Workday, Inc. Q4 FY2026 earnings call

Aneel emphasized the start of Chapter 4 focusing on innovation, marrying deterministic enterprise apps with probabilistic AI. Gerrit talked about leveraging AI for new business processes, 1.7 billion AI actions in full year '26, over $100 million new ACV from emerging AI products in Q4, 12 new organically developed role-based agents moving to GA. Rob mentioned high customer trust, expansions as growth engine, AI involved in half of customer-base transactions, Flex Credits pricing model adoption, international business progress, and partner ecosystem role.

Subscription revenue in Q4 was $2.360 billion, up 16%. Full year FY '26 subscription revenue was $8.833 billion, growth of 14%. Total revenue in Q4 was $2.532 billion, growth of 15%, and for the full year was $9.552 billion, up 13%. U.S. revenue in Q4 totaled $1.91 billion, up 15%, and international revenue in the quarter was $626 million, growing 13%. For the year, U.S. revenue was $7.18 billion, up 13%, and international revenue was $2.38 billion, up 12%. 12-month subscription revenue backlog or cRPO was $8.83 billion at the end of Q4, growing 15.8%. Total subscription revenue backlog at the end of Q4 was $28.1 billion, up 12%. Gross revenue retention rates remained strong at 97%, net expansion rates remained consistent through FY '26, contributing roughly 60% of subscription revenue growth. Non-GAAP operating income for Q4 was $774 million, non-GAAP operating margin 30.6%. Full year non-GAAP operating income was $2.82 billion, non-GAAP operating margin 29.6%. Q4 operating cash flow was $1.28 billion, full year operating cash flow $2.94 billion, growth 19%. Free cash flow for Q4 was $1.22 billion, for the year $2.78 billion, up 27%.

Expect FY '27 subscription revenue of approximately $9.925 billion to $9.950 billion, growth of 12% to 13%. Q1 FY '27 subscription revenue expected ~$2.335 billion, growth 13%. cRPO to increase between 14.5% and 15.5% in Q1. Subscription revenue to increase ~5% sequentially in Q2. FY '27 professional services revenue ~$710 million, Q1 ~$180 million. FY '27 non-GAAP operating margin ~30%, Q1 ~30.5%. FY '27 operating cash flow $3.450 billion, capital expenditures ~$270 million, free cash flow $3.180 billion, growth 15%.

Q: Aneel, how is the next chapter for Workday differentiating AI strategy?

A: Aneel is optimistic on agentic front, acquired solutions generating rapid growth, organic solutions coming to market.

Q: Kirk, guide seems conservative, why?

A: Aneel is optimistic, agentic offerings more second half, Flex Credits model second half.

Q: Keith, is M&A strategy less prominent?

A: Leaning on organic development, but opportunistic.

Q: John, Q1 subscription decline?

A: DIA contract not in Q1 forecast, seasonal component.

Q: Brad, where are dollars going?

A: Focus on reaccelerating growth with AI, organic agents consumption model.

Q: Raimo, international progress?

A: Europe, ASEAN, India, Canada making progress.

Q: Michael, AI impact on economic profile?

A: Agents delivering efficiency gains and business returns.

Q: Karl, SaaS rearchitecting cores?

A: Different from last transition, about data model and ROI.

Q: Brent, op margin guide?

A: Focus on AI investments, optimistic on margin upside.

Q: Alex, monetizing third-party agents?

A: Consumption model via APIs, data cloud.

Q: Gabriela, risk of vendors building next to Workday?

A: API layer and business process framework provide value, we get compensated via consumption model