Workday (NASDAQ: WDAY) reported stronger fiscal third-quarter results and raised its full-year subscription guidance on Wednesday, but shares still fell more than 9% as investors digested costs tied to AI expansion.

Revenue increased 12.6% to $2.432 billion, led by subscription revenue of $2.244 billion, which grew 14.6% year over year. Earnings of $2.32 per share exceeded analyst expectations of $2.17.

Workday cited broad customer demand and accelerating adoption of its AI-powered finance and HR tools. CFO Zane Rowe said Q3 performance reflected progress across multiple growth initiatives.

The company now anticipates fiscal 2026 subscription revenue of $8.828 billion, representing 14% growth, alongside a non-GAAP operating margin of roughly 29%.

For the quarter ending January 2026, Workday guided to subscription revenue of $2.355 billion, an increase of 15.5%, with projected non-GAAP operating margins of at least 28.5%.