Workday Silent on Silver Lake Rumors, Announces $4B Buyback Amid Weak Guidance

Workday, Inc. (WDAY) remained silent on speculation of a potential takeover by private equity firm Silver Lake during its second-quarter earnings call on August 27, a move that came as the company announced a new $4 billion share repurchase program but issued a disappointing growth outlook.

Earnings Beat Overshadowed by Muted Outlook

For its second quarter of fiscal year 2027, Workday reported results that topped analyst estimates. However, the company's forward-looking guidance for key growth metrics underwhelmed investors, signaling a deceleration from its recent pace.

Key financial figures reported include:

• Non-GAAP EPS: $2.75, beating the consensus estimate of $2.61.
• Subscription Revenue: $2.471 billion, an increase of 13.9% year-over-year and slightly ahead of the $2.456 billion estimate.
• Q3 cRPO Guidance: Growth of 11% to 12%, which fell short of the 14% expected by analysts.
• FY2028 Subscription Growth Guidance: Forecasted at approximately 11%.

Buyback and Silence Fuel Takeover Talk

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Workday's management did not publicly address the Silver Lake acquisition rumors during the call, which is standard corporate practice when deal discussions may be active. The lack of comment, coupled with a significant new capital return plan, has drawn scrutiny from market observers.

The company announced it had completed its previous $5 billion buyback program six months early and that its board approved a new, open-ended $4 billion repurchase authorization. This could suggest that either takeover talks are progressing, making public comment legally restricted, or that the board believes its stock is undervalued, especially given the slowing growth forecast.

AI Momentum a Bright Spot

While core subscription growth is slowing, Workday highlighted significant momentum in its artificial intelligence offerings, which have become a major contributor to new business. The company reported that AI SKU Annual Recurring Revenue (ARR) has reached approximately $600 million, up over 200% year-over-year.

Furthermore, AI products accounted for over 25% of all new Annual Contract Value (ACV) closed in the second quarter. According to the company, more than 5,500 customers are now using at least one of its organic AI agents. This growing AI business presents a key long-term value driver, even as near-term growth in its core segments moderates.