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Workday (WDAY) delivered another EPS beat in 3Q26 - its 14th straight - but revenue growth of nearly 13% and in-line Q4 subscription guidance failed to excite investors. Shares sold off as the outlook offered little upside and higher-education softness tied to federal funding pressured near-term subscription growth.

• Subscription revenue grew 15% yr/yr to $2.244 bln, while cRPO increased 17.6% to $8.21 bln, up over $100 mln sequentially and slightly above expectations excluding M&A.
• AI adoption continued to build: over 75% of net-new deals included an AI product, helping drive 1.5 points of ARR growth. Customers executed more than 1 bln AI actions on WDAY this year.
• Paradox, Sana, and Pipedream are accelerating WDAY’s AI roadmap, boosting cRPO, expanding cross-sell, and creating new entry points into non-Workday environments. Paradox contributed revenue within weeks of closing.
• Higher-education softness tied to federal funding created isolated pressure on subscription growth, though WDAY noted strong long-term win rates.
• Backlog and retention remain solid. Total subscription backlog rose 17% yr/yr to $25.96 bln with 97% gross revenue retention.

Briefing.com Analyst Insight:

WDAY delivered another clean EPS beat, but investors were disappointed by revenue and guidance that merely met expectations rather than exceeded them. The underlying fundamentals - steady subscription growth, strong cRPO, and rising AI contribution - remain intact, but the company hasn’t yet shown the revenue acceleration some expected from its expanding AI portfolio. Early traction from Paradox and Sana is promising, especially given their impact on ARR and cross-sell, but it will take a few more quarters to determine whether AI can materially lift WDAY’s organic growth rate. Until then, the stock may struggle to regain momentum without clearer signs of an upswing in subscription growth or a broader demand tailwind.