Workday sold more software and kept more of each dollar.
In the six months ended July 31, revenue rose from $2.3 billion to $2.6 billion, while operating income climbed from $248 million to $313 million. The company’s operating margin reached 11.8%, up from 10.6% a year earlier. That is the straightforward reading: growth is still outrunning the cost base.
The less straightforward part is the jump below operating income. Net income rose from $228 million to $632 million, taking net margin from 9.7% to 23.9%. A large accounting tax benefit did much of the lifting.
Workday recorded a $172 million income tax benefit in the latest six-month period, compared with a $111 million provision in the comparable period. Management attributed it to an internal intellectual-property transfer, not to more software subscriptions being sold.
"The income tax benefit for the three and six months ended July 31, 2026, was primarily attributable to an intra-entity transfer of certain intellectual property rights as part of an internal legal entity restructuring."
Workday, 10-Q, Aug. 27, 2026
That $283 million swing helps explain why earnings grew much faster than revenue. It is part of the reported result, but it does not describe the recurring economics of the application-software business as cleanly as operating income does.
Cash supplies the other half of the picture. Operating cash flow rose only from $1.1 billion to $1.2 billion, while cash on hand fell from $1.3 billion to $661 million. Capital spending more than doubled to $139 million, and accounts receivable grew 17.8% to $1.9 billion, faster than revenue.
Workday says collections improved, but it also lists several uses of cash tied to expansion and operations:
"The improvement was primarily driven by higher cash collections of $723 million mainly due to increased sales, partially offset by increased supplier payments of $196 million to support our continued growth, increased employee-related payments of $191 million, increased capital expenditures of $75 million, higher income tax payments of $73 million, and decreased interest income of $58 million."
Workday, 10-Q, Aug. 27, 2026
The plain-English version is that customers paid more, but the business also spent more to support growth. Workday separately said marketable debt securities were liquidated to fund acquisition activities and share repurchases, which contributed to lower interest income. The cash balance therefore reflects more than operating performance alone.
There is another recurring cost sitting underneath the margin improvement. Stock compensation rose from $391 million to $462 million for the six months, even as diluted shares fell from 270.2 million to 246.3 million. Workday said the compensation increase came primarily from additional grants to new and existing employees.
The company’s annual record gives the current operating improvement some history: revenue reached $9.6 billion in the latest fiscal year, and operating margin had risen to 7.5% after several years of losses. The latest six-month margin is higher still, while the cash figures show the resources required to keep that expansion moving.
That leaves one clean question in the numbers, without requiring a forecast: how much of the profit acceleration survives once the internal tax benefit is no longer doing the work? For the next quarter, the cleanest comparison is operating cash flow against accounts receivable, reported at $1.9 billion.