10-QPeriod: Q2 FY2025

Workday, Inc. Quarterly Report for Q2 Ended Jul 31, 2024

Filed August 28, 2024For Securities:WDAY

Summary

Workday, Inc. reported solid financial performance for the quarter ending July 31, 2024, demonstrating continued growth in its core subscription services business. Total revenues increased by 17% year-over-year to $2.1 billion, driven by strong subscription services revenue growth of 17% to $1.9 billion. This growth was attributed to expansion within the existing customer base and new customer acquisitions, supported by gross and net revenue retention rates exceeding 95% and 100%, respectively. The company also achieved significant improvements in profitability, with GAAP operating income rising to $111 million from $36 million in the prior year period, reflecting revenue growth outpacing operating expense increases. Non-GAAP operating income also saw a healthy increase to $518 million. Furthermore, Workday continued to generate strong cash flow from operations, amounting to $571 million for the quarter, and its free cash flow increased by 43% to $516 million, highlighting efficient cash management and operational effectiveness. The company ended the quarter with a robust cash position of $7.4 billion in cash, cash equivalents, and marketable securities.

Financial Statements
Beta
Revenue$2.08B
R&D Expenses$649.00M
Operating Expenses$1.97B
Operating Income$111.00M
Interest Expense$29.00M
Net Income$132.00M
EPS (Basic)$0.50
EPS (Diluted)$0.49
Shares Outstanding (Basic)265.32M
Shares Outstanding (Diluted)267.95M

Key Highlights

  • 1Total revenues grew 17% year-over-year to $2.1 billion, with subscription services revenue up 17% to $1.9 billion.
  • 2GAAP operating income increased significantly to $111 million from $36 million in the prior year period, indicating improved profitability.
  • 3Non-GAAP operating margin expanded to 24.9% from 23.6% in the prior year, showing enhanced operational efficiency.
  • 4Operating cash flow strengthened by 34% to $571 million, demonstrating strong cash generation from core operations.
  • 5Free cash flow saw a substantial increase of 43% to $516 million, reflecting effective cash management.
  • 6Total subscription revenue backlog stood at $21.6 billion, with $6.8 billion expected to be recognized in the next 12 months, indicating strong future revenue visibility.
  • 7The company repurchased $309 million of its Class A common stock during the quarter, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Workday's subscription services revenue grew by 17% year-over-year to $1.9 billion for the three months ended July 31, 2024. This growth was driven by expansion within existing customer relationships and new customer acquisitions, supported by strong retention rates.

Workday ended the quarter with a strong liquidity position, reporting $7.4 billion in cash, cash equivalents, and marketable securities. The company generated $571 million in operating cash flow and $516 million in free cash flow during the quarter, indicating robust financial health.

Workday demonstrated improved profitability. GAAP operating income increased significantly to $111 million from $36 million in the prior year's comparable period. The non-GAAP operating margin also improved to 24.9% from 23.6%.

Workday's total subscription revenue backlog was $21.6 billion as of July 31, 2024, with $6.8 billion expected to be recognized as revenue within the next 12 months. This backlog provides strong visibility into future revenue streams.