Workday Q2 FY2027 Revenue Grows 12.8% with Subscription Up 13.9%, Slightly Decelerating from Q1

What happened

Workday reported fiscal Q2 2027 total revenues of $2.649 billion, up 12.8% year-over-year, and subscription revenues of $2.471 billion, up 13.9%. Compared to Q1 FY2027, total revenue growth decelerated from 13% to 12.8%, while subscription growth slowed from 14.3% to 13.9%. The results remain above the company's full-year subscription growth guidance of 12%-13%, but the slight deceleration suggests AI-driven reacceleration has not yet materialized. The master report's base case assumed subscription growth of 12%-13%, so this quarter fits within that framework, but the bull case required exiting FY2027 above 13%, and the current rate is only marginally above that threshold. With no details on profitability, backlog, or guidance changes in the press release, the investment thesis remains balanced between durable growth and the need for proof of AI monetization.

Implication

Investors should monitor whether subscription growth stabilizes above 13% or continues to drift toward the 12%-13% guidance range in subsequent quarters. The lack of acceleration means the market may not re-rate the stock upward without evidence that AI products are driving incremental revenue. Current price near $148 is above the attractive entry of $135 but below the trim level of $175, so holding or waiting for a better entry remains prudent. If the next quarter shows subscription growth holding above 13% and backlog re-acceleration, the bull case gains credibility and the stock could move toward $185. Conversely, if growth slips to 11%-12% and AI investment continues to pressure margins, the bear case with a value near $130 becomes more likely, and the stock could test lower levels.

Thesis delta

The new Q2 data does not materially shift the thesis. Workday continues to deliver double-digit subscription growth, but the slight deceleration from Q1 suggests AI monetization is not yet pulling growth higher. The base case probability remains unchanged as the company operates within its guided range, and the wait-and-see stance is reinforced rather than altered.