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Call sheet · Q3'25

Workday (WDAY)

Q3'25 earnings call · held November 26, 2024 · compared with the Q2'25 call · management-credibility review
9/12
Disclosure score
3 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is revenue recognition delays becoming a structural issue as WDAY builds federal/wellness platforms that can't monetize until delivered - this $8-10M Q4 hit is the tip of the iceberg. Yes, they beat margins and AI traction is real (Recruiter Agent 4x'd ACV, 30% expansion attach rate), but international execution is the binding constraint - only 25% of revenue from 50% of TAM with EMEA deal scrutiny persisting 'the last few quarters.' Carl's most revealing quote: 'We think the current environment is the new norm going forward' - they're planning for permanently slower growth, not a cyclical downturn. My view changes if they can quantify total AI revenue contribution above 5% of bookings or if international revenue mix exceeds 30% by FY26.

The 30-second version

  • Revenue recognition delays are THE new risk vector everyone's missing
  • AI monetization is actually accelerating, but they're burying the lead
  • International growth story is cracking under deal scrutiny pressure

What changed this quarter

MetricQ2'25Q3'25Change
Subscription Revenue$1.903B (+17% YoY)$1.959B (+16% YoY)100 bps deceleration
Total Revenue$2.085B (+17% YoY)$2.160B (+16% YoY)100 bps deceleration
cRPO Growth16%15%100 bps deceleration
Non-GAAP Operating Margin24.9%26.3%+140 bps expansion
Operating Cash Flow$571M (+34% YoY)$406M (declined YoY)Significant deterioration blamed on Q2 collections timing
International Revenue$524M (+18% YoY)$537M (+16% YoY)200 bps deceleration
Professional Services$182M$201M+$19M sequential increase
Share Repurchases$309M at $223.10$157M at $242.4249% reduction in buyback activity
Cash Position$7.4B$7.2B$200M decline
FY26 Sub Revenue GuideNot provided$8.8B (~14% growth)Initial guide below mid-teens target

Accountability tracked

8 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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