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Workday Q3 Earnings Beat Estimates on Solid Revenue Growth
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Key Takeaways
WDAY delivered Q3 revenue and earnings beats supported by solid gains across key industries.
Strong demand for HCM and financial tools plus new wins and expansions lifted WDAY's top line.
Rising subscription revenue and a larger backlog underscored WDAY's momentum in the quarter.
Workday, Inc. (WDAY - Free Report) reported strong third-quarter fiscal 2026 results, with the bottom and top lines beating the respective Zacks Consensus Estimate. The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, healthcare, financial Services, tech and media. Management’s strong focus on innovations, AI integration and international expansion is a positive factor.
Net Income of WDAY
Net income, on a GAAP basis, was $252 million or 94 cents per share compared with $193 million or 72 cents in the year-ago quarter. Healthy top-line growth boosted the net income during the quarter.
Non-GAAP net income per share was $2.32 compared with $1.89 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 19 cents.
Net sales during the quarter were $2.43 billion, up from $2.16 billion in the year-ago quarter, backed by rising demand for the company’s Human Capital Management and financial management solutions. The top line beat the Zacks Consensus Estimate by $17 million.
In the third quarter, healthy traction in tech, media, financial services, healthcare and education drove the top line. New customer wins with Sunnybrook Health Sciences Centre, Fuji Electric and The Magnum Ice Cream Company, and expansion agreements with CommonSpirit Health, Levi Strauss and Novartis are positive factors.
Subscription services revenues contributed $2.24 billion, up from $1.95 billion in the year-ago quarter. Net sales missed our estimate of $2.23 billion. At the end of the quarter, the 12-month subscription revenue backlog was $8.21 billion, up 17.6%, backed by higher contract renewals. The total subscription revenue backlog was $25.96 billion, up 17% year over year. Revenues from professional services were $188 million compared with $201 million in the prior-year quarter. The top line beat our estimate of $180.1 million.
Other Details of WDAY
Operating income during the quarter was $259 million compared with $165 million in the year-ago quarter. Non-GAAP operating income was $692 million, up from $569 million a year ago, with respective margins of 28.5% and 26.3%. The year-over-year improvement was backed by a combination of revenue outperformance, ongoing cost discipline and improved efficiencies across the company.
WDAY’s Cash Flow & Liquidity
During the third quarter of fiscal 2026, the company generated $588 million of cash from operating activities compared with $406 million in the prior-year quarter.
As of Oct. 31, 2025, it had cash and cash equivalents and marketable securities of $6.84 billion, with long-term debt of $2.98 billion.
WDAY’s Outlook
For the fourth quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.35 billion, representing growth of 14%. Management expects the non-GAAP operating margin to be 28.5%.
For fiscal 2026, the company expects subscription revenues to be $8.82 billion, indicating growth of 14% year over year. The non-GAAP operating margin is anticipated to be 29%. Capital expenditure is approximated to be around $200 million, down slightly from fiscal 2025. Non-GAAP tax rate is expected to be 19%. Operating cash flow is forecasted to be $2.9 billion.
WDAY’s Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader industry have been discussed below.
In the last reported quarter, it delivered an earnings surprise of 7.48%. The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries.
CommScope Holdings Inc. (COMM - Free Report) sports a Zacks Rank #1. CommScope’s comprehensive, differentiated portfolio allows it to hold a dominant position in the communication infrastructure industry.
In the last reported quarter, COMM delivered an earnings surprise of 67.57%. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicated to developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technology.
Ericsson (ERIC - Free Report) carries a Zacks Rank #2 (Buy) at present. It delivered an earnings surprise of 23.08% in the last reported quarter.
Ericsson is well-positioned to cash in on the market momentum with its competitive 5G product portfolio. The company continues to execute its strategy to become a leading mobile infrastructure provider and establish a focused enterprise business. The combination of strategic buyouts and continuous innovation are expected to accelerate commercial expansion and solidify Ericsson’s position in the wireless equipment market.
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Workday Q3 Earnings Beat Estimates on Solid Revenue Growth
Key Takeaways
Workday, Inc. (WDAY - Free Report) reported strong third-quarter fiscal 2026 results, with the bottom and top lines beating the respective Zacks Consensus Estimate. The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, healthcare, financial Services, tech and media. Management’s strong focus on innovations, AI integration and international expansion is a positive factor.
Net Income of WDAY
Net income, on a GAAP basis, was $252 million or 94 cents per share compared with $193 million or 72 cents in the year-ago quarter. Healthy top-line growth boosted the net income during the quarter.
Non-GAAP net income per share was $2.32 compared with $1.89 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 19 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
WDAY’s Revenues
Net sales during the quarter were $2.43 billion, up from $2.16 billion in the year-ago quarter, backed by rising demand for the company’s Human Capital Management and financial management solutions. The top line beat the Zacks Consensus Estimate by $17 million.
In the third quarter, healthy traction in tech, media, financial services, healthcare and education drove the top line. New customer wins with Sunnybrook Health Sciences Centre, Fuji Electric and The Magnum Ice Cream Company, and expansion agreements with CommonSpirit Health, Levi Strauss and Novartis are positive factors.
Subscription services revenues contributed $2.24 billion, up from $1.95 billion in the year-ago quarter. Net sales missed our estimate of $2.23 billion. At the end of the quarter, the 12-month subscription revenue backlog was $8.21 billion, up 17.6%, backed by higher contract renewals. The total subscription revenue backlog was $25.96 billion, up 17% year over year. Revenues from professional services were $188 million compared with $201 million in the prior-year quarter. The top line beat our estimate of $180.1 million.
Other Details of WDAY
Operating income during the quarter was $259 million compared with $165 million in the year-ago quarter. Non-GAAP operating income was $692 million, up from $569 million a year ago, with respective margins of 28.5% and 26.3%. The year-over-year improvement was backed by a combination of revenue outperformance, ongoing cost discipline and improved efficiencies across the company.
WDAY’s Cash Flow & Liquidity
During the third quarter of fiscal 2026, the company generated $588 million of cash from operating activities compared with $406 million in the prior-year quarter.
As of Oct. 31, 2025, it had cash and cash equivalents and marketable securities of $6.84 billion, with long-term debt of $2.98 billion.
WDAY’s Outlook
For the fourth quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.35 billion, representing growth of 14%. Management expects the non-GAAP operating margin to be 28.5%.
For fiscal 2026, the company expects subscription revenues to be $8.82 billion, indicating growth of 14% year over year. The non-GAAP operating margin is anticipated to be 29%. Capital expenditure is approximated to be around $200 million, down slightly from fiscal 2025. Non-GAAP tax rate is expected to be 19%. Operating cash flow is forecasted to be $2.9 billion.
WDAY’s Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader industry have been discussed below.
Celestica Inc. (CLS - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last reported quarter, it delivered an earnings surprise of 7.48%. The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries.
CommScope Holdings Inc. (COMM - Free Report) sports a Zacks Rank #1. CommScope’s comprehensive, differentiated portfolio allows it to hold a dominant position in the communication infrastructure industry.
In the last reported quarter, COMM delivered an earnings surprise of 67.57%. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicated to developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technology.
Ericsson (ERIC - Free Report) carries a Zacks Rank #2 (Buy) at present. It delivered an earnings surprise of 23.08% in the last reported quarter.
Ericsson is well-positioned to cash in on the market momentum with its competitive 5G product portfolio. The company continues to execute its strategy to become a leading mobile infrastructure provider and establish a focused enterprise business. The combination of strategic buyouts and continuous innovation are expected to accelerate commercial expansion and solidify Ericsson’s position in the wireless equipment market.