| KPI | Q3 FY26 | YoY Change | Why It Matters |
|---|---|---|---|
| Subscription Revenue | $2.244B | +14.6% | Continues durable subscription compounding. |
| 12-mo Sub Backlog | $8.21B | +17.6% | Indicates accelerating demand visibility. |
| Total Sub Backlog | $25.96B | +17.0% | Multi-year revenue base strengthening. |
| Free Cash Flow | $550M | +53% | Strongest cash execution in company history. |
| Non-GAAP Op Income | $692M | +21.6% | Confirms margin leverage in scaling AI workloads. |
| New/Expanded Customers | Fuji Electric, Kelly Services, Novartis, etc. | — | Diverse vertical adoption, healthcare crosses $1B ARR. |
Other notable changes this quarter:
| Guidance Metric | New | Prior (Implied) | Change |
|---|---|---|---|
| FY26 Subscription Revenue | $8.828B | ~$8.80B | Raised |
| FY26 Non-GAAP Op Margin | ≈29% | ≈29% | Flat |
| Q4 Subscription Revenue | $2.355B (15.5% growth) | N/A | — |
| Q4 Non-GAAP Op Margin | ≥28.5% | N/A | — |
The raised full-year guide validates Q3 execution and explains why the stock is trading higher despite a slight top-line shortfall.
After closing the day up 3.11%, the stock is up another 3.98% after earnings.
| Metric | Actual | Estimate | Beat/Miss |
|---|---|---|---|
| Revenue | $2.432B | $2.465B | Miss |
| Subscription Revenue | $2.244B | ~$2.25B implied | In line |
| Non-GAAP EPS | $2.32 | $2.17 | Beat |
| GAAP EPS | $0.94 | N/A | — |
| GAAP Operating Margin | 10.7% | ~10.6% | Slight beat |
| 12-mo Subscription Backlog | $8.21B (+17.6%) | N/A | — |
Workday delivered another high-quality margin and EPS beat even as revenue came in light. The revenue miss will draw headlines, but the guidance raise and 17% backlog growth highlight strengthening demand across AI-driven workloads. Margin execution remains best-in-class for large-cap SaaS, helping offset top-line softness.
Workday (NASDAQ: WDAY) reports Q3 earnings today after market close. The company beat EPS estimates in all eight past quarters, averaging +7.75% surprise.
The streak began Q3 2024 with $1.53 EPS (+8.51% above consensus) through Q2 2026’s $2.21 (+4.25% beat). CEO Carl Eschenbach told investors last quarter: “We think the current environment is the new norm going forward.”
Prediction markets price 95% odds of another beat above $2.17 consensus, though CFO Zane Rowe’s August recalibration to “mid-teens” growth for FY26-27 signals tempered ambition. Insider selling accelerated in October with Eschenbach disposing 23,500 shares at $231-237, though the pattern appears programmatic.
Workday Inc (NASDAQ: WDAY) delivered its Q2 FY2026 earnings on August 21, 2025, beating estimates with $2.21 EPS against the $2.12 consensus. The company posted $2.348 billion in revenue, up 12.6% year-over-year, and generated $588 million in free cash flow during the quarter. Despite the beat—its eighth consecutive quarter above expectations—shares have declined 16% over the past year, signaling investor concern about growth deceleration even as execution remains solid.
Last Quarter’s Top 3 Takeaways:
Workday Inc (NASDAQ: WDAY) maintains a robust financial position heading into its Q3 fiscal 2026 earnings release, with $8.2 billion in total cash and investments against $3.1 billion in total debt as of July 31, 2025.
| Metric | Q2 FY2026 | Q1 FY2026 | Change |
|---|---|---|---|
| Total Debt | $3.10B | $3.15B | -$50M |
| Debt-to-Equity | 0.34 | 0.35 | -0.01 |
| Cash & Equivalents | $8.19B | $7.89B | +$300M |
| Current Ratio | 2.05 | 1.98 | +0.07 |
The company’s conservative 0.34 debt-to-equity ratio and $5.1 billion net cash position provide substantial flexibility. Working capital expanded to $5.2 billion with a healthy 2.05 current ratio. Operating cash flow reached $616 million in Q2, supporting $299 million in share repurchases. CFO Zane Rowe maintained fiscal 2025 operating cash flow guidance at $2.35 billion during the most recent earnings call.
Live coverage has ended. The full story is below.
Workday (NASDAQ: WDAY | WDAY Price Prediction) reports fiscal Q3 results today after the bell. After eight consecutive quarters of beating expectations, the question isn’t whether the company will exceed estimates. It’s whether management can prove the AI narrative is translating into durable margin expansion.
Last quarter, Workday delivered a 10.9% earnings surprise on $2.23 EPS against $2.01 expectations. Revenue came in at $2.35 billion, up 16.7% year-over-year. Operating margin hit 10.6%, and management sounded confident about demand for its AI-powered finance and HR applications.
Since then, the company announced it will acquire Pipedream, an integration platform connecting more than 3,000 business applications. The deal, disclosed November 19, signals Workday is accelerating its push into actionable AI and workflow automation. The timing matters. Announcing a strategic acquisition days before earnings typically reflects management confidence in the quarter and the forward outlook.
Shares have pulled back roughly 8% from the October high of $239.92, trading near $226.64 as of yesterday’s close. The stock sits in neutral territory with an RSI of 47.2, suggesting no extreme positioning heading into the print. That leaves room for movement in either direction depending on guidance tone.
| Metric | Q3 FY26 Estimate | YoY Growth | Full Year FY26 Estimate | YoY Growth |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.17 | +14.8% | $8.50 | +16.4% |
| Revenue | $2.465B | +12.5% | $9.50B | +13.2% |
The company’s recent history suggests it will clear the $2.17 EPS bar. Over the past eight quarters, Workday has averaged a $0.14 per-share beat, with surprises ranging from 4.2% to 10.9%. Earnings growth has consistently outpaced revenue growth, a sign that operational leverage is improving as the business scales.
I’ll be watching three things closely. First, subscription revenue growth and customer additions. Workday reported 71.4% year-over-year earnings growth last quarter while revenue grew 12.6%. That gap reflects margin expansion, but it also raises the question of whether top-line acceleration can reaccelerate as AI demand materializes.
Second, operating margin trajectory. The company posted a 10.6% operating margin in Q2, and Wall Street will want to see that number hold or expand. Management has been investing heavily in AI capabilities, and investors need confirmation that spending is translating into efficiency gains rather than just higher costs.
Third, guidance for Q4 and full-year FY26. The Pipedream acquisition adds integration capabilities that should help Workday embed its platform more deeply into enterprise workflows. But acquisitions also bring integration risk and near-term expense. Management’s commentary on how quickly Pipedream contributes to growth will matter.
Polymarket data shows 95.5% odds that Workday beats the $2.17 consensus, with $6,508 in total volume on the prediction market. That level of confidence suggests the beat is priced in. The real test will be whether the company can deliver guidance that justifies its forward PE of 21.05, down sharply from a trailing PE of 105.91 but still demanding continued acceleration.
Analyst sentiment remains strong. Thirty out of 40 analysts rate the stock Buy or Strong Buy, with zero Sell ratings. The consensus price target of $281.44 implies upside from current levels, but that assumes execution continues without disruption.
Workday has built credibility through consistent execution. The company hasn’t missed earnings expectations since May 2022, and its 96.7% institutional ownership reflects its status as a core holding for professional investors. But the AI narrative needs to show up in subscription growth and margin performance, not just in press releases about acquisitions.
If management delivers a beat and raises guidance with confidence, the stock could test resistance near the $240-$250 range based on recent trading patterns. If guidance is cautious or margins disappoint, the recent pullback from $239.92 could continue. After eight straight beats, this is the quarter where the story either gains momentum or starts to feel stretched.
Contact [email protected] for any questions or corrections.
Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
Investors are watching Workday (NASDAQ:WDAY | WDAY Price Prediction) ahead of its fiscal first-quarter results expected after the bell today, May 21, 2026 at 4:00 PM ET. With a new CEO and an AI…
A name that needs no introduction for job seekers, Workday (NASDAQ:WDAY | WDAY Price Prediction) shares are down 38% year to date and have shed ~44% over the past year, landing at $133 as…
Workday (NASDAQ: WDAY | WDAY Price Prediction) delivered a strong Q4 FY2026 report after Tuesday’s close, but an initial after-hours selloff signals investors may have been hoping for more from the company’s forward guidance.…
Cadence Design Systems (NASDAQ: CDNS | CDNS Price Prediction) reports fourth-quarter 2025 results tonight after the bell. After three consecutive quarters of accelerating momentum, investors are watching whether the EDA software leader can maintain…
Cadence Design Systems (NASDAQ: CDNS | CDNS Price Prediction) delivered a decisive beat on both earnings and revenue in Q3, raising full-year guidance and signaling momentum that investors rewarded immediately. Yet, the stock dropped about…
Zscaler (NASDAQ: ZS | ZS Price Prediction) reports fiscal Q2 2026 results today after the bell. After an eight-quarter streak of beating estimates by an average of 24%, the company faces elevated expectations and…
Cardinal Health (NYSE: CAH | CAH Price Prediction) delivered a commanding first quarter for fiscal 2026, beating both earnings and revenue expectations by wide margins while raising full-year guidance. The stock climbed 1% in…
ServiceNow (NYSE:NOW | NOW Price Prediction) delivered a textbook beat-and-raise quarter for Q1, yet the tape told a different story. Shares are falling than 13% in morning trading to $88.70 after the workflow giant…
Salesforce (NYSE: CRM | CRM Price Prediction) reports its Q4 FY26 results after the bell, and the setup is significant. Last quarter delivered a strong fundamental print. The question now is whether that momentum…
