Enterprise software company Workday (NASDAQ: WDAY) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 13.5% year on year to $2.54 billion. Its non-GAAP profit of $2.66 per share was 5.7% above analysts’ consensus estimates.
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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
- Free Cash Flow Margin: 24.2%, down from 48.1% in the previous quarter
- Billings: $1.86 billion at quarter end, up 18.3% year on year
- Market Capitalization: $31.61 billion
"We had a great Q1, and it makes one thing clear: Workday is ready for this AI moment. Our core business is strong, our AI strategy is working, and we're moving with the speed and focus required to lead," said Aneel Bhusri, co-founder, CEO, and chair, Workday.
Company Overview
Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Workday grew its sales at a 17.1% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Workday’s recent performance shows its demand has slowed as its annualized revenue growth of 14.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Workday reported year-on-year revenue growth of 13.5%, and its $2.54 billion of revenue exceeded Wall Street’s estimates by 1.1%.
Looking ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Workday’s billings punched in at $1.86 billion in Q1, and over the last four quarters, its growth slightly outpaced the sector as it averaged 16.3% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
It’s relatively expensive for Workday to acquire new customers as its CAC payback period checked in at 86.4 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low. 
Key Takeaways from Workday’s Q1 Results
We enjoyed seeing Workday beat analysts’ billings expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 10.8% to $135.61 immediately after reporting.
Workday put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
