Workday delivered a well-received Q1, as the market responded positively to growth in both revenue and profitability. Management attributed the strong performance to renewed momentum in its core business and the rapid adoption of its AI-powered agent solutions, which are helping customers automate HR and finance processes. CEO Aneel Bhusri pointed to this being Workday's best first quarter for new annual contract value (ACV) in five years, citing increased customer demand for AI-driven functionality and improved operational focus. Bhusri emphasized, “We are seeing momentum once again building in the business,” highlighting that AI agents and the integration of Sana and Paradox platforms were key contributors.
Is now the time to buy WDAY? Find out in our full research report (it’s free for active Edge members).
Workday (WDAY) Q1 CY2026 Highlights:
- Revenue: $2.54 billion vs analyst estimates of $2.52 billion (13.5% year-on-year growth, 1.1% beat)
- Adjusted EPS: $2.66 vs analyst estimates of $2.52 (5.7% beat)
- Adjusted Operating Income: $809 million vs analyst estimates of $769.1 million (31.8% margin, 5.2% beat)
- Operating Margin: 13.3%, up from 1.7% in the same quarter last year
- Billings: $1.86 billion at quarter end, up 18.2% year on year
- Market Capitalization: $30.75 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Workday’s Q1 Earnings Call
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Keith Weiss (Morgan Stanley) asked about Workday’s total cost of ownership versus customers building solutions in-house with new code-generation tools. CEO Aneel Bhusri and President Garrett Katzmeyer explained that Workday’s unique data model, security, and business process framework give it a clear advantage, emphasizing that customers prefer compliant, integrated solutions over “lawless” alternatives.
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Gabriela Borges (Goldman Sachs) inquired about customer feedback and challenges when deploying agentic AI. Katzmeyer highlighted that Workday engages on concrete business problems, which helps avoid common proof-of-concept pitfalls, and noted that rapid adoption has led to default provisioning of self-service agents to all customers.
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Michael Turrin (Wells Fargo) questioned the balance between margin expansion and growth investments. CFO Zane C. Rowe stated that margin improvement is being driven by both revenue outperformance and productivity gains from AI, with CEO Bhusri expressing a goal to keep headcount flat as efficiencies increase.
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John DiFucci (Guggenheim Securities) asked how Workday plans to lead through the current AI paradigm shift. Katzmeyer responded that AI allows Workday to enter new markets and rethink business processes, while Bhusri stressed the importance of making bold bets, especially in areas where Workday’s data model enables expansion beyond HR and finance.
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Brad Zelnick (Deutsche Bank) sought clarification on the impact of the deployment agent on competitiveness and deal seasonality. Robert Enslin, Chief Commercial Officer, explained that deployment agent is expected to significantly reduce implementation time and costs, making Workday more competitive in mid-market and large enterprise segments.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will monitor (1) the pace of customer adoption and monetization of newly launched AI agents, including the Sana Travel Agent and Sana for ITSM; (2) the impact of the flex credits pricing model on deal sizes and customer retention; and (3) continued international expansion, especially in new markets like Vietnam and EMEA. The integration and performance of AI-driven solutions across broader use cases will also be key signposts for execution.
Workday currently trades at $125.38, up from $121.85 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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