Workday(US:WDAY)2025-11-25 22:32Financial Data and Key Metrics Changes - Workday reported Q3 subscription revenue of $2.244 billion, reflecting a 15% increase year-over-year. Total revenue reached $2.432 billion, up 13% [19][20] - The 12-month subscription revenue backlog (CRPO) was $8.21 billion, increasing by 17.6% [20] - Non-GAAP operating income for Q3 was $692 million, with a non-GAAP operating margin of 28.5% [20] - Operating cash flow for Q3 was $588 million, representing a growth of 45% [20] - The company ended the quarter with $6.8 billion in cash and marketable securities [22] Business Line Data and Key Metrics Changes - In Human Capital Management (HCM), Workday added new customers including Sunnybrook Health Sciences Center and Magnum Ice Cream Company, with strong full-suite adoption [8] - The company saw that half of all net new global deals in Q3 included both HR and finance solutions [8] - Workday Go contributed to strong new customer growth, particularly in the medium enterprise segment [8] Market Data and Key Metrics Changes - U.S. revenue in Q3 totaled $1.825 billion, up 12%, while international revenue was $607 million, up 13% [19] - Healthcare became the sixth industry to exceed $1 billion in ARR, with significant wins in the sector [10] - The company reported strong performance across EMEA, APAC, and Japan, with notable wins in these regions [16] Company Strategy and Development Direction - Workday is focused on integrating AI into its platform, with over 75% of core customers using Workday Illuminate AI [9] - The company aims to make Workday the "new front door to work" by combining enterprise knowledge, AI agents, and HR and finance processes [14] - Workday is expanding its market presence, including new initiatives in the Middle East and India [92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum and the strength of its business model, particularly in the face of potential economic challenges [30] - The company anticipates a subscription revenue growth of approximately 14% for FY26, with a target of 12%-15% CAGR through FY28 [24][25] - Management highlighted the importance of data quality, integrity, and security as key factors for enterprise adoption of AI solutions [32] Other Important Information - Workday announced the acquisition of Sana, an AI-native platform, and Pipedream, a low-code integration platform, to enhance its AI capabilities [15] - The company is accelerating its share repurchase program, with plans to repurchase an additional $3.6 billion through the end of FY27 [21] Q&A Session Summary Question: Feedback on venture-backed vibe-coding startups - Management noted that while some startups are experiencing a slowdown, Workday's established infrastructure and data quality continue to attract customers [30][32] Question: Mechanisms to maintain ACV growth amid layoffs - Management explained that they focus on selling additional solutions to existing customers and have protections in place for headcount reductions [36][39] Question: Early success with AI solutions - Management reported that AI solutions contributed 1.5 points of growth to ARR, with strong demand for AI products among new and existing customers [43][44] Question: Feedback on Paradox and Sana acquisitions - Management indicated strong early interest in both acquisitions, with Paradox already generating sales shortly after the acquisition [50][52] Question: Go-to-market strategy for Paradox - Management confirmed that Paradox can be sold independently of Workday's platform, allowing for broader market penetration [58] Question: Confidence in DIA go-live milestones - Management expressed high confidence in meeting DIA contract requirements, which are expected to contribute $15 million in Q4 [68][69] Question: International growth rates - Management acknowledged that international growth rates are comparable to U.S. growth, with a strong pipeline building in international markets [99]