10-QPeriod: Q2 FY2023

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

Filed August 25, 2022For Securities:WDAY

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.

Financial Highlights

51 data points
Beta

Revenue

$1.54B

Net Income

-$64.16M

-4.2% Net Margin

EPS (Diluted)

$-0.25

Total Assets

$13.25B

Cash & Equivalents

$2.50B

Free Cash Flow

$114.36M

Financial Statements
Beta
Revenue$1.54B
R&D Expenses$547.84M
Operating Expenses$1.57B
Operating Income-$34.08M
Interest Expense$30.12M
Net Income-$64.16M
EPS (Basic)$-0.25
EPS (Diluted)$-0.25
Shares Outstanding (Basic)254.35M
Shares Outstanding (Diluted)254.35M

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.

Frequently Asked Questions

Workday reported total revenues of $1.54 billion for the three months ended July 31, 2022, an increase of 22% compared to the same period last year. Subscription services revenue, the primary driver of growth, increased by 23% to $1.37 billion.

While Workday reported a GAAP operating loss of $34.1 million, a widening from the prior year's $1.1 million loss, this was primarily due to increased operating expenses related to investments in headcount and growth initiatives. On a non-GAAP basis, which excludes items like share-based compensation, the company reported a solid operating income of $301.6 million and a non-GAAP operating margin of 19.6%.

The company's subscription revenue backlog, representing future contracted revenue, increased significantly by 27% year-over-year to $13.5 billion as of July 31, 2022. Of this, approximately $8.4 billion is expected to be recognized over the next 24 months, indicating a strong pipeline and visibility into future revenue streams.

Workday maintains a strong liquidity position. As of July 31, 2022, the company had $6.3 billion in cash, cash equivalents, and marketable securities. The company stated its existing liquidity, combined with operating cash flow and borrowing capacity, is sufficient to meet its working capital, capital expenditure, and debt repayment needs over the next 12 months.