Workday, Inc. Quarterly Report for Q2 Ended Jul 31, 2022

Summary

Workday, Inc. (WDAY) reported its second-quarter results for fiscal year 2023, showcasing continued revenue growth driven by its subscription services segment. Total revenues increased by 22% year-over-year to $1.5 billion, with subscription services contributing $1.37 billion, up 23%. Despite revenue growth, the company reported a GAAP operating loss of $34.1 million, a significant widening from the prior year's loss of $1.1 million. This was driven by increased operating expenses, particularly in employee-related costs due to higher headcount and performance-based bonuses, as well as a return to travel and in-person events. However, on a non-GAAP basis, Workday reported an operating income of $301.6 million, with a non-GAAP operating margin of 19.6%. The company ended the quarter with a strong liquidity position, with $6.3 billion in cash, cash equivalents, and marketable securities. The subscription revenue backlog also showed robust growth, increasing by 27% year-over-year to $13.5 billion, indicating strong future revenue potential.

Key Highlights

• 1Total revenues increased 22% year-over-year to $1.54 billion.
• 2Subscription services revenue grew 23% year-over-year to $1.37 billion, representing 89% of total revenues.
• 3GAAP operating loss widened to $34.1 million from $1.1 million in the prior year period, primarily due to increased operating expenses.
• 4Non-GAAP operating income was $301.6 million, with a non-GAAP operating margin of 19.6%.
• 5Cash, cash equivalents, and marketable securities stood at $6.3 billion, reflecting a strong liquidity position.
• 6Subscription revenue backlog increased 27% year-over-year to $13.5 billion, indicating strong future revenue potential.
• 7Headcount increased by 26% year-over-year to 16,918 employees, reflecting investment in growth.

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