Episode Details

Workday (WDAY) Q2 FY2027 — Shares gapped down, reversed, and closed up 5.8% at $204.72 the next session. AI drove more than 25% of new ACV. Total subscription backlog grew 8.0%, slower than the 13.9% subscription revenue it feeds. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$191 vs ~$205 today. KEY METRICS: - Revenue $2,649M, +12.8% YoY; subscription revenue $2,471M, +13.9% - Total subscription backlog $27.40B, +8.0%; 12-month backlog $9.03B, +14.2% - Backlog beyond 12 months fell to $18.37B from $18.49B in April - Non-GAAP operating margin 31.1% vs 29.0%; non-GAAP EPS $2.75 vs $2.61 consensus - GAAP EPS $2.57 includes $1.52 of one-off IP-transfer tax benefit - Free cash flow $460M, -21.8% YoY; H1 free cash flow $1.08B, +6.6% - Non-GAAP EPS +24.4% but non-GAAP net income +13.2%; diluted shares -8.8% - H1 buyback $2.92B = 2.06x trailing free cash flow; net cash down to $414M - FY27 subscription guide $9.940-9.950B; the $9.950B ceiling is unchanged since May - FY27 non-GAAP operating margin guide raised 30.5% to 31.0% What to watch: total subscription backlog growth back above 10% for two straight quarters would break our thesis Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.