01—Abstract
Summary
Summary of the 10-Q filed November 26, 2025. Cited figures are marked; the original filing is the authoritative source.
Workday, Inc. (WDAY) reported solid financial results for the quarter ended October 31, 2025, demonstrating continued revenue growth driven primarily by its subscription services.
Total revenues increased by 13%a year-over-year for both the three and nine-month periods, with subscription services growing at a robust 15% and 14% respectively. This growth was supported by strong expansion within existing customers and the addition of new clients. The company also highlighted a healthy gross revenue retention rate of 97%, indicating strong customer satisfaction and loyalty.
Operationally, Workday saw significant improvements in profitability. GAAP operating income increased substantially, with operating margin expanding from 7.6%b to 10.7% for the quarter and from 5.5% to 7.8% for the nine-month period, year-over-year. This improvement was attributed to revenue growth outpacing headcount growth and cost management initiatives, including those from a recent restructuring.
The company also reported a strong increase in operating cash flow and free cash flow, underscoring its financial health and operational efficiency. Strategic investments in AI and recent acquisitions are positioning Workday for future growth, although the company continues to navigate macroeconomic uncertainties and potential impacts on sales cycles and customer spending.
02—Key points
Key Highlights
- Total revenues grew 13% year-over-year for both the three and nine months ended October 31, 2025.
- Subscription services revenues showed strong performance, increasing 15% for the quarter and 14% for the nine-month period.
- Gross revenue retention rate remained high at 97%, indicating strong customer satisfaction.
- Significant improvement in GAAP operating income and operating margin, reflecting effective cost management and revenue growth.
- Operating cash flow increased by 23% and free cash flow by 34% for the nine months ended October 31, 2025, compared to the prior year.
- The company completed the acquisition of Paradox, Inc. in September 2025, integrating AI capabilities into its product portfolio, and subsequently announced the acquisition of Sana Labs AB in November 2025.
- Total subscription revenue backlog grew 17% to $26.0 billion as of October 31, 2025, providing strong visibility into future revenue.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed November 26, 2025Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $2.43B$2.16B | +12.6% |
| R&D Expenses | $666.00M$647.00M | +2.9% |
| Operating Expenses | $2.17B$2.00B | +8.9% |
| Operating Income | $259.00M$165.00M | +57.0% |
| Interest Expense | $29.00M$29.00M | 0.0% |
| Net Income | $252.00M$193.00M | +30.6% |
| EPS (Basic) | $0.95$0.73 | +30.1% |
| EPS (Diluted) | $0.94$0.72 | +30.6% |
| Shares Outstanding (Basic) | 265.87M265.41M | +0.2% |
| Shares Outstanding (Diluted) | 268.63M268.55M | 0.0% |
05—Questions
Frequently Asked Questions
How did Workday's revenue perform in the third quarter of fiscal year 2026?
Workday reported total revenues of $2.43 billion for the three months ended October 31, 2025, an increase of 13% compared to $2.16 billion in the same period last year. Subscription services revenues, the primary revenue driver, grew 15% to $2.24 billion.
What is the company's profitability outlook based on this report?
Profitability saw a significant improvement. GAAP operating income for the quarter was $259 million, a 57% increase year-over-year, with operating margin expanding to 10.7% from 7.6%. This was driven by revenue growth outpacing headcount growth and cost optimization efforts.
What are the key growth drivers and future strategies mentioned by Workday?
Workday's growth is driven by expanding its suite of cloud-based, AI-powered applications for financial management and human capital management. Key strategies include investing in AI solutions, expanding internationally, growing its partner ecosystem, and pursuing strategic acquisitions, such as Paradox, Inc. and Sana Labs AB, to enhance its product offerings.
How is Workday managing its cash flow and capital resources?
Workday generated $1.7 billion in cash from operating activities for the nine months ended October 31, 2025, a 23% increase year-over-year. Free cash flow also saw a substantial increase of 34% to $1.6 billion. The company holds $6.8 billion in cash, cash equivalents, and marketable securities, providing ample liquidity for operations, strategic investments, and capital expenditures.
06—Continue