10-QPeriod: Q1 FY2026

Workday, Inc. Quarterly Report for Q1 Ended Apr 30, 2025

Filed May 23, 2025For Securities:WDAY

Summary

Workday, Inc. reported its first-quarter fiscal year 2026 results, demonstrating continued revenue growth driven primarily by its subscription services. Total revenues increased by 13% year-over-year to $2.24 billion, with subscription revenue alone reaching $2.06 billion, also up 13%. This growth was supported by a strong gross revenue retention rate of approximately 98%, indicating customer loyalty and satisfaction. Despite revenue growth, GAAP operating income saw a decrease of 38% to $39 million, largely due to significant restructuring charges of $166 million related to a workforce reduction of approximately 7.5% announced in February 2025. However, on a non-GAAP basis, operating income surged 32% to $677 million, with non-GAAP operating margin improving to 30.2% from 25.9% in the prior year, highlighting the company's focus on operational efficiency and scalability. Financially, Workday maintains a strong liquidity position with $8.0 billion in cash, cash equivalents, and marketable securities. Operating cash flow increased by 23% to $457 million, and free cash flow saw a substantial 45% increase to $421 million, reflecting effective cash management and operational improvements. The company's subscription revenue backlog remains robust at $24.6 billion, signaling future revenue streams. While the company is navigating macroeconomic uncertainties, including deal scrutiny and extended sales cycles, its subscription-based model and continued investment in AI and strategic growth areas position it for sustained long-term growth.

Financial Highlights

51 data points
Beta

Revenue

$2.24B

Net Income

$68.00M

3.0% Net Margin

EPS (Diluted)

$0.25

Total Assets

$17.21B

Cash & Equivalents

$988.00M

Free Cash Flow

$421.00M

Financial Statements
Beta
Revenue$2.24B
R&D Expenses$663.00M
Operating Expenses$2.20B
Operating Income$39.00M
Interest Expense$29.00M
Net Income$68.00M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)266.52M
Shares Outstanding (Diluted)270.30M

Key Highlights

  • 1Total revenues grew 13% to $2.24 billion, driven by a 13% increase in subscription services revenue to $2.06 billion.
  • 2GAAP operating income decreased by 38% to $39 million due to $166 million in restructuring charges, but Non-GAAP operating income increased 32% to $677 million with improved margins.
  • 3Gross revenue retention rate remained strong at approximately 98%, demonstrating customer loyalty.
  • 4Operating cash flow increased 23% to $457 million, and Free Cash Flow grew 45% to $421 million.
  • 5Total subscription revenue backlog stood at $24.6 billion, with $7.6 billion expected to be recognized in the next 12 months.
  • 6Workday announced a restructuring plan in February 2025, resulting in a 7.5% workforce reduction, incurring $166 million in related charges this quarter.
  • 7The company maintains a strong liquidity position with $8.0 billion in cash, cash equivalents, and marketable securities.

Frequently Asked Questions

Workday incurred $166 million in restructuring charges in the first quarter of fiscal year 2026, primarily related to a workforce reduction of approximately 7.5% and office space impairments. These charges significantly impacted GAAP operating income, causing it to decrease by 38% year-over-year. However, on a non-GAAP basis, which excludes these restructuring costs, operating income increased by 32%, and operating margin improved, indicating underlying operational strength.

Workday's total revenues grew 13% to $2.24 billion in the first quarter of fiscal year 2026. This growth was primarily driven by its subscription services, which also increased by 13% to $2.06 billion. The company attributes this growth to expansion within its existing customer base (approximately 60% of the increase) and revenue from newly acquired customers (40%). The strong gross revenue retention rate of 98% further underscores the stability and growth from existing customers.

Workday maintains a strong financial position. As of April 30, 2025, the company had $8.0 billion in cash, cash equivalents, and marketable securities. Operating cash flow increased by 23% year-over-year to $457 million, and free cash flow saw a significant increase of 45% to $421 million. The substantial subscription revenue backlog of $24.6 billion provides good visibility into future revenues.

Workday is navigating macroeconomic uncertainties, including increased deal scrutiny and lengthening sales cycles, which can impact revenue recognition and collections. The company also faces intense competition in the enterprise cloud application market and potential risks related to cybersecurity, data privacy, and the evolving regulatory landscape for technologies like AI. Additionally, the restructuring plan, while aimed at long-term growth, incurred significant upfront costs.