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Workday, Inc. Quarterly Report for Q3 Ended Oct 31, 2023

Filing Date
Filed November 28, 2023
Period End
October 31, 2023
Security
WDAY
In the record · 2016–202610-K1110-Q328-K112

WDAY filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 112 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Leadership change8-K · Aug ’20Aug ’20
  3. Leadership change8-K · Dec ’22Dec ’22
  4. Material agreement8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 10-Q filed November 28, 2023. Cited figures are marked; the original filing is the authoritative source.

Workday, Inc. reported strong revenue growth in the third quarter of fiscal year 2024, with total revenues increasing by 17% year-over-year to $1.87 billiona.

Subscription services, the company's primary revenue driver, saw an 18% increase, reaching $1.69 billionb. This growth was attributed to new customer acquisition, expansion of product offerings to existing customers, and high customer retention rates, with gross and net retention rates exceeding 95% and 100%, respectively. The company also demonstrated significant improvement in profitability, with GAAP operating income turning positive at $87.9 million, a substantial increase from a loss of $26.3 million in the prior year period.

Non-GAAP operating income also saw robust growth of 47% to $462.1 millionc, with a non-GAAP operating margin of 24.8%, up from 19.7% in the prior year. This improvement was driven by revenue growth, expense management, and a favorable change in depreciation expense due to updated useful lives for data center equipment. Financially, Workday maintains a strong liquidity position with $6.9 billion in cash, cash equivalents, and marketable securities as of October 31, 2023.

Operating cash flow increased by 10% to $450.8 milliond for the quarter, and free cash flow grew by 12% to $390.8 million, indicating healthy cash generation from operations. The company also reported a substantial subscription revenue backlog of $18.4 billion, providing good visibility into future revenue. Significant investments continue in product development and sales, signaling a focus on long-term growth.

02—Key points

Key Highlights

  1. Total revenues increased by 17% year-over-year to $1.87 billion.
  2. Subscription services revenues grew by 18% year-over-year to $1.69 billion, driven by new customer acquisition and high retention rates.
  3. GAAP operating income turned positive at $87.9 million, a significant improvement from a loss of $26.3 million in the prior year.
  4. Non-GAAP operating income increased by 47% to $462.1 million, with non-GAAP operating margin expanding to 24.8%.
  5. Strong liquidity position with $6.9 billion in cash, cash equivalents, and marketable securities.
  6. Subscription revenue backlog reached $18.4 billion, reflecting strong future revenue potential.
  7. Operating cash flow increased by 10% to $450.8 million, and free cash flow grew by 12% to $390.8 million.

03—One dollar

04—Financials

Financial Highlights

Figures from 10-QQ3 FY2024filed November 28, 2023
Revenue$1.87BNet Income$114.00M6.1% Net MarginEPS (Diluted)$0.43Total Assets$13.93BCash & Equivalents$1.58BFree Cash Flow$391.00M

Financial Statements

Q3 FY2024 against Q3 FY2023

Line itemQ3 FY2024Q3 FY2023Change
Revenue$1.87B$1.60B+16.7%
R&D Expenses$619.00M$565.73M+9.4%
Operating Expenses$1.78B$1.63B+9.4%
Operating Income$88.00M-$26.32M+434.3%
Interest Expense$29.00M$29.59M−2.0%
Net Income$114.00M-$74.72M+252.6%
EPS (Basic)$0.43$-0.29+248.3%
EPS (Diluted)$0.43$-0.29+248.3%
Shares Outstanding (Basic)262.15M255.75M+2.5%
Shares Outstanding (Diluted)266.38M255.75M+4.2%

05—Questions

Frequently Asked Questions

  1. What was Workday's revenue performance in the third quarter of fiscal year 2024?

    Workday reported total revenues of $1.87 billion for the three months ended October 31, 2023, a 17% increase compared to $1.60 billion in the same period last year. Subscription services revenues, the primary revenue source, grew 18% year-over-year to $1.69 billion.

  2. How did Workday's profitability change in the reported quarter?

    Workday showed significant improvement in profitability. GAAP operating income was $87.9 million, a substantial turnaround from a loss of $26.3 million in the prior year. Non-GAAP operating income increased by 47% to $462.1 million, with the non-GAAP operating margin expanding by 510 basis points to 24.8%.

  3. What is Workday's current financial position and cash flow generation?

    As of October 31, 2023, Workday maintained a strong liquidity position with $6.9 billion in cash, cash equivalents, and marketable securities. Operating cash flow for the quarter was $450.8 million, a 10% increase year-over-year. Free cash flow also saw a healthy increase of 12% to $390.8 million.

  4. What is the outlook for Workday's future revenues based on their backlog?

    Workday's subscription revenue backlog stood at $18.4 billion as of October 31, 2023. This represents contracted revenues from subscription services that have not yet been recognized, providing good visibility into future revenue streams. Approximately $6.0 billion is expected to be recognized within the next 12 months.

06—Continue

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