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Investing.com - Workday (NASDAQ:WDAY) shares surged more than 12% in premarket trading on Wednesday after the AI-powered enterprise management platform reported fourth-quarter earnings and revenue that exceeded analyst expectations, while also providing robust guidance for the upcoming fiscal year.
The company posted adjusted earnings per share of $1.92, surpassing estimates of $1.78. Revenue for the quarter came in at $2.21 billion, beating the consensus projections of $2.18 billion and marking a 15% increase versus the year-ago period.
Workday’s subscription revenues, a key metric for the company, rose 15.9% year-on-year to $2.04 billion. Its 12-month subscription revenue backlog grew 15.2% to $7.63 billion, while total subscription revenue backlog expanded by 19.7% to $25.06 billion.
Momentum in full suite and financial products, growing demand for AI offerings, and strong execution across industry verticals helped to underpin the results.
"Our fourth quarter performance is a testament to Workday’s value proposition as organizations seek to boost productivity, run more efficiently, and deliver incredible employee experiences," said CEO Carl Eschenbach in a statement.
For the fiscal year 2026, Workday expects subscription revenue of $8.8 billion, representing 14% growth. The firm also raised its adjusted operating margin guidance by 50 basis points to approximately 28%, although analysts at Morgan Stanley (NYSE:MS) argued that the outlook does reflect much of a recent 8.5% company-wide headcount reduction.
Meanwhile, Workday said its customer base now exceeds 11,000 organizations worldwide. The company also announced new partnerships and product enhancements, including the Workday Agent System of Record for managing AI agents.
"We note not all is perfect, with continued macro headwinds in Europe and the company continuing to expect a moderate subscription growth rate," analysts at Barclays (LON:BARC) said in a note to clients. "However, investors now have an interesting margin story with hope that the company has now found its level and can stabilize growth rates."
(Luke Juricic contributed reporting.)