Workday Shares Drop Despite Q3 Beat

Core Insights - Workday reported stronger fiscal third-quarter results with a revenue increase of 12.6% to $2.432 billion, driven by subscription revenue growth of 14.6% year over year [1] - Despite positive earnings of $2.32 per share, which exceeded analyst expectations of $2.17, shares fell more than 9% due to concerns over costs associated with AI expansion [1] - The company raised its full-year subscription guidance, anticipating fiscal 2026 subscription revenue of $8.828 billion, representing a 14% growth [2] Financial Performance - Revenue for the third quarter reached $2.432 billion, with subscription revenue at $2.244 billion [1] - Earnings per share were reported at $2.32, surpassing the expected $2.17 [1] - For the quarter ending January 2026, Workday guided to subscription revenue of $2.355 billion, an increase of 15.5% [3] Growth Initiatives - Workday cited broad customer demand and accelerating adoption of AI-powered finance and HR tools as key drivers of growth [2] - CFO Zane Rowe indicated that the Q3 performance reflected progress across multiple growth initiatives [2] - The company projects a non-GAAP operating margin of roughly 29% for fiscal 2026 [2] and at least 28.5% for the quarter ending January 2026 [3]