Workday Reports AI Revenue Growth Amid Workforce Reductions

Workday reported that its AI annual recurring revenue is approaching $600 million, with roughly 900 customers purchasing agents over the last year. This adoption has resulted in a 12% average annual recurring revenue uplift. During its Rising 2026 conference and Analyst Day, the company maintained its fiscal 2028 outlook, projecting subscription growth of approximately 11% and a non-GAAP operating margin exceeding 33%.

Alongside these financial updates, the company announced a 2.5% workforce reduction primarily affecting product and technology teams. Workday is also reducing its leased office spaces as part of these cost-cutting measures.

Financial analysts offered mixed reactions to the company's trajectory. Mizuho reiterated an Outperform rating and a $210 price target, citing Workday's proprietary data as a strong foundation for AI monetization, though it noted investors seek more visibility on revenue reacceleration. Needham maintained a Buy rating with a $230 target, while Jefferies lowered its target to $210 due to concerns regarding slowing revenue and backlog growth. Other firms, including Cantor Fitzgerald and Citizenship, reiterated Overweight and Neutral ratings respectively.