Workday (WDAY) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue grew 16% year-over-year to $2.2B, with subscription revenue at $1.96B and strong customer expansion, especially in government, higher education, and healthcare.

• AI-driven innovation and new product launches, including Workday Illuminate and new AI agents, fueled customer wins and expansions; over 30% of expansions involved at least one AI product.

• Major acquisitions included Evisort and HiredScore, enhancing AI capabilities in document intelligence and talent orchestration.

• Leadership transition announced: Doug Robinson retiring, Rob Enslin appointed as President and Chief Commercial Officer.

• Workday serves over 10,500 global customers, including more than 60% of the Fortune 500, with customer satisfaction above 95%.

Financial highlights

• Q3 subscription revenue: $1.959B, up 16% year-over-year; total revenue: $2.160B–$2.2B, up 16%; U.S. revenue: $1.62B; international revenue: $537M.

• Non-GAAP operating income: $569M (26.3% margin); GAAP operating margin: 7.6%; Q3 non-GAAP diluted EPS: $1.89, up from $1.56.

• Q3 operating cash flow: $406M; free cash flow: $359M; cash and marketable securities at quarter end: $7.2B.

• 12-month subscription revenue backlog: $6.98B, up 15%; total subscription revenue backlog: $22.19B, up 20%.

• Gross revenue retention rate remained strong at 98%.

Outlook and guidance

• Q4 FY25 subscription revenue expected at $2.025B (15% growth); full-year subscription revenue guidance raised to $7.703B (17% growth).

• FY25 non-GAAP operating margin guidance raised to 25.5%; FY26 subscription revenue outlook at ~$8.8B (14% growth), with non-GAAP margin expected at 27.5%.

• FY25 operating cash flow expected at $2.35B; capital expenditures at $300M.

• Q1 FY26 subscription revenue growth to be slightly lower due to leap year impact; higher growth expected in second half from AI and strategic wins.