Workday Q2 FY2027: $305M Tax Benefit More Than Doubles Net Income
Workday's net income jumped 177% to $632 million, but almost none of that came from selling more software. A $305 million income tax benefit — the result of moving intellectual property between its own subsidiaries — did the heavy lifting. Strip it out and the quarter looks like what it actually is: revenue up 13% to $2.65 billion, operating income up 26% to $313 million, and an operating margin that gained 1.21 percentage points. That margin gain matters, but it is a marked slowdown from the prior year's 5.2-point (524 bps) leap, and it arrived alongside a $2.9 billion buyback that cut net cash — cash and marketable securities less the $2.99 billion carrying value of debt — from $2.45 billion to roughly $414 million. The prior programs were fully exhausted as of July 31, and in August the board authorized another $4.0 billion of repurchases.
1. Balance Sheet
1-1. Key Asset Items
| Item | Jan 31, 2026 ($M) | Jul 31, 2026 ($M) | Change |
|---|---|---|---|
| Cash and cash equivalents | 1,501 | 661 | -56.0% |
| Marketable securities | 3,942 | 2,742 | -30.4% |
| Trade and other receivables, net | 2,332 | 1,895 | -18.7% |
| Property and equipment, net | 1,093 | 1,126 | +3.0% |
| Acquisition-related intangibles, net | 681 | 611 | -10.3% |
| Goodwill | 5,229 | 5,227 | -0.0% |
| Deferred tax assets | 829 | 1,129 | +36.2% |
| Total assets | 18,074 | 15,857 | -12.3% |
The balance sheet shrank by $2.2 billion in six months. This was a deliberate choice, not a business problem.
Cash and marketable securities together fell from $5,443 million to $3,403 million, a 37.5% decline. The company spent $2,931 million buying back its own stock over the same period. That single line more than fully accounts for the drawdown; operating cash flows of roughly $884 million provided a partial offset.
