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Workday, Inc. 8-K Report, Financial Results (May 22, 2025)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed May 22, 2025
Period End
May 22, 2025
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 May 22, 2025. Cited figures are marked; the original filing is the authoritative source.

Workday reported fiscal 2026 first quarter results (quarter ended April 30, 2025) that were mixed on a GAAP basis but solid on growth and profitability metrics.

Total revenues rose 12.6% year over year to $2.240 billiona, and subscription revenues grew 13.4% to $2.059 billion. GAAP operating income fell to $39 million (1.8% margin) from $64 million, as the company absorbed $166 million in restructuring charges tied to its Fiscal 2026 Restructuring Plan, which cut the workforce by roughly 7.5%. GAAP diluted EPS was $0.25 versus $0.40 a year earlier.

Non-GAAP operating margin expanded to 30.2% from 25.9%, and non-GAAP diluted EPS rose to $2.23b from $1.74. Cash generation and backlog were the key positives. Operating cash flow reached $457 million and free cash flow $421 million, up from $372 million and $291 million.

Twelve-month subscription revenue backlog grew 15.6% to $7.63 billionc, and total subscription backlog grew 19.1% to $24.62 billion. Cash, cash equivalents and marketable securities totaled $7.97 billion. Management reiterated fiscal 2026 subscription revenue guidance of $8.8 billion (14.0% growth) and raised its non-GAAP operating margin outlook to approximately 28.5%.

Q2 guidance calls for subscription revenue of $2.160 billiond (13.5% growth) and a 28.0% non-GAAP operating margin. The Board also authorized an additional $1.0 billion share repurchase program with no expiration date.

During the quarter Workday bought back about 1.3 million Class A shares for $293 million. Investors should note that unearned revenue declined sharply on a sequential basis, from $4.47 billion to $3.81 billion, which is typical seasonality for the company's billing cycle, and that GAAP profitability remains sensitive to restructuring costs.

02—Key points

Key Highlights

  1. Total revenue of $2.240 billion, up 12.6% year over year; subscription revenue of $2.059 billion, up 13.4%.
  2. GAAP operating income fell to $39 million (1.8% margin) from $64 million, driven by $166 million in restructuring expenses.
  3. Non-GAAP operating margin improved to 30.2% from 25.9%; non-GAAP diluted EPS rose to $2.23 from $1.74.
  4. Free cash flow of $421 million, up 45% from $291 million a year earlier.
  5. 12-month subscription revenue backlog of $7.63 billion (up 15.6%); total subscription backlog of $24.62 billion (up 19.1%).
  6. Fiscal 2026 subscription revenue guidance reiterated at $8.8 billion; non-GAAP operating margin guidance raised to approximately 28.5%.
  7. New $1.0 billion share repurchase authorization approved; $293 million of shares repurchased in the quarter.

03—Questions

Frequently Asked Questions

  1. Why did GAAP operating income decline despite revenue growth?

    GAAP operating income fell to $39 million from $64 million mainly because of $166 million in restructuring expenses tied to the Fiscal 2026 Restructuring Plan, which reduced headcount by about 7.5% and included a $34 million office space impairment. Excluding these and other non-GAAP adjustments such as stock-based compensation, operating margin actually improved to 30.2% from 25.9%.

  2. Did Workday change its full-year guidance?

    Subscription revenue guidance for fiscal 2026 was reiterated at $8.8 billion (14.0% growth). Non-GAAP operating margin guidance was raised to approximately 28.5%. Q2 fiscal 2026 guidance calls for $2.160 billion in subscription revenue and a 28.0% non-GAAP operating margin.

  3. How strong is Workday's balance sheet and cash position?

    Workday ended the quarter with $7.97 billion in cash, cash equivalents and marketable securities, against roughly $2.99 billion of noncurrent debt. Operating cash flow of $457 million and free cash flow of $421 million both improved year over year, supporting the new $1.0 billion buyback authorization.

  4. What does the new share repurchase program mean for shareholders?

    The Board authorized up to $1.0 billion in Class A share repurchases with no expiration date. Execution may use open market purchases, Rule 10b5-1 trading plans, or private transactions, and the program can be suspended at any time. In the quarter, Workday repurchased about 1.3 million shares for $293 million, and treasury stock increased to $1.6 billion from $1.3 billion.

  5. Why did unearned revenue drop so much on the balance sheet?

    Unearned revenue fell to $3.81 billion from $4.47 billion sequentially. This reflects the company's billing seasonality, with large annual invoices typically recognized as receivables and deferred revenue earlier in the fiscal year and then recognized as revenue over subsequent months. The decline is consistent with normal intra-year patterns and does not by itself signal weakening demand, though the 12-month backlog growth of 15.6% is the better indicator of forward momentum.

04—Continue

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