Workday enters this report as a very different stock than the one investors saw last quarter, up nearly 50% since its last print while the S&P 500 has barely budged. That kind of divergence raises the stakes considerably. When a stock rallies this hard on the back of an improving narrative, the market is no longer grading the company against last year's numbers. It is grading the company against the story management told three months ago, and that story now needs fresh evidence to hold up.

Wall Street is looking for non-GAAP EPS of $2.63 on revenue of about $2.63 billion, representing 12% year-over-year growth, a step down from the 15% revenue growth Workday posted in the same quarter last year but still consistent with the low end of what management has guided to for the full year. The earnings whisper of $2.70 sits modestly above consensus, suggesting the buy side expects another beat rather than a dramatic upside surprise. That is a meaningfully different setup than a quarter where expectations were still catching up to reality. Guidance has already been reaffirmed at $9.925 billion to $9.950 billion in fiscal 2027 subscription revenue, implying 12% to 13% growth, and the fact that management held that range steady even after a strong first quarter tells investors the company is not yet ready to let bookings strength flow through to the top-line outlook.

The last call was arguably Workday's most encouraging in years. New annual contract value growth was the best first quarter in five years, agentic AI adoption exploded from roughly 400 customers to over 4,000 in a single quarter, and management raised its full-year operating margin target to 30.5% while signaling a more disciplined approach to headcount. That combination of accelerating bookings and expanding margins is exactly what investors want to see from a maturing software company, but it came with an important caveat. Much of the AI monetization tied to FlexCredits and consumption-based pricing is back-half weighted, with real revenue impact not expected until fiscal 2028. This quarter is an early test of whether that timeline is realistic or whether it continues to slip.

Investors should watch whether CRPO growth, which came in at 15.5% last quarter, holds steady or decelerates, since that metric is the best proxy for whether the ACV strength is translating into durable backlog rather than one-time bookings. Subscription revenue growth of 14% last quarter also serves as a baseline. Any deceleration there, even a modest one, would raise questions about whether the acceleration story is playing out or plateauing. On the other side, continued growth in agentic AI ARR beyond the nearly $500 million level flagged last quarter, along with further gains in the number of organic agents in general availability, would reinforce that Workday's product cycle is still gaining traction rather than losing steam.

Sentiment heading into this report is not overtly bullish, with bearish readings near 37%, which is somewhat notable given how strongly the stock has run. That gap between price performance and sentiment suggests the market has priced in operational improvement without fully pricing in confidence that it will continue. The stock trades well above its 200-day moving average and sits close to its post-earnings high, meaning it is approaching a breakout level rather than testing support. That leaves little room for a merely in-line quarter. The central question is whether Workday can show that its agentic AI momentum and margin discipline are compounding, or whether the reaffirmed guidance was a signal that the good news is already fully reflected in the stock.