Q1 2027 results set the stage

Workday (WDAY) has just posted Q1 2027 results with revenue of US$2.5 billion and basic EPS of US$0.87, setting up a fresh read on how its earnings story is developing. The company has seen quarterly revenue move from US$2.2 billion in Q1 2026 to US$2.5 billion in Q1 2027, while basic EPS over that span has ranged between roughly US$0.26 and US$0.95, with trailing twelve month EPS at US$3.23 as of Q1 2027. This gives investors a fuller picture of earnings power behind the latest print. With net profit margin over the last year higher than the prior year and earnings growth outpacing revenue growth on the provided figures, this update puts profitability firmly in focus.

See our full analysis for Workday.

With the headline numbers in place, the next step is to see how this earnings profile lines up against the key stories investors often rely on, and where those narratives may now need a rethink.

73.9% earnings growth puts margin story in focus

• Over the last 12 months, net income reached US$847 million on US$9.9b of revenue, with reported earnings growth of 73.9% year over year and net profit margin at 8.6% versus 5.6% the prior year.
• Bulls argue that this kind of earnings momentum can continue, and the recent numbers give them plenty to point to:
  • Earnings have grown about 48.4% per year over the past five years, and the latest trailing EPS of US$3.23 sits well above the individual quarterly prints. This heavily supports the bullish view that profitability is scaling with the business.
  • Forecasts in the bullish narrative expect earnings to reach roughly US$2.6b by about 2029. The combination of an 8.6% trailing margin and 73.9% recent earnings growth is the type of profile bulls use to argue that higher future margins are possible if current trends hold.

Bulls suggest Workday's latest margin and earnings run rate is just the opening act for a bigger profit story, and you can see how that argument is built in the 🐂 Workday Bull Case.

Premium 37.4x P/E versus DCF fair value

• The stock trades on a trailing P/E of 37.4x against a current price of US$128.14, higher than the US software industry average of 28.4x and peer average of 29.3x, while a DCF fair value of US$318.46 in the dataset sits far above the current share price.
• Critics highlight that a higher multiple raises the bar, yet the data also give bulls some counterpoints:
  • Bears focus on the 37.4x P/E as expensive versus peers, which is consistent with their argument that the market already prices in strong growth. However, they also have to reconcile that premium with the DCF fair value that is more than double the current price.
  • Supporters of the bullish case point to the 73.9% trailing earnings growth and 23.3% forecast annual earnings growth to argue that paying more than the 28.4x industry average may still be reasonable if those earnings forecasts prove accurate.

9.7% revenue growth forecasts versus faster EPS

• Revenue is forecast to grow about 9.7% per year, compared with roughly 23.3% annual earnings growth on the same forecast set, and trailing 12 month revenue sits at US$9.9b versus US$8.7b a year earlier.
• Bears worry that the effort needed to support AI products and expansion could squeeze this earnings gap, and the current figures give them both support and pushback:
  • Bears argue that heavy AI and international investment might hold margins back, and slower forecast revenue growth than the wider US market at 11.7% supports the idea that Workday is not purely a top line growth outlier.
  • At the same time, the 8.6% trailing margin and 73.9% earnings growth challenge the bearish view that spending already limits profitability, because so far earnings growth is higher than the 9.7% revenue forecast built into the dataset.

Skeptics point to the gap between revenue and earnings forecasts as a stress test for Workday's spending plans, and the detailed bear case lays out why that gap might narrow in the 🐻 Workday Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Workday on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If the mix of bullish and cautious points feels finely balanced, do not wait around for a consensus to form. Instead, pressure test the positives yourself in the 3 key rewards.

See What Else Is Out There

Workday's premium 37.4x P/E relative to peers and slower 9.7% forecast revenue growth versus the wider US market leave some investors questioning value for money.

If that mix of high expectations and modest growth makes you uneasy, compare it with companies screened for a better balance of quality and price using the 49 high quality undervalued stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.