Workday (WDAY) delivered a solid Q3 beat with encouraging early artificial intelligence adoption trends and momentum from its partner network, RBC Capital Markets said in a note on Tuesday.

RBC said Workday reported revenue of $2.43 billion, up 12.6% year over year, with subscription revenue also ahead of consensus.

The firm noted mixed guidance for Q4 with subscription revenue expected at about $2.36 billion after accounting for roughly 150 basis points of contribution from recent acquisitions of Sana and Paradox.

RBC also highlighted strength in AI offerings with roughly 45% of customers using the company's Illuminate AI product.

The firm noted continued traction in the partner channel with partners representing 20% of net new annual contract value.

RBC kept an outperform rating on Workday and lowered its price target to $320 from $340.

Shares of Workday were down over 10% in recent Wednesday trading.

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