Workday Inc Q2 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : Hi, thank you very much. Good to hear the energy in your voice, Carl and, congrats on the results and the outlook.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : If you look at -- yeah, awesome. If you look at what's going on in the market, at least this pure site costs that are script investors that somehow SaaS is going to die and maybe SaaS is already dead. But I wanted to get your perspective. Since you know Workday is a very special company. It was one of the early pioneers in the SaaS wave. You put the incumbents back then on the defense of Aneel and the rest of the team did. And you've scaled it. Now the tables appear to be turning the other way and there is the notion that AI startups are going to be able to at the flick of a view of risk. Create software, magically HCM software, create HCM software. Boom, it creates it. Boom, you got a product overnight. It's this thing called white coding apparently. And I wonder, given your experience in the industry now, that you're the incumbent SaaS player, you've also been a venture capitalist before. Maybe you know a thing or two about judging these startups. And of course, Sam Altman at open AI already tweeted that they're getting into fast fashion SaaS. I don't know what that means, but these are all the things that are afflicting the market for software stocks and investor psyche, I'm curious if you have a take on all of this as it pertains to the Workday business. Thank you so much.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : And Carl, that's useful. And Sam Altman's post saying that they're getting into SaaS. What do you make of that? What SaaS it is? We don't know, but I wonder if you had a viewpoint.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : Awesome. Thank you so much.

Question: Kirk Materne - Evercore Inc - Analyst : Yeah. Hi guys, thanks for the -- thanks for taking the question and congrats on a solid quarter. I guess Carl for you that there's a lot of things going possibly right now with extend with some of the partners, contributing. Yeah, I was just kind of wondering, are there any cross currents out there that are sort of offsetting that relative to what you would have thought maybe at the beginning of the year, obviously tariffs with Europe, just anything you could give us some context on because it seems like you have some really nice momentum some of your early stage offerings, but I was just kind of curious, are there any things that are sort of making the macro perhaps a little bit more difficult as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 21, 2025 / 8:30PM, WDAY.OQ - Q2 2026 Workday Inc Earnings Call

Question: Kirk Materne - Evercore Inc - Analyst : And Zane if I can just ask a quick follow up on that, on the guide for 4Q, obviously there's a little bit of a ramp in -- from 3Q to 4Q. Just remind us kind of what's embedded in that. I know you had some ramp deals that are probably coming back in this year, what should we think about I think Paradox plays into that, just any sort of additional color you can have on just the sequential ramp from 3Q to 4Q would be helpful. Thanks.

Question: Kirk Materne - Evercore Inc - Analyst : Great. Thanks guys. See you rising. Appreciate it.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you so much. Nice to see the backlog growth actually accelerating and the net new piece looking very solid. It's very differentiated. Carl, you mentioned the launch of Workday Government. I think you said as a wholly owned subsidiary. And you have this strong momentum developing with the big agencies. I'm just curious if they requested the formation of the subsidiary structure to be extra secure or is that going to let them go bigger with your AI products and just anything else you're doing architecturally that is differentiating Workday and driving those expansions with the with the DOD and the intelligence of the other agencies.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you very much.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Great. Thank you so much and congrats on a really strong Q2. And congrats on announcing Paradox which many are less familiar with, but I know they have a great reputation. And some seem to suggest it's a pretty substantial business that's growing nicely. Carl, can you talk about what led up to the deal strategically, what the vision is and maybe for Zane, anything that you can share more about the financial profile, because I think it may, if I'm not mistaken be a little bit larger than the recent M&A that you've done. Thank you.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Awesome. Thank you guys.

Question: Brent Thill - Jefferies LLC - Analyst : Thanks Carl. You mentioned AI doubled, but when you think about just a specific number, is there more color you can add around that and maybe just give us a sense of how this is influencing your win rates in these deals that you're seeing going forward.

Question: Brent Thill - Jefferies LLC - Analyst : Right. Quick one for Zane, I think last quarter you called out United Airlines is a big deal. I don't know if there were any larger outsized elephant transactions that you saw this quarter, maybe UVA and the healthcare side. Is there -- was there any other ones that caught your eye or that were notable?

Question: Brent Thill - Jefferies LLC - Analyst : Just to clarify, UVA was a working student and customer before, correct. So they were an existing student related customer. So this is an expansion in the healthcare segment of that business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 21, 2025 / 8:30PM, WDAY.OQ - Q2 2026 Workday Inc Earnings Call

Question: Brent Thill - Jefferies LLC - Analyst : Okay. Thanks for clarifying.

Question: Brent Thill - Jefferies LLC - Analyst : Great, Thanks Zane.

Question: Brad Sills - Bank of America - Analyst : Great. Thank you so much. I wanted to ask, I know it's early with Illuminate but what are you seeing with regards to levels of engagement or any types of interactions with the agentic platform, are there any trends or themes coming in here where you might have surprised you to the upside. Just general commentary would be helpful, I think on just the level of engagement there.

Question: Brad Sills - Bank of America - Analyst : Great to hear Carl. Thanks so much. And one more if I may please just on the commercial business, I know it's been such a key source of growth for you. Would love to get some commentary from you on how that business is trending and any kind of observations on the macro in that segment in particular, please.

Question: Brad Sills - Bank of America - Analyst : Thanks so much, Carl.

Question: Karl Keirstead - UBS AG - Analyst : Thank you. Zane, maybe a couple of smallish ones for you. You mentioned that the July quarter had a boost from elevated early renewals. Was that beyond what you were anticipating? And are you able to roughly maybe size what the bps upside might have been? And then just to be clear around layering in, Paradox, are you able -- maybe just a bracket, what the revenue contribution that's dropping into the sub revs growth is in the fourth quarter from that deal? Thank you so much.

Question: Karl Keirstead - UBS AG - Analyst : Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 21, 2025 / 8:30PM, WDAY.OQ - Q2 2026 Workday Inc Earnings Call

Question: Karl Keirstead - UBS AG - Analyst : Okay. Great. Thank you both. See you in San Francisco.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Hey. Thanks for squeezing me in. Actually, can I stay on Karl question Zane? So if Paradox is $15 million is a kind of good proxy, then kind of underlying you're actually guiding down because you beat in Q2. Is that kind of the message you want to give us that, because in theory, you kind of overachieve by [$9 million]. So $9 million plus $15 million from Paradox would actually be a higher number. Can you just clarify that one more time?

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay, perfect. Okay, thank you. And then on the international -- thank you. And on the international side, you talked about the good momentum in the UK, Germany, it's still kind of nice emerge, they're kind of still emerging markets, in a wait for you, in terms of that you can do better there. Where do you see the reference customer based here in terms of being able to be that kind of big vendor or is it still single deals they're really nice, but like it's not kind of quite mass market yet. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 21, 2025 / 8:30PM, WDAY.OQ - Q2 2026 Workday Inc Earnings Call

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Yeah. Okay, perfect. Thank you.

Question: Derrick Wood - TD Cowen - Analyst : Great, thanks. I don't know, Carl or Zane, I wanted to ask about the partner side of things. You guys have made really impressive progress on partner leverage, but it did for the first time kind of sit steady at 20%, quarter-on-quarter. So is this kind of the right level of mix to expect from here? And is there a tipping point to think about in terms of getting to a certain kind of deal velocity from the channel that can really start to move the needle more on total revenue growth?

Question: Derrick Wood - TD Cowen - Analyst : All right. Thank you.