Workday, Inc. (WDAY) delivered a textbook earnings beat on Tuesday evening, but the market wasn't buying it—at least not in extended trading. Shares initially climbed after the third-quarter report dropped, then reversed course and headed lower despite results that topped Wall Street's expectations.

The Numbers

Workday reported quarterly earnings of $2.32 per share, comfortably ahead of the $2.18 analyst consensus. Revenue came in at $2.43 billion, just edging past the Street estimate of $2.42 billion.

Digging Into the Metrics

The company's subscription business continues to show solid growth. Subscription revenues hit $2.24 billion, up 14.6% from the same quarter last year. The 12-month subscription revenue backlog reached $8.21 billion, marking a 17.6% year-over-year increase. Total subscription revenue backlog climbed to $25.96 billion, up 17% from the prior year.

Worth noting: both backlog figures include the impact from Workday's acquisition of Paradox, which closed during the third quarter of fiscal 2026.

What Management Is Saying

"Workday delivered another solid quarter, fueled by the strength and diversity of our business and the momentum we're seeing across our AI portfolio," said Carl Eschenbach, CEO of Workday.

"By unifying people, money, and AI agents on one trusted platform, we're giving customers a real edge — helping them empower their people, simplify how work gets done, and drive results that truly matter," Eschenbach added.

The Market's Reaction

Despite the upbeat numbers and optimistic commentary around AI momentum, Workday stock closed Tuesday's extended session down 3.70% at $226.21. It's a reminder that beating estimates doesn't always translate to happy investors—sometimes the guidance, margins, or forward outlook matter just as much as the headline numbers.