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Workday, Inc. 8-K Report, Financial Results (Aug 22, 2024)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed August 22, 2024
Period End
August 22, 2024
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 8-K filed August 22, 2024. Cited figures are marked; the original filing is the authoritative source.

Workday reported fiscal Q2 2025 results (quarter ended July 31, 2024) that beat its internal expectations on key metrics.

Total revenue rose 16.7% year over year to $2.085 billiona, and subscription revenue rose 17.2% to $1.903 billion. GAAP operating income was $111 million (5.3% margin), up from $36 million (2.0%) a year earlier. Non-GAAP operating income was $518 million (24.9% margin), up from $421 million (23.6%).

GAAP diluted EPS was $0.49b versus $0.30, and non-GAAP diluted EPS was $1.75 versus $1.43. Free cash flow was $516 million, up from $360 million. The 12-month subscription revenue backlog reached $6.80 billion (up 16.1%), and total subscription backlog reached $21.58 billion (up 20.9%).

Management reiterated full-year FY25 subscription revenue guidance of $7.700 to $7.725 billionc (about 17% growth) and raised its non-GAAP operating margin outlook to 25.25%, per the CFO's commentary. Third-quarter guidance calls for subscription revenue of $1.955 billion (16% growth) and the same 25.25% non-GAAP operating margin. The company also repurchased about 1.4 million shares for $309 million and announced a new authorization to repurchase up to $1.0 billion of Class A common stock with no expiration date.

Cash and marketable securities totaled $7.37 billiond at quarter end. Investors should note that Workday changed its non-GAAP definitions beginning in fiscal 2025 to also exclude certain acquisition-related costs, realignment costs, and gains or losses on strategic investments. Non-GAAP comparisons therefore may not be fully like-for-like with prior disclosures.

GAAP profitability is improving but remains thin relative to the non-GAAP figures, which exclude substantial stock-based compensation of $370 million in the quarter. Unearned revenue declined sequentially, which is consistent with seasonal billing patterns but is worth monitoring.

02—Key points

Key Highlights

  1. Total revenue of $2.085 billion grew 16.7% year over year, and subscription revenue of $1.903 billion grew 17.2%.
  2. GAAP operating margin expanded to 5.3% from 2.0%, while non-GAAP operating margin reached 24.9% versus 23.6% a year earlier.
  3. GAAP diluted EPS was $0.49 and non-GAAP diluted EPS was $1.75, up from $0.30 and $1.43, respectively.
  4. Free cash flow of $516 million rose 43% from $360 million, and operating cash flow was $571 million.
  5. Subscription backlog was $21.58 billion (up 20.9%) and 12-month backlog was $6.80 billion (up 16.1%), supporting visibility into future revenue.
  6. The board authorized a new $1.0 billion share repurchase program, following $309 million of repurchases in the quarter.
  7. FY25 subscription revenue guidance was reiterated at $7.700 to $7.725 billion, and non-GAAP operating margin guidance was raised to 25.25%.

03—Questions

Frequently Asked Questions

  1. Did Workday meet or beat expectations this quarter?

    According to CFO Zane Rowe, second-quarter performance was ahead of the company's expectations across key financial metrics. The filing itself does not state consensus estimates, so investors should compare the reported figures against analyst forecasts from other sources.

  2. What is the company's full-year outlook?

    Workday reiterated FY25 subscription revenue guidance of $7.700 to $7.725 billion, representing growth of about 17%. It raised its FY25 non-GAAP operating margin expectation to 25.25%. For the third quarter, it expects subscription revenue of $1.955 billion (16% growth) and the same 25.25% non-GAAP operating margin.

  3. How much capital is Workday returning to shareholders?

    In the quarter, Workday repurchased about 1.4 million Class A shares for $309 million. The board also authorized a new repurchase program of up to $1.0 billion with no expiration date. The program may be suspended or discontinued at any time and does not obligate the company to buy any specific amount of stock.

  4. Why do GAAP and non-GAAP results differ so much?

    Non-GAAP measures exclude share-based compensation, which was $370 million in the quarter, along with employer payroll taxes on stock transactions, amortization of acquired intangibles, acquisition-related costs, and realignment costs. Starting in fiscal 2025, non-GAAP results also exclude certain acquisition-related costs, realignment costs, and gains or losses on strategic investments. Investors should weigh GAAP results alongside the non-GAAP figures.

  5. What is the company's liquidity position?

    Cash, cash equivalents, and marketable securities totaled $7.37 billion as of July 31, 2024. Operating cash flow for the six months was $943 million, and the balance sheet shows $2.98 billion of noncurrent debt.

04—Continue

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