What Happened?
Shares of enterprise software company Workday (NASDAQ: WDAY) jumped 5.8% in the afternoon session after the company reported second-quarter financial results that beat Wall Street expectations, driven by strong subscription revenue growth and accelerating artificial intelligence adoption.
According to a company press release, Workday reported revenue of $2.65 billion, up 12.8% year on year, and adjusted profit of $2.75 per share. These results topped Wall Street estimates of $2.64 billion in revenue and $2.61 per share in adjusted earnings. Subscription revenue increased 13.9% from the prior year to $2.47 billion, exceeding the company's previous guidance of $2.455 billion. Workday highlighted growing momentum across its platform, noting that artificial intelligence solutions drove over 25% of new annual contract value, with more than 5,500 customers deploying at least one organic AI agent. The company's 12-month subscription revenue backlog rose 14.2% year on year to $9.03 billion. Looking ahead, Workday raised the lower end of its full-year subscription revenue guidance to between $9.94 billion and $9.95 billion, representing 13% growth. The company also authorized a new $4 billion share repurchase program following the early completion of its previous $5 billion buyback plan.
The shares closed the day at $204.70, up 4.6% from the previous close.
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What Is The Market Telling Us
Workday’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 4.5% on the news that Bank of America significantly raised its price target on the stock, while Barclays reiterated a positive rating, a TipRanks report revealed. According to a research note from Bank of America, the firm increased its price target on Workday to $205 from $140 but maintained a Neutral rating on the shares. The analyst cited broad-based software multiple expansion, improving growth at select infrastructure companies, and easing concerns about disruption from artificial intelligence as reasons for the re-rating. Separately, Barclays reiterated its Overweight rating and $200 price target on the stock ahead of the company's fiscal second-quarter earnings report, as noted by Investing.com.
Workday is flat since the beginning of the year, and at $204.25 per share, it is trading 17.5% below its 52-week high of $247.69 from September 2025. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at only $752.66.
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