Fiscal Second Quarter Total Revenues of $2.085 Billion, Up 16.7% Year Over YearSubscription Revenues of $1.903 Billion, Up 17.2% Year Over Year
PLEASANTON, Calif., Aug. 22, 2024 /PRNewswire/ -- Workday, Inc. (NASDAQ:WDAY), a leading provider of solutions to help organizations manage their people and money, today announced results for the fiscal 2025 second quarter ended July 31, 2024.
Fiscal 2025 Second Quarter Results
Total revenues were $2.085 billion, an increase of 16.7% from the second quarter of fiscal 2024. Subscription revenues were $1.903 billion, an increase of 17.2% from the same period last year.
Operating income was $111 million, or 5.3% of revenues, compared to an operating income of $36 million, or 2.0% of revenues, in the same period last year. Non-GAAP operating income for the second quarter was $518 million, or 24.9% of revenues, compared to a non-GAAP operating income of $421 million, or 23.6% of revenues, in the same period last year.1
Diluted net income per share was $0.49, compared to diluted net income per share of $0.30 in the second quarter of fiscal 2024. Non-GAAP diluted net income per share was $1.75, compared to non-GAAP diluted net income per share of $1.43 in the same period last year.1
12-month subscription revenue backlog was $6.80 billion, up 16.1% from the same period last year. Total subscription revenue backlog was $21.58 billion, increasing 20.9% year-over-year.
Operating cash flows were $571 million compared to $425 million in the prior year. Free cash flows were $516 million compared to $360 million in the prior year.1
Workday repurchased approximately 1.4 million shares of Class A common stock for $309 million as part of its share repurchase program.
Cash, cash equivalents, and marketable securities were $7.37 billion as of July 31, 2024.
1
See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.
Comments on the News
"Workday delivered a solid quarter of growth and operating margin expansion, as businesses of all sizes and industries around the world increasingly turn to Workday as their trusted partner in navigating the future of work," said Carl Eschenbach, CEO, Workday. "Through the power of our unified, AI-powered platform and our expanding partner ecosystem, we're reimagining HR and Finance to consistently increase the value we deliver to our customers. Our commitment to customer success, AI innovation, and delivering true business value will propel us into the future."
"Our second quarter performance was ahead of our expectations across our key financial metrics," said Zane Rowe, CFO, Workday. "We remain focused on balancing targeted investments across our growth areas along with driving efficiencies across the company as we leverage the power of the platform. We see a macroeconomic environment consistent with last quarter and are reiterating our full-year FY25 subscription revenue guidance while slightly raising our expectation for FY25 non-GAAP operating margin."
Recent Highlights
Workday joined the Fortune 500 list for the first time, ranking it among the largest U.S. companies by revenue.
Workday now has more than 70 million users under contract and more than 2,000 Workday Financial Management customers.
Workday added several full suite customers for Workday Financial Management and Workday Human Capital Management (HCM), including Clemson University, County of San Joaquin, and Presbyterian Healthcare Services.
Workday announced new innovations to further bolster its global payroll strategy, which include the global availability of Workday Payroll provided by Strada, and its new Global Payroll Connect, a unified global payroll solution that can seamlessly connect with payroll providers.
Workday announced new updates to make it easier for partners to build solutions, including AI services for Workday Extend; the general availability of Workday AI Marketplace; and Built on Workday, a new program to help partners build, manage, and distribute finance and HCM apps and industry solutions.
Workday announced strategic partnerships with Equifax, Salesforce, and Kainos.
Workday announced that HiredScore AI for Recruiting and HiredScore AI for Talent Mobility are now available through Workday to boost recruiter productivity and empower hiring managers and employees.
Workday announced that its Board of Directors approved a new share repurchase program to repurchase up to an additional $1.0 billion of shares of its Class A common stock.
According to Gartner® market share research, Workday had the largest market share in 2023 for ERP Worldwide SaaS revenue at 19.6%.1
Workday was named a Leader in The Forrester Wave™ for Enterprise Resource Planning Solutions For Service-Centric Industries, Q2 2024.2
1
Gartner® Market Share: Enterprise Application Software as a Service, Worldwide, 2023, Varsha Mehta, Neha Gupta, Chris Pang, Craig Roth, Jim Hare, Julian Poulter, Balaji Abbabatulla, Kevin Quinn, Roland Johnson, Radu Miclaus, Alexandre Oddos, Amarendra ., Anand Chouksey, Mudit Sharma, Kanchi Bindal, 14 June 2024.
2
By Liz Herbert with Linda Ivy-Rosser, George Lawrie, Sara Sjoblom, February 20, 2024.
Financial Outlook
Workday is updating its guidance for the fiscal 2025 full year ending January 31, 2025 as follows:
Subscription revenue between $7.700 billion to $7.725 billion, representing growth of approximately 17%
Non-GAAP operating margin of 25.25%1
Workday is providing guidance for the fiscal 2025 third quarter ending October 31, 2024 as follows:
Subscription revenue of $1.955 billion, representing growth of 16%
Non-GAAP operating margin of 25.25%1
1
The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate this non-GAAP financial measure, particularly related to stock-based compensation and its related tax effects, acquisition-related costs, and realignment costs.
Earnings Call Details
Workday plans to host a conference call today to review its fiscal 2025 second quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 1:30 p.m. PT/4:30 p.m. ET and can be accessed via webcast. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 90 days.
Workday uses the Workday Blog as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
About Workday
Workday is a leading enterprise platform that helps organizations manage their most important assets – their people and money. The Workday platform is built with AI at the core to help customers elevate people, supercharge work, and move their business forever forward. Workday is used by more than 10,500 organizations around the world and across industries – from medium-sized businesses to more than 60% of the Fortune 500. For more information about Workday, visit workday.com.
© 2024 Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding our intended share repurchases, Workday's full-year and third quarter fiscal 2025 subscription revenue and non-GAAP operating margin, growth, innovation, strategy, and investments. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to: (i) breaches in our security measures or those of our third-party providers, unauthorized access to our customers' or other users' personal data, or disruptions in our data center or computing infrastructure operations; (ii) service outages, delays in the deployment of our applications, and the failure of our applications to perform properly; (iii) privacy concerns and evolving domestic or foreign laws and regulations; (iv) the impact of continuing global economic and geopolitical volatility on our business, as well as on our customers, prospects, partners, and service providers; (v) any loss of key employees or the inability to attract, train, and retain highly skilled employees; (vi) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications, advancements in technology, and marketing initiatives by our competitors; (vii) our reliance on our network of partners to drive additional growth of our revenues; (viii) the regulatory, economic, and political risks associated with our domestic and international operations; (ix) adoption of our applications and services by customers and individuals, including any new features, enhancements, and modifications, as well as our customers' and users' satisfaction with the deployment, training, and support services they receive; (x) the regulatory risks related to new and evolving technologies such as AI and our ability to realize a return on our development efforts; (xi) our ability to realize the expected business or financial benefits of any acquisitions of or investments in companies; (xii) delays or reductions in information technology spending; and (xiii) changes in sales, which may not be immediately reflected in our results due to our subscription model. Further information on these and additional risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Workday, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
July 31, 2024
January 31, 2024
Assets
Current assets:
Cash and cash equivalents
$ 1,635
$ 2,012
Marketable securities
5,738
5,801
Trade and other receivables, net
1,292
1,639
Deferred costs
237
232
Prepaid expenses and other current assets
298
255
Total current assets
9,200
9,939
Property and equipment, net
1,259
1,234
Operating lease right-of-use assets
339
289
Deferred costs, noncurrent
487
509
Acquisition-related intangible assets, net
331
233
Deferred tax assets
1,022
1,065
Goodwill
3,257
2,846
Other assets
339
337
Total assets
$ 16,234
$ 16,452
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 87
$ 78
Accrued expenses and other current liabilities
292
287
Accrued compensation
487
544
Unearned revenue
3,549
4,057
Operating lease liabilities
98
89
Total current liabilities
4,513
5,055
Debt, noncurrent
2,982
2,980
Unearned revenue, noncurrent
62
70
Operating lease liabilities, noncurrent
284
227
Other liabilities
48
38
Total liabilities
7,889
8,370
Stockholders' equity:
Common stock
0
0
Additional paid-in capital
10,869
10,400
Treasury stock
(1,051)
(608)
Accumulated other comprehensive income (loss)
19
21
Accumulated deficit
(1,492)
(1,731)
Total stockholders' equity
8,345
8,082
Total liabilities and stockholders' equity
$ 16,234
$ 16,452
Workday, Inc.
Condensed Consolidated Statements of Operations
(in millions, except number of shares which are reflected in thousands and per share data)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Revenues:
Subscription services
$ 1,903
