AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Retention outcomes, replacement-cycle friction and implementation requirements support strong switching costs in core workflows. They do not establish exclusivity or an advantage across every application.
durability · 3/4 · Strong fiscal 2024 renewals and approximately 97% retention in July 2026 demonstrate persistence across periods. Replacement friction supports continued relevance, with no basis for exceptional long-term certainty.
customer dependency · 3/4 · Reported recurring-revenue retention directly demonstrates repeat demand. Training, customization and infrequent financial-system opportunities indirectly support operational dependency; switching costs are not quantified.
erosion resilience · 2/4 · Retention remains strong despite competitive and purchasing pressure. Actual cancellations, security exposure and litigation temper resilience; AI substitution is a potential threat rather than demonstrated core displacement.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Experienced concession demands establish bargaining pressure, but neither granted concessions nor realized comparable price changes are disclosed. Retention excludes price adjustments and cannot resolve pricing realization.
retention · 3/4 · Approximately 97% gross revenue retention and earlier strong renewals demonstrate retained demand. This is revenue retention, not a fabricated customer-renewal rate or proof of acceptance of higher prices.
margin resilience · 3/4 · GAAP operating margins improved across fiscal 2024–2026 and in the latest reported quarter despite concession demands. Expense moderation and revenue outpacing headcount contributed, so resilience is demonstrated but cannot be attributed to pricing alone.
contractual freedom · 2/4 · Noncancelable subscription commitments provide protection during contracted terms. Customers have no renewal obligation, and service credits constrain terms. The passages do not establish unilateral repricing or renewal-escalation rights.
Predictability—
Missing exact annual revenue, free cash flow or FCF margin; operating cash flow and capex must both be reported for all five years.
Financial strength63
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 98.92
- netDebtEbitGrade
- 58.78
- interestCoverageGrade
- 48.41
- currentRatioGrade
- 45.73
- Debt / FCF (x)
- 1.08
- Net debt / operating income (x)
- 2.06
- Interest coverage (x)
- 6.32
- Current ratio (x)
- 1.32
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- 1.33
- 3-year average SBC / revenue (%)
- 18.17
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Positive free cash flow and falling outstanding shares show cash generation and net share reduction. However, first-half repurchases of $2.907 billion exceeded $1.076 billion of free cash flow, compensation remains substantial, and obligations and acquisition returns require consideration. Repurchases alone do not establish value creation.
incentive alignment · 2/4 · Implemented three-year performance awards and an adopted clawback support alignment. Only 25% of annual executive equity was performance-based, substantial compensation is excluded from incentive profitability metrics, and concentrated voting control limits accountability. Ownership magnitudes and completed performance-award outcomes are unavailable.
execution · 3/4 · Revenue growth, high retention, improved operating results, positive free cash flow and the disclosed service-performance record demonstrate strong execution. These are company-level outcomes, not proof that the returning CEO caused them or that AI monetization will succeed.
governance · 2/4 · A lead independent director, independent Audit Committee and adopted recoupment policy provide substantive safeguards. Concentrated dual-class voting control materially restricts outside shareholders' influence, producing a mixed assessment.
Evidence
Gross Revenue Retention Rate Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 97% as of July 31, 2026.
MD&A / Gross Revenue Retention Rate · Filed 27/08/2026
The metric takes into account recurring revenues lost to product or customer churn but does not account for additional revenue earned from add-ons or net expansions, which include volume and price adjustments.
MD&A / retention metric exclusions · Filed 27/08/2026
The increase in subscription services revenues was primarily due to an increased number of new customers, expansion of our product offerings sold to existing customers, and strong customer renewals, with gross and net retention rates over 95% and over 100%, respectively.
MD&A / fiscal 2024 subscription growth and retention · Filed 08/03/2024
Therefore, if we lose a current customer to a competitor or fail to secure a prospective customer for financial management solutions, there is a long duration before we will be able to approach that customer again with our sales efforts for such solutions.
Risk Factors / financial-management sales opportunities · Filed 27/08/2026
We also offer extensive customer training opportunities and a professional services ecosystem of experienced Workday consultants and system integrators to help customers achieve a timely adoption of Workday and enable them to enhance the value of our applications over the life of their subscription.
Business / customer training and implementation ecosystem · Filed 06/03/2026
Workday offers a suite of cloud-based enterprise solutions that address the evolving needs of the C-suite on a platform designed to be open, extensible, and configurable, allowing integration with other applications and the ability for customers and our partners to build custom applications.
Business / platform integration and customization · Filed 06/03/2026
Our primary competitors are Oracle and SAP, well-established providers of financial management and HCM applications, which have long-standing relationships with customers and partners.
Business / primary competitors and incumbent relationships · Filed 06/03/2026
These vendors include, without limitation: Anaplan, Inc., ADP, Coupa Software Inc., Dayforce, Inc., Microsoft, ServiceNow, Inc., and UKG Inc.
Business / additional named competitors · Filed 06/03/2026
The markets for enterprise cloud applications, including AI-powered solutions, are highly competitive, with relatively low barriers to entry for some applications or services.
Risk Factors / competition and entry barriers · Filed 06/03/2026
We may also face greater competition from non-specialist solutions relying on generic large language models (“LLMs”), generative AI, and general-purpose agents to address a broad range of business needs.
Business / potential general-purpose AI competition · Filed 06/03/2026
Our customers have no obligation to renew their subscriptions for our applications after the expiration of either the initial or renewed subscription period and it is difficult to predict attrition rates given our varied customer base and the number of multi-year subscription contracts.
Risk Factors / subscription expiration and renewal obligations · Filed 27/08/2026
Acquisitions of our customers by other companies have led, and could continue to lead, to cancellation of our contracts with those customers, thereby reducing the number of our existing and potential customers.
Risk Factors / realized cancellations following customer acquisitions · Filed 27/08/2026
In connection with recent macroeconomic events, we have experienced and may continue to experience delays in purchasing decisions from existing and prospective customers, increased demand for price concessions and delayed payment terms, and a reduction in customer demand.
Risk Factors / experienced purchasing delays and concession demands · Filed 06/03/2026
We are currently defending against a lawsuit alleging that certain of our AI-related products and services enable discrimination, and although we believe that such claims lack merit, and the majority of the claims have been dismissed, legal proceedings can be lengthy, expensive, and disruptive to our operations and customers (particularly where, as in the present litigation, the plaintiff may seek to also litigate against certain of Workday’s customers).
Risk Factors / AI discrimination litigation · Filed 27/08/2026
For example, in August 2025, we were targeted as part of a social engineering campaign against many large organizations, resulting in unauthorized access to some of our internal systems including some commonly available business contact information in our third-party customer relationship management platform.
Risk Factors / August 2025 unauthorized internal-system access · Filed 22/05/2026
The markets and monetization strategies for certain of our offerings, including our agentic AI solutions and Workday Data Cloud, remain relatively new and uncertain and as a result, our expansion into such offerings, and related investments, may present additional risks and challenges.
Risk Factors / uncertain AI and Data Cloud monetization · Filed 27/08/2026
We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to the remaining term of contracted noncancelable subscription agreements, which are not reflected on the Condensed Consolidated Balance Sheets, and, if necessary, our borrowing capacity under our 2022 Credit Agreement that provides for $1.0 billion of unsecured financing, are sufficient to meet our working capital, capital expenditure, share repurchase, and debt repayment needs over the next 12 months and beyond.
MD&A / liquidity and contracted noncancelable subscriptions · Filed 27/08/2026
In our standard agreements with customers, we commit to defined levels of service availability and performance and, under certain circumstances, permit customers to receive credits in the event that we fail to meet those levels.
Notes / contractual service levels and credits · Filed 06/03/2026
To date, we have not experienced any significant failures to meet defined levels of availability and performance and, as a result, we have not accrued any liabilities related to these agreements on the consolidated financial statements.
Notes / demonstrated service availability and performance · Filed 06/03/2026
Year Ended January 31, 2026 2025 2024 Operating income $ 721 $ 415 $ 183 Share-based compensation expense (1) 1,570 1,511 1,416 Employer payroll tax-related items on employee stock transactions 62 76 66 Amortization of acquisition-related intangible assets 106 79 75 Acquisition-related costs 62 21 1 Restructuring costs 303 84 0 Non-GAAP operating income $ 2,824 $ 2,186 $ 1,741 Operating margin 7.5 % 4.9 % 2.5 % Share-based compensation expense (1) 16.4 % 17.9 % 19.5 % Employer payroll tax-related items on employee stock transactions 0.7 % 0.9 % 0.9 % Amortization of acquisition-related intangible assets 1.1 % 0.9 % 1.1 % Acquisition-related costs 0.6 % 0.2 % 0.0 % Restructuring costs 3.3 % 1.1 % 0.0 % Non-GAAP operating margin 29.6 % 25.9 % 24.0 % (1)Share-based compensation expense in the GAAP to non-GAAP reconciliation tables above excludes share-based compensation associated with restructuring activities of $56 million and $8 million for fiscal 2026 and 2025, respectively.
MD&A / fiscal 2024–2026 operating results reconciliation · Filed 06/03/2026
Operating Income and Operating Margin GAAP operating income was $313 million, or 11.8% of revenues, for the three months ended July 31, 2026, compared to the prior year GAAP operating income of $248 million, or 10.6% of revenues.
MD&A / second-quarter GAAP operating results · Filed 27/08/2026
The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.
MD&A / drivers of second-quarter operating improvement · Filed 27/08/2026
Reconciliation of our GAAP net cash provided by operating activities to non-GAAP free cash flows is as follows (in millions): Six Months Ended July 31, 2026 2025 Net cash provided by operating activities $ 1,215 $ 1,073 Less: Capital expenditures (139) (64) Free cash flows $ 1,076 $ 1,009 Share Repurchase Programs We repurchase shares of our Class A common stock under share repurchase programs authorized by our Board of Directors.
MD&A / operating cash flow, capital expenditures and free cash flow · Filed 27/08/2026
Share repurchase programs authorized by our Board of Directors that were in effect during the three and six months ended July 31, 2026, and 2025, were as follows (in millions): Authorization Date Amount Authorized Authorization Completion Date August 2024 1,000 Q3 fiscal 2026 May 2025 1,000 Q4 fiscal 2026 September 2025 4,000 Q2 fiscal 2027 The table below sets forth information regarding repurchase of shares under our share repurchase programs (in millions, except number of shares which are reflected in thousands, and per share data): Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Total number of shares repurchased 9,783 1,216 21,809 2,506 Average price paid per share (1) $ 133.59 $ 245.57 $ 133.29 $ 236.11 Amount repurchased (1) $ 1,307 $ 299 $ 2,907 $ 592 (1)Amounts exclude excise tax and commissions.
Note 13 / completed share repurchases · Filed 27/08/2026
Three Months Ended July 31, Six Months Ended July 31, 2026 2025 2026 2025 Operating income $ 313 $ 248 $ 651 $ 287 Share-based compensation expense (1) 462 391 871 809 Employer payroll tax-related items on employee stock transactions 13 12 32 39 Amortization of acquisition-related intangible assets 34 21 70 42 Acquisition-related costs 2 7 9 14 Restructuring costs 0 1 0 167 Non-GAAP operating income $ 824 $ 680 $ 1,633 $ 1,358 Operating margin 11.8 % 10.6 % 12.5 % 6.3 % Share-based compensation expense (1) 17.4 % 16.7 % 16.8 % 17.6 % Employer payroll tax-related items on employee stock transactions 0.5 % 0.5 % 0.6 % 0.8 % Amortization of acquisition-related intangible assets 1.3 % 0.9 % 1.4 % 0.9 % Acquisition-related costs 0.1 % 0.3 % 0.2 % 0.3 % Restructuring costs 0.0 % 0.0 % 0.0 % 3.7 % Non-GAAP operating margin 31.1 % 29.0 % 31.5 % 29.6 % (1)Share-based compensation expense in the GAAP to non-GAAP reconciliation tables above excludes share-based compensation associated with restructuring activities of $42 million for the six months ended July 31, 2025.
MD&A / share compensation and operating reconciliation · Filed 27/08/2026
80 Table of Contents Note 14. Stockholders’ Equity Common Stock As of January 31, 2026, there were 212 million shares of Class A common stock, and 47 million shares of Class B common stock outstanding.
Note 14 / January 2026 shares outstanding · Filed 06/03/2026
Note 13. Stockholders’ Equity Common Stock As of July 31, 2026, there were 196 million shares of Class A common stock and 45 million shares of Class B common stock outstanding.
Note 13 / July 2026 shares outstanding · Filed 27/08/2026
70 | workday.com TABLE OF CONTENTS EXECUTIVE COMPENSATION Fiscal 2026 Pay Component Fiscal 2026 Enhancements Rationale and Value to Stockholders Fixed Pay Base Salary Adjustments for select executives as part of multi-year strategy to align cash compensation with market • Provides market-competitive cash compensation based on experience, skills, and responsibilities as well as alignment to internal pay equity At-risk or variable pay Performance-Based Cash Incentive Added adjusted non-GAAP operating margin as a financial metric • Encourages achievement of defined, near-term corporate performance objectives in alignment with Workday’s long term strategic growth objectives • Financial and non-financial metrics help drive efficient growth and stockholder value creation • Adjusted non-GAAP operating margin metric motivates more efficient performance and execution across the company, counterbalancing topline growth • Responds to stockholder feedback received in fiscal 2025 to include a profitability metric Restricted Stock Units Transitioned away from strictly time-based awards and apportioned 75% of executives’ annual equity award as RSUs • Incentivizes long-term stockholder value creation and aligns to stockholder interests • Helps attract and retain key executive talent Performance Restricted Stock Units Introduced three-year PSUs equal to 25% of executives’ annual grant subject to adjusted subscription revenues and adjusted non-GAAP operating margin performance metrics • Responds to stockholder feedback received in fiscal 2025 to incorporate performance-based equity and aligns with our pay for performance philosophy • No shares vest or are released until after the end of the full three-year performance period, which aligns our NEOs with long-term performance and promotes long-term retention • Award design aligns with the company’s plans to drive durable growth while expanding operating margins The initial compensation arrangements with our executive officers were generally the result of arm’s-length negotiations between us and each individual executive officer at the time of his or her hire, appointment, or promotion.
Executive Compensation / implemented fiscal 2026 compensation structure · Filed 05/05/2026
Our Board has adopted an Executive Officer Recoupment Policy providing that it will require reimbursement or forfeiture of all or a portion of any incentive compensation that was paid to an executive officer based on financial results if a restatement of those results is required and may require the forfeiture, recovery, or reimbursement of all incentive compensation and time-based equity from a Section 16 officer or certain other executive officers in the event of misconduct.
Executive Compensation / adopted recoupment policy · Filed 05/05/2026
The dual class structure of our common stock has the effect of concentrating voting control with our Co-Founders, as well as with other executive officers, directors, and affiliates, which limits or precludes the ability of non-affiliates to influence corporate matters.
Risk Factors / concentrated voting control · Filed 27/08/2026
Lead Independent Director Mr. Hawkins serves as Vice Chair of the Board and as Lead Independent Director of the Board of Directors.
Corporate Governance / lead independent director · Filed 05/05/2026
Our Audit Committee is comprised entirely of independent directors who regularly evaluate cybersecurity risks.
Cybersecurity / independent Audit Committee oversight · Filed 06/03/2026
In fiscal 2026, Workday delivered $9.552 billion in total revenues, up 13.1% year over year, and $8.833 billion in subscription revenues, up 14.5%, while expanding non-GAAP operating margin to 29.6%.
Stockholder letter / fiscal 2026 revenue achievements · Filed 05/05/2026
20 Table of Contents Employee Equity Plans In June 2026, our stockholders approved the amendment and restatement of the 2022 Equity Incentive Plan (the “A&R 2022 Plan”), which increased the total number of shares of common stock reserved for issuance by 20 million.
Note 13 / June 2026 approved equity-plan reserve increase · Filed 27/08/2026
Payments Due by Period Total Short-term Long-term Reference Senior Notes (1) $ 3,458 $ 110 $ 3,348 Note 11 Third-party hosted infrastructure platform obligations 1,056 298 758 Note 13 Operating leases 1,065 146 919 Note 12 Other purchase obligations 510 163 347 Note 13 Total $ 6,089 $ 717 $ 5,372 (1)Consists of principal and interest payments on the Senior Notes.
MD&A / material contractual obligations · Filed 06/03/2026
