Shares of Workday surged 7.4% in after-hours trading to $130.85 after the enterprise software company delivered a fiscal Q1 that cleared analyst expectations on nearly every line. The beat comes at a critical juncture: co-founder Aneel Bhusri has returned as CEO to steer a company whose stock has been cut in half from its 52-week high, and he's staking the recovery on AI-powered tools that automate HR and finance tasks for large businesses.

The Numbers Came in Ahead of What Wall Street Expected

Workday reported total revenues of $2.542 billion, up 13.5% year-over-year, with subscription revenues of $2.354 billion, up 14.3%.

Analysts had anticipated EPS of $2.52 and revenue of $2.52 billion.

The company delivered non-GAAP EPS of $2.66 — a clean beat on both counts. For shareholders, this signals Workday can still grow at a double-digit clip even as corporate IT budgets face scrutiny.

The Backlog Tells a Stronger Story Than the Headline

The 12-month subscription backlog — essentially revenue already contracted but not yet recognized — hit $8.806 billion, up 15.5% from a year ago. That growth rate outpaces current revenue growth, suggesting deal momentum is accelerating. Total subscription backlog reached $27.3 billion, up 10.9%.

Margins Are Expanding, and the Company Raised Its Profit Outlook

Non-GAAP operating margin reached 31.8% , up from 30.2% a year earlier.

Management reiterated full-year subscription revenue guidance of $9.925–$9.950 billion and raised its non-GAAP operating margin target to 30.5%. The guidance implies 12–13% subscription growth for the year — slower than Q1's pace, which explains why the stock still trades far below its highs.

The AI Bet Is Bhusri's Biggest Gamble — and Possibly His Best Card

In Q1, Workday supported 14 million hiring processes with its recruiting AI tool, up 44% year-over-year.

Gartner predicts 40% of enterprise apps will integrate task-specific AI agents by end of 2026, up from under 5% in 2025. Bhusri is betting that AI features will convince companies still running older systems to finally switch. He acknowledged high market share in HR means "the accelerating growth will come from the agents we build on top of Workday."

The tension is clear: Q1 execution was excellent, but full-year guidance implies deceleration. Whether Bhusri's AI pivot can close that gap will determine if this after-hours pop is a dead-cat bounce or the start of a recovery.