Summary
Workday, Inc. reported its third-quarter fiscal year 2023 results, showcasing continued revenue growth driven by its subscription services, which now represent 90% of total revenue. While total revenues increased by 20% year-over-year to $1.6 billion for the quarter, the company experienced a GAAP operating loss of $26.3 million, a significant decrease from the prior year's operating income, primarily due to increased operating expenses related to headcount growth, a new performance-based cash bonus program, and a return to travel and in-person events. Despite these increased expenses impacting short-term profitability, Workday's subscription revenue backlog remains strong, growing 28% year-over-year to $14.1 billion, indicating robust future revenue potential. Financially, Workday ended the quarter with a strong liquidity position, holding $5.5 billion in cash, cash equivalents, and marketable securities. The company also successfully managed its debt, including the conversion of its 2022 Notes. While investing in future growth, including product development and sales expansion, the company is navigating a challenging macroeconomic environment which has led to longer sales cycles. Investors should monitor the company's ability to translate its strong revenue growth and backlog into improved GAAP profitability while managing its operating expenses effectively.
Financial Highlights
51 data points| Revenue | $1.60B |
| R&D Expenses | $565.73M |
| Operating Expenses | $1.63B |
| Operating Income | -$26.32M |
| Interest Expense | $29.59M |
| Net Income | -$74.72M |
| EPS (Basic) | $-0.29 |
| EPS (Diluted) | $-0.29 |
| Shares Outstanding (Basic) | 255.75M |
| Shares Outstanding (Diluted) | 255.75M |
Key Highlights
- 1Total revenues grew 20% year-over-year to $1.6 billion for the third quarter, with subscription services revenue up 22% to $1.4 billion.
- 2Subscription revenue backlog increased 28% year-over-year to $14.1 billion as of October 31, 2022.
- 3The company reported a GAAP operating loss of $26.3 million for the quarter, compared to an operating income of $23.9 million in the prior year, primarily due to increased operating expenses.
- 4Non-GAAP operating margin decreased to 19.7% from 25.0% year-over-year, reflecting increased investments in headcount and operations.
- 5Workday ended the quarter with $5.5 billion in cash, cash equivalents, and marketable securities, demonstrating a strong liquidity position.
- 6The company noted an increase in sales cycles, particularly for net new opportunities, due to the prevailing economic uncertainty.