Workday (Workday (WDAY)) shares jumped Friday after the enterprise software company reported first-quarter results that beat Wall Street estimates and highlighted accelerating adoption of its artificial intelligence products.

AI Push Helps Workday Beat Estimates

Workday reported first-quarter earnings of $2.66 per share, beating analyst estimates of $2.51, according to market data. Revenue rose to $2.54 billion, ahead of the consensus estimate of $2.52 billion.

Adjusted operating income increased to $809 million, resulting in a 31.8% operating margin. Operating cash flow climbed 52% year over year to $696 million, while free cash flow increased 46% to $616 million.

AI Adoption Accelerates Across Enterprise Workflows

The company said AI adoption continued to gain momentum during the quarter as customers increasingly deployed automation tools across enterprise workflows.

Workday introduced several AI-powered products, including a travel agent designed to combine booking, expense management and compliance workflows; an IT service management agent called Sana for onboarding and service requests; and a deployment agent intended to reduce implementation effort by about 30%, with a long-term goal of cutting workloads by as much as 50%.

The company said AI contributed more than 25% of new annual contract value generated from customer expansions. AI-related deals were also more than 50% larger on average.

Workday processed 14 million recruiting workflows during the quarter, up 44% from a year earlier. Contract analysis volume exceeded 1.1 million, increasing 53% sequentially.

More than 4,000 customers are now using Workday AI agents, with integrations expanding across Microsoft Teams, Microsoft Copilot and Google Gemini.

Subscription Revenue And Backlog Growth Remain Strong

Subscription revenue increased 14% year over year to $2.354 billion, while professional services revenue totaled $188 million.

Workday's 12-month subscription revenue backlog rose 15.5% from the prior year to $8.81 billion. The company said it delivered its strongest first-quarter new annual contract value growth in five years, supported by stable demand and increased AI adoption.

Workday reaffirmed fiscal 2027 subscription revenue guidance of $9.925 billion to $9.950 billion, representing expected growth of 12% to 13%. The company also raised its fiscal 2027 non-GAAP operating margin outlook to 30.5%, citing operational efficiency gains and growing AI leverage.

Workday Stock Jumps After Earnings Beat

WDAY Price Action: Workday shares were up 9.40% at $133.30 during premarket trading on Friday, according to market data.