10-QPeriod: Q3 FY2025

Workday, Inc. Quarterly Report for Q3 Ended Oct 31, 2024

Filed December 5, 2024For Securities:WDAY

Summary

Workday, Inc. (WDAY) reported solid financial results for the third quarter of fiscal year 2025, ending October 31, 2024. Total revenues increased by 16% year-over-year to $2.2 billion, driven by a 16% rise in subscription services revenue to $2.0 billion. This growth was supported by strong expansion within existing customers (60% of the increase) and new customer acquisition (40%). The company demonstrated improved profitability, with GAAP operating income more than doubling to $165 million, resulting in a GAAP operating margin of 7.6%, up from 4.7% in the prior year period. This expansion in profitability reflects revenue growth outpacing headcount growth and efforts to build efficiencies across the business. Financially, Workday maintains a strong liquidity position with $7.2 billion in cash, cash equivalents, and marketable securities as of October 31, 2024. The company also reported a healthy subscription revenue backlog of $22.2 billion, indicating strong future revenue potential. Acquisitions in Evisort and HiredScore are expected to bolster Workday's AI capabilities, aligning with the company's strategic focus on innovation and expanding its cloud-based offerings in financial management and HCM. Despite macroeconomic uncertainties, Workday's subscription-based model and high gross revenue retention rate of 98% provide a degree of revenue predictability.

Financial Highlights

51 data points
Beta

Revenue

$2.16B

Net Income

$193.00M

8.9% Net Margin

EPS (Diluted)

$0.72

Total Assets

$16.42B

Cash & Equivalents

$1.32B

Free Cash Flow

$359.00M

Financial Statements
Beta
Revenue$2.16B
R&D Expenses$647.00M
Operating Expenses$2.00B
Operating Income$165.00M
Interest Expense$29.00M
Net Income$193.00M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)265.41M
Shares Outstanding (Diluted)268.55M

Key Highlights

  • 1Total revenues grew 16% year-over-year to $2.2 billion, with subscription services revenue up 16% to $2.0 billion.
  • 2GAAP operating income significantly increased to $165 million, and GAAP operating margin improved to 7.6% from 4.7% in the prior year.
  • 3The company maintains a strong liquidity position with $7.2 billion in cash, cash equivalents, and marketable securities.
  • 4Subscription revenue backlog stands at a robust $22.2 billion, signaling strong future revenue visibility.
  • 5Gross revenue retention rate of 98% highlights customer loyalty and the company's ability to retain recurring revenue.
  • 6Workday completed the acquisition of Evisort Inc. in October 2024 to enhance its AI-powered document intelligence capabilities.

Frequently Asked Questions

Workday reported total revenues of $2.2 billion for the three months ended October 31, 2024, representing a 16% increase compared to the same period last year. Subscription services revenue, the primary driver, grew 16% to $2.0 billion.

Profitability improved significantly. GAAP operating income rose to $165 million from $88 million in the prior year, and the GAAP operating margin expanded to 7.6% from 4.7%. This was attributed to revenue growth outpacing headcount increases and operating expense management.

Workday maintains a strong financial position with $7.2 billion in cash, cash equivalents, and marketable securities as of October 31, 2024. Furthermore, the company has a substantial subscription revenue backlog of $22.2 billion, which provides good visibility into future recognized revenues.

The company highlighted its continued focus on expanding its cloud applications, international growth, AI innovation, and strategic acquisitions. In this quarter, Workday completed the acquisition of Evisort Inc. in October 2024 to integrate AI-powered document intelligence into its platform.