HR software maker Workday's Q3 revenue slightly beats estimates
Overview
Workday fiscal Q3 revenue rises 12.6% yr/yr, slightly beating analyst expectations
Adjusted EPS for fiscal Q3 beats consensus, reflecting strong operational performance
Company repurchased 3.4 mln shares for $803 mln during fiscal Q3
Outlook
Workday expects Q4 fiscal 2026 subscription revenue of $2.355 bln, up 15.5%
Workday forecasts full-year fiscal 2026 subscription revenue at $8.828 bln, up 14.4%
Company anticipates fiscal 2026 non-GAAP operating margin of approximately 29%
Result Drivers
SUBSCRIPTION REVENUE GROWTH - Subscription revenues increased 14.6% yr/yr, driven by AI portfolio and growth initiatives
ACQUISITIONS IMPACT - Acquisition of Paradox contributed to 17.6% increase in 12-month subscription revenue backlog
AI AND INNOVATION - Growth fueled by AI solutions and platform innovation, per CFO Zane Rowe
Key Details
Metric | Beat/Miss | Actual | Consensus Estimate |
Q3 Revenue | Slight Beat* | $2.43 bln | $2.42 bln (33 Analysts) |
Q3 Adjusted EPS | Beat | $2.32 | $2.18 (34 Analysts) |
Q3 EPS |
| $0.94 |
|
Q3 Adjusted Operating income | Beat | $692 mln | $678.57 mln (32 Analysts) |
Q3 Operating income |
| $259 mln |
|
Q3 Subscription Revenue |
| $2.24 bln |
|
*Applies to a deviation of less than 1%; not applicable for per-share numbers.
Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 31 "strong buy" or "buy", 10 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the software peer group is "buy"
Wall Street's median 12-month price target for Workday Inc is $280.00, about 19.1% above its November 24 closing price of $226.64
The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 24 three months ago
Press Release: ID:nPn1mzcgPa
For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact RefinitivNewsSupport@thomsonreuters.com.
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