Workday (WDAY) Q3 2026 earnings summary

Executive summary

• Q3 FY26 total revenues reached $2.432 billion, up 13% year-over-year, with subscription revenues of $2.244 billion, up 15% year-over-year.

• Achieved a non-GAAP operating margin of 28.5% and GAAP operating margin of 10.7%, both improved year-over-year.

• Strong customer momentum across industries, with healthcare surpassing $1 billion in annual recurring revenue and notable wins in government and public sector.

• Accelerated AI adoption, with over 1 billion AI actions year-to-date and more than 75% of core customers using AI products.

• Closed acquisitions of Paradox and Sana, expanding AI and enterprise knowledge capabilities.

Financial highlights

• Q3 subscription revenue: $2.244 billion, up 15% year-over-year; total revenue: $2.432 billion, up 13%.

• Professional services revenue: $188 million; U.S. revenue: $1.825 billion, up 12%; International revenue: $607 million, up 13%.

• 12-month subscription revenue backlog: $8.21 billion, up 17.6%; total subscription backlog: $25.96 billion, up 17%.

• Gross revenue retention: 97%.

• Q3 operating cash flow: $588 million, up 45%; free cash flow: $550 million, up 53.2%.

Outlook and guidance

• Q4 FY26 subscription revenue expected at $2.355 billion, up 15.5%; full-year FY26 subscription revenue guidance: $8.828 billion, up 14.4%.

• Q4 CRPO expected to grow 15%-16%, with contributions from acquisitions and tenant contracts.

• FY26 operating cash flow outlook raised to $2.90 billion; free cash flow expected at $2.70 billion, up 23%.

• FY27 subscription revenue growth targeted at 13%; Q1 FY27 expected to be 14% year-over-year and flat sequentially.

• Non-GAAP operating margin for FY26 expected at approximately 29%; GAAP margin expected to be 19-21 points lower.