Workday 2026 Q3 Earnings Strong Revenue Growth and 30.6% Net Income Surge

Workday (WDAY) reported fiscal 2026 Q3 earnings on Nov 26, 2025, delivering revenue and EPS results above expectations. The company’s 12.6% revenue growth to $2.43 billion and 30.1% EPS increase to $0.95 outperformed analyst forecasts. However, mixed investor sentiment followed, as shares fell 9.87% month-to-date despite strong cross-sell momentum and AI-driven growth.

Revenue

Workday’s total revenue rose 12.6% year-over-year to $2.43 billion, with subscription services accounting for $2.24 billion and professional services contributing $188 million. This performance reflects robust demand for its cloud-based solutions, particularly in AI integration and enterprise workflow automation. The company’s 15% subscription revenue growth underscores its ability to retain and expand its customer base through strategic offerings.

Earnings/Net Income

Workday’s EPS surged 30.1% to $0.95 in Q3 2026, compared to $0.73 in Q3 2025. Net income also grew by 30.6% to $252 million, driven by improved operational efficiency and higher subscription revenue. The significant EPS growth underscores the company’s improving profitability and operational efficiency.

Post-Earnings Price Action Review

The strategy of buying WDAY when earnings beat and holding for 30 days resulted in a -4.47% return, significantly underperforming the benchmark return of 84.71%. This approach had a maximum drawdown of 0.00%, a Sharpe ratio of -0.02, and a volatility of 37.36%, indicating a high-risk, low-reward strategy.

CEO Commentary

Carl Eschenbach, CEO, highlighted 15% subscription revenue growth and a 28.5% non-GAAP operating margin. He emphasized AI-driven value propositions, cross-sell momentum, and strategic acquisitions (Sana, Paradox). International expansion and AI innovations like Workday Build and Flex Credits were cited as key differentiators.

Guidance

Zane Rowe, CFO, provided Q4 subscription revenue guidance of $2.355 billion (15% growth) and FY 2026 full-year guidance of $8.828 billion (14% growth). Non-GAAP operating margin is projected at ~29%, with free cash flow of $2.70 billion (23% growth). FY 2027 targets include 13% subscription revenue growth and continued margin expansion.

Additional News

Workday completed the $1.1 billion acquisition of Sana, enhancing AI-powered employee training tools, and acquired Paradox to streamline recruitment processes. CEO Carl Eschenbach reiterated confidence in AI-driven growth, with 1.5% of ARR attributed to AI products. The company also expanded its international footprint in the Middle East and Asia-Pacific regions.