AI Fears Have Crushed Workday — Will Tonight’s Earnings Prove the Bears Wrong?

Workday reports after the close with the software tape still acting like it just saw a ghost in the server room, and that matters because the market isn’t simply grading results anymore—it’s grading “AI survivability.” The setup is high stakes : WDAY is down -39% year-to-date, sentiment around apps software remains sour, and several analysts are explicitly framing the group through an AI-risk lens (Jefferies’ downgrades are a good snapshot of how defensive the Street has become). Against that backdrop, Workday’s print is less about whether the company beats a penny or two and more about whether it can demonstrate steady demand, avoid any hint of deceleration, and keep FY27 anchored around the subscription growth framework investors are clinging to.

What analysts are expecting tonight is an “in-line, already-teed-up” quarter. Consensus is roughly $2.30–$2.32 in EPS on about $2.52B of revenue (about 14% YoY). The more important line item will be subscription revenue growth and forward demand signals (especially cRPO), because those are the quickest read-throughs on whether customers are slowing commitments in a world where boards are asking, “Do we need this SaaS contract if AI can automate the workflow?” Several analysts expect subscription revenue growth around the mid-teens for the quarter (TDCowen models 15.5%), and they’re looking for cRPO growth to hold up near the mid-teens as well (TDCowen cited ~16% modeling; management previously guided to 15–16% cRPO growth in Q4).

To give readers a clean benchmark for “deceleration risk,” Q3 is the reference point. In fiscal Q3, Workday delivered total revenue of $2.432B (+13% YoY) driven by subscription revenue of $2.244B (+15% YoY) and professional services of $188M. Demand indicators were solid: 12-month cRPO was $8.21B, total subscription backlog was $25.96B, and gross retention held at 97%. Profitability remained a bright spot with non-GAAP operating margin of 28.5% (non-GAAP operating income of $692M), while operating cash flow was $588M (+45% YoY). If Q4 prints meaningfully below these growth rates—particularly subscription growth and cRPO growth—it will read as a demand cooldown, not “noise.”

Guidance is the other landmine. On the Q3 call, management guided Q4 subscription revenue to $2.355B (15% growth), full-year FY26 subscription revenue to $8.828B (14% growth), and cRPO growth of 15–16% in Q4 (including roughly 0.25 point/around $20M from Sana). They also reiterated the FY27 subscription revenue growth framework of about 13% at the time. The wrinkle is the CEO transition earlier this month: co-founder Aneel Bhusri returned as CEO and the company reaffirmed Q4 and FY26 outlook in the 8-K, but did not explicitly reiterate the FY27 13% subscription growth line in that filing—understandable in context, but it leaves the Street hypersensitive to any “reset.” Tonight, investors will be watching for (1) explicit reaffirmation of the FY27 growth algorithm, or (2) language that sounds like a cautious re-underwrite that pushes confidence further out.

AI will be the headline theme no matter what the numbers say, and Workday has been trying to tell a “we’re building with AI, not being replaced by it” story. In Q3 commentary, management emphasized that more than 75% of core customers were using Workday Illuminate AI and that the platform had driven over 1 billion AI actions year-to-date, with AI products adding more than 1.5 points of ARR growth that quarter. They also highlighted acquisitions meant to accelerate AI product velocity and user experience reimagination (Sana, Paradox, plus mention of Pipedream intent) and positioned Paradox as both an upsell into Workday’s base and a “land” motion even into competitor environments. The market’s pushback is philosophical: even if Workday ships AI features, does AI compress pricing, reduce seat-based expansion, and shorten implementation/services opportunities? That’s why commentary around monetization (attach rates, pricing, packaging), “revenue per seat” dynamics, and any evidence that AI is increasing ACV rather than just defending renewals will matter.

So what are the key things to watch tonight? First, subscription revenue growth versus the Q4 guide ($2.355B) and whether management frames any softness as macro, execution, or buyer behavior. Second, cRPO growth (guided 15–16%): any dip below that range will be taken as a forward-demand signal and will likely overwhelm an EPS beat. Third, margins and operating discipline: Workday’s restructuring actions and efficiency push can support the floor, but if investors suspect cost cuts are masking demand issues, it won’t help. Fourth, FY27 commentary: even a “we continue to expect approximately 13% subscription growth” would be a meaningful de-risking headline given the current tape. Fifth, AI narrative specifics: look for concrete metrics (AI ARR contribution, attach rates, customer case studies, pipeline signals) rather than broad “we’re excited” language—because the market has become allergic to vibes.

WDAY’s report is a referendum on whether a large system-of-record SaaS platform can show steady demand and monetize AI without triggering a growth reset. If Q4 looks consistent with Q3’s 15% subscription growth and 15–16% cRPO growth, and if FY27 stays intact, the stock has a path to stabilize in a hostile sector. If there’s any whiff of deceleration or a guidance wobble, the market will treat it as “proof” that AI fear is turning into budget reality—fair or not.