, resulting in unauthorized access to some internal systems including commonly available business contact information. The markets for enterprise cloud applications are intensely competitive, with primary competitors including Oracle and SAP, and Workday faces competition from non-specialist solutions relying on generic large language models and generative AI. Workday is currently defending against a lawsuit alleging that certain of its AI-related products and services enable discrimination, and although the majority of claims have been dismissed, legal proceedings can be lengthy and expensive. Workday's existing and future debt obligations, including $3.0 billion ³² aggregate principal amount of senior notes consisting of $1.0 billion ³³ of 3.500% notes due April 1, 2027, $750 million ³⁴ of 3.700% notes due April 1, 2029, and $1.25 billion ³⁵ of 3.800% notes due April 1, 2032, could adversely affect financial condition and operating results.

Management's message emphasizes Workday's position as the enterprise AI platform for managing people, money, and agents, with a focus on driving sustainable, long-term subscription revenue growth by adding new customers and expanding relationships with existing customers through increased adoption of the suite of solutions. Key strategic priorities include investing in strategic growth areas such as developing innovative AI solutions, expanding internationally, growing the partner ecosystem, deepening presence in industry verticals and the emerging and medium enterprise market, and exploring strategic acquisitions to complement organic innovation. Management is also focused on expanding operating margin by driving scale and building efficiencies across the business, expecting product development, sales and marketing, and general and administrative expenses as a percentage of total revenues to decrease over the longer term as revenues grow and investments are made in a disciplined manner.