Workday(US:WDAY)2025-11-25 22:30Financial Data and Key Metrics Changes - Workday reported a 15% growth in subscription revenue, totaling $2.244 billion for Q3 2026, with total revenue reaching $2.432 billion, reflecting a 13% increase [17] - Non-GAAP operating margin stood at 28.5%, with non-GAAP operating income of $692 million [18] - The 12-month subscription revenue backlog (CRPO) increased by 17.6% to $8.21 billion, while total subscription revenue backlog rose 17% to $25.96 billion [18] Business Line Data and Key Metrics Changes - The Human Capital Management (HCM) segment saw new customer additions, including Sunnybrook Health Sciences Center and Fuji Electric, contributing to strong full-suite adoption [6] - More than 75% of core customers are utilizing Workday Illuminate AI, with over 1 billion AI actions executed on the platform this year [7] - AI products contributed over 1.5 points to Annual Recurring Revenue (ARR) growth in Q3 [8] Market Data and Key Metrics Changes - Healthcare became the sixth industry to exceed $1 billion in ARR, with significant wins including Arden Health and Northeast Georgia Medical Center [9] - International revenue totaled $607 million, up 13%, with strong performances across EMEA, APAC, and Japan [17][15] - The U.S. revenue for Q3 was $1.825 billion, reflecting a 12% increase [17] Company Strategy and Development Direction - Workday aims to enhance its AI capabilities through strategic acquisitions, including the recent acquisition of Sana, which will improve user experience and AI integration [12] - The company is focused on expanding into new markets, including the Middle East and India, while also investing in medium enterprises [18] - Workday's vision is to unify HR and finance processes on a single platform, leveraging AI to drive better decision-making and operational efficiency [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business momentum and the ability to achieve financial targets, with a subscription revenue growth forecast of approximately 14% for FY26 [20] - The company anticipates continued growth in AI-driven solutions, with expectations for a subscription revenue CAGR of 12%-15% through FY28 [22] - Management acknowledged some impacts from fiscal funding in the public sector but emphasized strong execution across the portfolio [20] Other Important Information - Workday's operating cash flow for Q3 was $588 million, a 45% increase, and the company ended the quarter with $6.8 billion in cash and marketable securities [18] - The company plans to repurchase an additional $3.6 billion in shares, totaling $5 billion in buybacks [19] Q&A Session Summary Question: Feedback on venture-backed vibe-coding startups - Management noted that while there are challenges with operationalizing these solutions, customers are returning to trusted vendors like Workday for reliable data and security [27][28] Question: Mechanisms to maintain ACV with customers facing layoffs - Management highlighted that customer headcount is still growing year-over-year, and they are focused on selling additional solutions to existing customers to offset any potential impacts from layoffs [30] Question: Early success with AI solutions - Management reported that AI solutions are contributing significantly to ARR growth, with 75% of new sales including AI products [32][33] Question: Feedback on Paradox and Sana acquisitions - Early feedback from customers has been very positive, indicating strong demand for both AI solutions and the integration of these acquisitions into the Workday ecosystem [36][38] Question: International growth performance - Management expressed satisfaction with international performance across EMEA, APAC, and Japan, attributing success to product localization and strong partner networks [60][61]