Workday just gave Wall Street something it rarely gets from enterprise software companies these days: a genuine positive surprise. The human capital and finance software maker posted first-quarter fiscal 2027 results that topped expectations, then sweetened the deal by raising its full-year profitability forecast.

Shares surged as much as 14% in after-hours trading on May 21 following the earnings release.

The numbers behind the pop

Workday reported Q1 subscription revenue of $2.455 billion, representing a 13% increase year-over-year.

Workday raised its fiscal 2027 non-GAAP operating margin guidance to 30.5%, up from its previous target of 30%.

The company held steady on its full-year subscription revenue guidance of $9.925 billion to $9.950 billion, implying 12% to 13% growth for fiscal 2027.

AI is doing the heavy lifting

Workday pointed to AI-driven automation as a key driver of both operational efficiency and product value. Over 4,000 clients are currently using Workday’s AI agent features, a figure that signals real deployment rather than the vaporware demos that plague much of the enterprise AI landscape.

Context and competitive landscape

Workday operates in the enterprise resource planning and human capital management space, competing with giants like SAP, Oracle, and an increasingly aggressive Microsoft.

What this means for investors

The key metric to watch going forward is whether Workday can continue expanding margins without sacrificing growth. Workday’s maintained rather than raised revenue guidance could reflect some caution about the broader demand environment.