Workday looks for growth fuelled by Workday Go and AI

Workday announced its Q3 results for the quarter ended October 31, 2025. Despite another strong set of results, its share price slid 6.16% after hours. Though it’s still up from five days previously. The cause was attributed to weaker-than-expected fourth-quarter guidance.

Carl Eschenbach, CEO, Workday, commented, “Workday delivered another solid quarter, fueled by the strength and diversity of our business and the momentum we’re seeing across our AI portfolio. By unifying people, money, and AI agents on one trusted platform, we’re giving customers a real edge—helping them empower their people, simplify how work gets done, and drive results that truly matter.”

The key numbers were:

• Total revenues were up 12.6% year over year to $2.432 billion.
• Subscription revenues rose 14.6% year over year to $ 2.244 billion.
• Operating income was $259 million, or 10.7% of revenues, compared to an operating income of $165 million, or 7.6% of revenues, in the same period last year.
• Operating cash flows were $588 million compared to $406 million in the same period last year.
• Free cash flows were $550 million compared to $359 million in the same period last year.
• 12-month subscription revenue backlog was $8.21 billion, up 17.6% from the same period last year.
• Total subscription revenue backlog was $25.96 billion, up 17.0% year over year.

These last two figures include the impact of the acquisition of Paradox. Which also closed in Q3, later in the quarter it close the acquisition of Sana.

Zane Rowe, CFO, Workday, commented, “Our Q3 results were driven by continued progress across several key growth initiatives, as we accelerate innovation across the platform and bring exciting AI solutions to market. We now expect fiscal 2026 subscription revenue of $8.828 billion, growth of 14%, and non-GAAP operating margin of approximately 29%.”

Outlook flat

In the earnings call, Rowe also commented, “We currently expect our Q1 FY 2027 subscription revenue growth to be approximately 14% year over year and flat sequentially, reflecting typical seasonality from Q4 as well as the expected revenue from DIA in Q4, which doesn’t extend into Q1.” (Source: The Motley Fool)

It was presumably this comment that drew the brief drop in share price as analysts reacted.

Workday Risings deliver impressive news

Q3 also saw Workday hosting its two major user conferences. First at Workday Rising US, the firm explained significant Agentic AI updates. It added new Workday Illuminate AI agents and unveiled Workday Flex Credits, a new, transparent subscription-based consumption model for AI.

Then, at Rising EMEA, it launched Workday Go, targeting mid-sized organisations with a go-to-market through partners. Other announcements included a new developer experience, Workday Build, and the launch of Workday Data Cloud, a new data layer.

During the analyst call, Eschenbach commented, “Workday Go is helping us drive strong new customer growth and continued ACV momentum in the medium enterprise. Just last week, we announced a major expansion of Workday Go, including global payroll, an expanded partner network, and a new AI deployment agent that can cut implementation time by up to 25%.”(Source: The Motley Fool)

It also announced the Workday EU Sovereign cloud, the acquisition of Pipedream, its sixth acquisition this year and a partnership with Remote to deliver payroll and an employee of Record service to customers. Especially in the midmarket looking to grow internationally.

Enterprise Times:  What does this mean?

Another strong set of results from Workday. Whilst the short-term outlook fell slightly short of expectations, there is better hope for the future. It is building out a complete platform around Agentic AI in a way that makes its platform more open. Thus, retaining the security the company is renowned for.

If Workday can make Workday Go attractive to the mid-market, it could provide a significant competitor to NetSuite in certain people-centric organisations. What Workday hasn’t made clear, and is not yet available, is the pricing it is setting it out at. In certain markets, it could face fierce competition from certain vendors.

However, the fact that it is based on the same platform as its Enterprise solution could make it a smart choice for ambitious fast fast-growing mid-market firms. If traction is good, the outlook for future quarters might increase significantly, and the share price will respond accordingly.

With mid-market firms also taking less time to make procurement decisions, the impact could be seen soon. Workday is relying on its partner network to sell Workday GO, and it is unclear how much marketing budget it is allocating to the new initiative.

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