Workday Inc Q3 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you very much. And I'll add my congrats on a very nice performance. Carl, we're hearing some feedback that the venture-backed vibe coding startups have started seeing a slowdown or at least as some of them have or elevated churn. And it's happening because companies are finding it's pretty difficult to operationalize them and put them into production use. I'm wondering if you're seeing any signs of some of that novelty wearing off for this third-party vibe coating products. And if so, do you see any accelerated adoption of Workday Extend where presumably, they'd have all the security and all the other infrastructure already in place?

Question: Mark Murphy - JPMorgan Chase & Co - Analyst : Thank you so much.

Question: Kirk Materne - Evercore Inc - Analyst : Yeah. Thanks very much and congrats on the solid quarter. Carl, the other narrative that often comes up these days is clients see a big customer laying off people. And I know you guys commented that your customers are growing, headcount slowly right now. What are the mechanisms that you guys have if a customer were to have to lay off people to be able to keep growing ACV with them? Obviously, cross-sell, upsell, are there discounts that go away? I just -- can you just explain that a little bit? Because I think people believe there's a linear relationship between a number of -- on a per seat basis. And I realize it's probably a little bit more complicated that, especially at the high end of your business. Thanks.

Question: Kirk Materne - Evercore Inc - Analyst : Great. Thanks. Thanks, guys.

Question: Keith Weiss - Morgan Stanley & Co Ltd - Analyst : Excellent. Thank you, guys, for taking the question and congratulations on the solid quarter. I wanted to ask about some of the early success you guys are seeing with your AI solutions. Carl, I think on the call, you said 1.5 points of growth in ARR already coming from the AI solutions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 25, 2025 / 9:30PM, WDAY.OQ - Q3 2026 Workday Inc Earnings Call Can you give us any rules of thumb that you're starting to see that could help us maybe model this out a little bit in terms of what type of uplift do you see on a typical deal or for a typical customer when they're buying the AI solutions? Or how broad is this? Like what percentage of your customer base has already bought into the solutions and how far do we have to go? Just something to help us extrapolate that early success into what this might look like in a year from now or two years from now?

Question: Keith Weiss - Morgan Stanley & Co Ltd - Analyst : Got it. Any sense on how much of an uplift it is versus the standard?

Question: Keith Weiss - Morgan Stanley & Co Ltd - Analyst : Okay, that's super helpful. Thank you, guys.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Hey. Great. Thanks. I appreciate you asking -- I appreciate you taking the question and congrats on the results as well. I guess just a two-parter for me. I guess first, just -- I wanted to zoom in on some of the early feedback around Paradox and Sana. Just what you're hearing from customers coming out of rising? And if that can help the Workday business model continue to evolve towards just some of the questions around AI and agentic capabilities that you're offering alongside the Flex Credits program. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 25, 2025 / 9:30PM, WDAY.OQ - Q3 2026 Workday Inc Earnings Call And then, Zane, maybe just coming out of Rising,, an update on how you're thinking about the trade-offs between growth and margin given some of the recent additions in the product portfolio and some of that feedback there as well. Thank you.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 25, 2025 / 9:30PM, WDAY.OQ - Q3 2026 Workday Inc Earnings Call

Question: Brent Thill - Jefferies LLC - Analyst : Thanks. Just with Paradox. I know that SAP and other ERP installed bases are using that. Is your vision that you can sell this anywhere that you're

Question: Brent Thill - Jefferies LLC - Analyst : Okay. Zane, real quick, just on cRPO. Is there anything to consider in the guide that you're maybe highlighting as a headwind, tailwind? Any change to how you're thinking about that in terms of how we should think about modeling it?

Question: Brent Thill - Jefferies LLC - Analyst : Great. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 25, 2025 / 9:30PM, WDAY.OQ - Q3 2026 Workday Inc Earnings Call

Question: Karl Keirstead - Deutsche Bank AG - Analyst : Thank you. Zane, maybe we can just continue that conversation. So if we try to take your 4Q cRPO 15% to 16% and normalize it by deducting maybe some of the onetime stuff. So just so I've got the thinking right, maybe 1 point year over year from the tenant contracts, maybe 1 point year over year from Paradox and 1/4 from Sana. So maybe 2.25 points from more unusual stuff to back out to get to more normalized. Is that roughly the right math?

Question: Karl Keirstead - Deutsche Bank AG - Analyst : Okay, Zane. Thanks. And maybe just in the spirit of a follow-up on 4Q, this time on subrevs, it sounds like it's embedding a view of reaching those DIA go-live milestones. I'm assuming that given that there's just two months left in the fiscal year, you and Carl are feeling pretty good about that. Obviously, the shutdown, I suspect didn't help, but can you just maybe express confidence level in hitting those DIA go-lives? Thanks.

Question: Karl Keirstead - Deutsche Bank AG - Analyst : Got it.

Question: Karl Keirstead - Deutsche Bank AG - Analyst : That's great news. Thank you, both.

Question: Brad Sills - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Great. Thank you so much. It's clear from all the announcements and what we saw out of the conference was that you're really going forward with AI, the Sana acquisition, Paradox, more recently, Pipedream, that partnership with Microsoft. I mean, how should we read that? Should we think of this as a year where you're building the foundation for AI and agents and that 1.5 points of growth coming from AI goes materially higher, perhaps in fiscal '28? Or is this more of a '27 event just given where you are with all the great innovation that you're bringing together and the time it might take for that to sink into the sales cycle and pipelines? Thank you.

Question: Brad Sills - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Great to hear. Thank you so much.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Great. Thank you so much. Brad, following Brad. Congrats, guys, on a good quarter and thanks for taking the question. My question is about Workday GO, where we continue to hear really good things, particularly in ME and emerging enterprise. So it was interesting to see it soon to be more broadly available. Perhaps looking at AI from a different angle, is there anything different Workday needs to deliver from an AI product perspective for downmarket customer versus large enterprise? Thanks.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : Thank you so much for taking the question.

Question: Alex Zukin - Wolfe Research LLC - Analyst : Maybe just a quick two-parter. Carl, first for you. When you think about the commentary for next year, it's great to hear about the reiterating the confidence and the growth rate of 13%. But since Analyst Day, is there anything that maybe you've seen that gives you even more confidence when you're talking with customers around things like budgets or their demand environments as we head into 2026 or propensity to allocate more from the AI budget specifically to Workday that you could comment on that gives you that confidence?

Question: Alex Zukin - Wolfe Research LLC - Analyst : Perfect. And then maybe just, Zane, as a follow-up, if we think about next year's guide that 13%, and the acquisitions that you've made over the last couple of months. A, how much do we think comes from inorganic there? And then the pace of M&A, are we through -- like should we think about this pace continuing at current course and speed of these exciting technology tuck-ins? Is -- or do you need to digest the ones that you've made here over the course of the next few weeks, months, quarters?

Question: Alex Zukin - Wolfe Research LLC - Analyst : Perfect. Thank you, guys.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay. Perfect. Thanks for squeezing me in. International is a big driver for you. And you mentioned a little bit of that, but like if I look at the growth rate, there's not that much difference between US and international. Can you talk a little bit what you saw in the quarter? And maybe there was more on the pipeline build, et cetera. Thank you.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Good. Perfect. Thank you.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : Hey. Last question, and it is my last Workday earnings call as well, so fitting. So congrats on the Q3 results, Carl and Zane. I wonder -- it's clear that you guys are seeing a bit of -- quite a bit of AI momentum, right? And I agree with you, the AI disruption risk seems to be little overstated. But I think we can look at the numbers and say that AI, there is some tangible contribution. Your backlog, 12-month backlog, growth rate, although it did include some acquisitions, it did do a little better. And these acquisitions, the anniversary -- they are growing very nicely, that should lead to an acceleration in the organic growth here as well. But that effect conceptually, you put your thinking hands off -- your thinking hats on -- sorry, down with the flu, a little too (inaudible). If you were to rebuild a company on an AI native stack, an HCM company AI native stack today, what would that functionality be able to do? That is what would that stack be able to do that could be disruptive that you can do as a Workday customer with the tools that Workday is providing, be it organically or through these combinations of acquisition? Thank you so much.

Question: Kash Rangan - Goldman Sachs Group Inc - Analyst : Amazing. I wish you well in achieving all these aspirations and dreams in the future. Thank you so much. Until then, bye now.