Workday has reported a strong second quarter, with revenue rising 12.8% year over year to $2.649 billion.
Workday’s subscription business remained the main engine of that growth, while its backlog continued to expand, giving the company a stronger base of contracted revenue heading into the rest of the fiscal year. It also raised its full-year non-GAAP operating margin guidance to 31%, suggesting that the stronger performance is not coming at the expense of profitability.
AI, however, is becoming harder to separate from the company’s broader commercial performance. Workday said the technology contributed to more than a quarter of its new annual contract value during the quarter, while thousands of customers are now using its AI agents. The figures point to a shift in how the company is selling and expanding its core HR and finance platform.
AI Becomes a Bigger Part of Workday’s Growth
Workday reported total revenue of $2.649 billion for the quarter ended July 31, with subscription revenue reaching $2.471 billion, up 13.9% from the same period last year. Its 12-month subscription revenue backlog also rose 14.2% to $9.034 billion, providing a measure of the contracted demand underpinning future revenue.
A significant development for Workday’s AI strategy was the contribution of AI to new business. The company said AI accounted for more than 25% of its new annual contract value during the quarter, suggesting the technology is increasingly influencing purchasing decisions rather than simply being added to an existing product portfolio.
Workday also said more than 5,500 customers are now using at least one of its organic AI agents, an increase of more than 35% from the previous quarter.
Workday’s AI Strategy Gains Momentum
Workday’s earnings growth and rising use of AI agents help explain why the company has made several recent announcements. In August, it introduced a dedicated AI research team focused on technical challenges including agent memory, multi-agent collaboration, governance and trust, areas that could become increasingly important as more customers put agents to work.
At the same time, the company expanded its agent ecosystem through capabilities including Developer Agent, which is designed to let developers create applications and agents using natural language, and Agent Passport, which is intended to test, verify, and continuously monitor agents before and after deployment.
The commercial significance of that push is becoming clearer, as according to Mark Vigoroso, President, North America, at The Enterprise Edge: “AI is a larger share of Workday's new business than of anyone else's disclosed mix. Salesforce's $1.5 billion Agentforce ARR sits on a $46 billion revenue base. Workday's $600 million sits on roughly $10 billion," he said.
