Workday in the AI stack

The business and what the filings show

Workday sells cloud software for human resources, payroll, finance and planning to large organizations. Over its latest four quarters it reported $10.2B of revenue, +13% on the year before, with an 11% operating margin and $2.8B of free cash flow. Like Intuit, it reports cost of revenue in its own XBRL categories, so the map shows no gross margin, and it stopped tagging remaining performance obligations in the standard field years ago.

Its AI strategy is agents built into the platform: its 10-K says it introduced new Workday AI agents in fiscal 2026 to speed up hiring, help frontline workers, simplify financial processes and answer employees’ questions, and announced more due in fiscal 2027. Workday’s argument is that it holds the system of record for who works where and what they are paid, which agents need before they can act on a company’s behalf.

Its pricing is what makes Workday an important test for the software layer. Subscriptions are sized to customers’ headcount, and the 10-K warns that renewals “for a lower headcount” could reduce revenue. If AI reduces headcount at its customers, a business priced that way shrinks with it, unless Workday charges for the work its agents do. Its growth over the next few years will show which way that goes.

How AI shows up in the numbers

AI shows up at Workday as agents and AI features sold into existing HR and finance customers. Its filings do not separate AI revenue, so the evidence is in revenue growth and in whether the company starts pricing on agents or outcomes rather than headcount. Its earnings releases show how often it talks about AI and how often it quantifies it.

For scale, Workday’s revenue over the latest four quarters equals 2% of the $566B the five largest buyers spent on capital projects over their latest four quarters. Their capex rose +81% on the year before, while Workday’s revenue grew +13%: slower than the spending, so it is capturing a smaller share of each new capex dollar, or more of its business sits outside the build-out.

How it talks about AI

In its latest earnings release, furnished to the SEC on August 27, 2026, Workday mentioned AI 13 times in 993 words of narrative text, about 13.1 mentions per 1,000 words. Of its 9 sentences about AI, 2 included a number: a revenue figure, a growth rate, a customer count or another measurable result. Across the 8 releases we read, back to February 5, 2025, AI mentions per 1,000 words went from 4.9 to 13.1.

Specific claims are easier to check against the numbers than general enthusiasm, which is why the share of AI sentences that carry a figure is worth watching alongside how often AI is mentioned. The sentences below are quoted from the release as published, after removing safe-harbor text and company boilerplate.

• “Workday Announces Fiscal 2027 Second Quarter Financial Results Fiscal Second Quarter Total Revenues of $2.649 Billion, Up 12.8% Year-Over-Year Subscription Revenues of $2.471 Billion, Up 13.9% Year-Over-Year PLEASANTON, Calif., August 27, 2026 – Workday, Inc. , the enterprise AI platform for HR, finance, and IT, tod…”
• “Comments on the News "We had a strong Q2, with AI driving more than 25% of our new ACV and more than 5,500 customers now using at least one of our organic agents," said Aneel Bhusri, co-founder, CEO, and chair, Workday.”
• “Our Q2 results reflect continued momentum across our platform, with AI emerging as a strategic driver of customer expansion," said Zane Rowe,”

Source: earnings release (Form 8-K, Exhibit 99.1), August 27, 2026.

The trend in the numbers

Since the start of 2023, Workday’s largest quarter by revenue was Q2 2026 at $2.6B. The latest quarter set the revenue record for the period.

Quarter by quarter, Workday’s revenue grew +13% in Q3 2025, +15% in Q4 2025, +13% in Q1 2026, +13% in Q2 2026 on the same quarter a year earlier. The pace has been steady.

Operating margin moved from 11% to 12% over the same span. Over the latest four quarters it turned 30% of its revenue into operating cash flow and spent 2% of revenue on capital projects, against 2% a year earlier.

Where it sits in the stack

Workday sits in the software and applications layer of the AI stack. It sits at the top of the stack, where revenue from end customers has to come from; its own spending flows to AI clouds.

Among the 27 companies in this layer on our map, it ranks number 7 by revenue and number 20 of 27 by revenue growth. The full layer analysis is on the software page.

Latest four quarters for 10-Q filers; latest fiscal year for 20-F filers. Companies under $100 million of revenue are left out.

Against the 27 US-listed companies in its layer, Workday grew +13% over the latest year versus +19% for the layer combined, and converted 28% of revenue into free cash flow versus 33% for the layer. It is growing more slowly than its layer, so its share of the layer’s revenue is shrinking.

What has to go right, and what could go wrong

What has to go right. Workday has to turn its position as the HR and finance system of record into agents customers pay for, growing revenue per customer even if customers employ fewer people.

What could go wrong. If AI lets its customers run with fewer employees, headcount-based renewals would shrink, and agents built by the large AI platforms could sit on top of Workday’s data and capture the new value.

These describe the conditions the business depends on, as the filings show them. They are not a view on the stock.

Through the lens of Investing in AI

Rob May’s book offers six mental models for telling AI moats from traps. The one most useful for Workday’s layer is “AI challenges traditional SaaS assumptions”: Per-seat pricing, zero marginal cost, smooth ARR curves, and automatic land-and-expand break down when software does work on your behalf. The mistake is not using SaaS instincts. It is using them automatically.

The question it asks of any company is: What work is this product actually doing, and how does pricing map to it? Applied to Workday, the filings on this page are the place to start: the margin trend shows whether it holds scarce value or passes it through, the customer and financing disclosures show who it depends on, and the commitments show what it has promised before the revenue arrives.

Customers and concentration

US companies must disclose any customer that accounts for 10% or more of revenue, and foreign filers usually describe their largest customers. Concentration matters because a company’s growth is only as durable as the handful of buyers behind it, and in the AI stack those buyers are often the same few companies.

• “No customer individually accounted for more than 10% of total revenues during fiscal 2026, 2025, or 2024.” 10-K, March 6, 2026

Commitments and backlog

• Backlog. Workday doesn’t report a comparable total of remaining performance obligations in its XBRL data.
• Purchase commitments. $11M of unconditional purchase obligations as of January 31, 2026 (10-K): what it has contracted to buy from its own suppliers.

What to watch

Workday’s next quarterly report will cover the quarter ending around October 30, 2026. Large companies must file a 10-Q within 40 days of a quarter’s end and a 10-K within 60 days of the fiscal year’s end, so the new figures should arrive by about December 29, 2026 at the latest. This page, the layer pages and the next quarterly report all update from that filing.

• Revenue growth against the layer, the clearest sign of whether AI is adding to what customers pay.
• Any change in how Workday prices: charges for agents or work done would show it is preparing for smaller customer headcounts.
• Operating margin, as the cost of building and running agents arrives.
• Its place in the next quarterly AI Stack Report, which updates every company on the map from the new filings.

Figures from Workday’s SEC filings, latest period ended July 31, 2026. Other companies: all company pages.