01—Abstract
Summary
Summary of the 10-Q filed May 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Workday, Inc. (WDAY) reported strong financial results for the quarter ended April 30, 2024, showcasing continued revenue growth and a significant improvement in profitability.
Total revenues increased by 18% year-over-year to $1.99 billiona, driven primarily by a 19% surge in subscription services revenue, which now constitutes 91% of total revenue. The company has successfully transitioned from a GAAP operating loss to a GAAP operating income of $64 million, with a GAAP operating margin of 3.2%, a substantial improvement from a loss in the prior year period. Key to this turnaround is the company's ability to grow revenue faster than expenses.
While total costs and expenses increased by 13%, this was outpaced by revenue growth, leading to improved profitability metrics. Non-GAAP operating income also saw a healthy increase of 30% to $515 millionb, with a non-GAAP operating margin of 25.9%, up from 23.5% in the prior year. The company also demonstrated robust cash flow generation, with operating cash flow increasing by 34% to $372 million and free cash flow up 33% to $291 million.
02—Key points
Key Highlights
- Total revenues increased 18% year-over-year to $1.99 billion.
- Subscription services revenue grew 19% year-over-year to $1.815 billion, representing 91% of total revenues.
- Achieved GAAP operating income of $64 million, a significant improvement from a $20 million loss in the prior year quarter.
- Non-GAAP operating income increased 30% to $515 million, with a non-GAAP operating margin of 25.9%.
- Operating cash flow increased 34% to $372 million.
- Free cash flow increased 33% to $291 million.
- The company completed its $500 million share repurchase program authorized in November 2022 and initiated a new $500 million repurchase program in February 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 29, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $1.99B$1.68B | +18.2% |
| R&D Expenses | $656.00M$600.00M | +9.3% |
| Operating Expenses | $1.93B$1.70B | +13.0% |
| Operating Income | $64.00M-$20.00M | +420.0% |
| Interest Expense | $29.00M$29.00M | 0.0% |
| Net Income | $107.00M$0 | — |
| EPS (Basic) | $0.40— | — |
| EPS (Diluted) | $0.40— | — |
| Shares Outstanding (Basic) | 264.44M258.82M | +2.2% |
| Shares Outstanding (Diluted) | 270.30M261.37M | +3.4% |
05—Questions
Frequently Asked Questions
What was Workday's revenue performance in the quarter?
Workday reported total revenues of $1.99 billion for the three months ended April 30, 2024, an 18% increase compared to $1.684 billion in the same period last year. Subscription services revenue, the primary driver, grew 19% to $1.815 billion.
How did Workday's profitability change compared to the prior year?
Workday demonstrated significant improvement in profitability. GAAP operating income swung from a loss of $20 million in the prior year period to an income of $64 million in the current period. The GAAP operating margin improved from -1.2% to 3.2%. Non-GAAP operating income also increased by 30% to $515 million, with the non-GAAP operating margin expanding to 25.9% from 23.5%.
What is the company's cash flow situation?
Workday generated strong cash flows. Operating cash flow increased by 34% to $372 million, and free cash flow, defined as operating cash flow minus capital expenditures, increased by 33% to $291 million. The company's cash, cash equivalents, and marketable securities totaled $7.2 billion as of April 30, 2024.
Were there any significant events or acquisitions during the quarter?
Yes, Workday acquired HiredScore, Inc., a provider of AI-powered talent orchestration solutions, on March 29, 2024, for $530 million in cash. The acquisition-date fair value of consideration was $530 million, with $411 million allocated to goodwill.
06—Continue