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] - Non-GAAP operating margin for Q3 was 28.5%, with non-GAAP operating income of $692 million [20] - The 12-month subscription revenue backlog (CRPO) was $8.21 billion, increasing by 17.6% [19] - Total subscription revenue backlog at the end of the quarter was $25.96 billion, up 17% [20] - Operating cash flow for Q3 was $588 million, representing a growth of 45% [20] Business Line Data and Key Metrics Changes - In Human Capital Management (HCM), Workday added new customers including Sunnybrook Health Sciences Center and Fuji Electric, with strong full-suite adoption [8] - AI products contributed over 1.5 points of Annual Recurring Revenue (ARR) growth this quarter, with more than 75% of core customers using Workday Illuminate AI [9] - Workday Go is driving strong new customer growth, particularly in the medium enterprise segment, with a major expansion announced [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 saw strong performance across EMEA, APAC, and Japan, with notable wins in these regions [16] Company Strategy and Development Direction - Workday aims to unify HR and Finance on one intelligent platform, leveraging AI to help organizations adapt quickly and make better decisions [7] - The company is focused on increasing AI talent and entering new markets, including the Middle East and India [20] - Workday is committed to driving efficiencies while scaling the business globally, with a focus on targeted investments for long-term growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of the business heading into Q4 and FY27, citing strong customer engagement and ROI from Workday solutions [30] - The company is optimistic about AI-driven growth investments and expects to achieve a subscription revenue CAGR of 12%-15% through FY28 [24] - Management acknowledged some impacts from fiscal funding in certain sectors but emphasized strong execution across the portfolio [23] Other Important Information - Workday closed the acquisition of Paradox, which contributed to CRPO growth and was not included in backlog guidance [20] - The company plans to repurchase an additional $3.6 billion in shares through the end of FY27, leading to a total of $5 billion in repurchases [21] Q&A Session Summary Question: Feedback on venture-backed vibe-coding startups - Management noted that while there is interest in point solutions, customers are returning to trusted vendors like Workday due to data quality and security concerns [31] Question: Mechanisms to maintain ACV growth amid layoffs - Management highlighted that they are focused on selling back into their customer base with new solutions, which helps offset any potential impacts from headcount reductions [36] Question: Early success with AI solutions - Management reported that AI solutions are adding significant growth to ARR, with 75% of new sales including an AI solution [43] Question: Feedback on Paradox and Sana acquisitions - Early feedback from customers has been very positive, with strong demand for both acquisitions and their integration into Workday's offerings [51] Question: Go-to-market strategy for Paradox - Workday plans to sell Paradox not only to existing customers but also to competitors' environments, expanding its market reach [59] Question: Confidence in DIA go-live milestones - Management expressed high confidence in meeting DIA contract requirements, which are expected to contribute significantly to Q4 revenue [68]