Workday Announces Q1 FY25 Results, Provides Updated Guidance

PLEASANTON, Calif.--(PRNewswire)-- Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloud applications for finance and human resources, reported strong financial results for the first quarter of fiscal 2025, which ended on April 30, 2024. Despite the positive performance, Workday's stock dropped 11.23% in after-market trading.

Key Financial Metrics

• Total Revenues: $1.990 billion, up 18.1% year-over-year.
• Subscription Revenues: $1.815 billion, up 18.8% year-over-year.
• Operating Income:
  • GAAP: $64 million, 3.2% of revenues, compared to a loss of $20 million (-1.2%) last year.
  • Non-GAAP: $515 million, 25.9% of revenues, up from $396 million (23.5%) last year.
• Diluted Net Income Per Share:
  • GAAP: $0.40, compared to $0.00 last year.
  • Non-GAAP: $1.74, up from $1.33 last year.
• Subscription Revenue Backlog:
  • 12-Month: $6.60 billion, up 17.9% year-over-year.
  • Total: $20.68 billion, up 24.2% year-over-year.
• Operating Cash Flows: $372 million, compared to $277 million last year.
• Free Cash Flows: $291 million, compared to $218 million last year.
• Share Repurchase: Repurchased 0.5 million shares for $134 million.
• Cash, Cash Equivalents, and Marketable Securities: $7.18 billion as of April 30, 2024.

Comments on the Results

"Q1 was another solid quarter of revenue growth and non-GAAP operating margin expansion for Workday," said Carl Eschenbach, CEO of Workday. "With the emergence of Generative AI, the shifting talent landscape, and pressure to realize operational efficiencies, Workday has never been more relevant. Our strong value proposition and leadership in AI are paying off as more organizations turn to Workday to manage their most important assets – their people and money."

"Our first-quarter performance met our expectations across key financial metrics," said Zane Rowe, CFO of Workday. "Our progress in key growth initiatives lays a foundation for long-term growth. Our updated subscription revenue guidance reflects elevated sales scrutiny and lower customer headcount growth. Meanwhile, we are increasing our margin outlook as we focus on driving efficiencies."

Recent Business Highlights

• Workday is used by over 60% of the Fortune 500, including HPE, Keybank, Salesforce, and Unum.
• New platform customers include City of Milwaukee, H. Lee Moffitt Cancer Center, and The Onin Group.
• The Defense Intelligence Agency (DIA) selected Workday Government Cloud to support its recruitment and onboarding.
• Completed acquisition of HiredScore for AI-powered talent acquisition and mobility solutions.
• Over 50 AI use cases in production and 25 generative AI use cases on its roadmap.
• Expanded partnership with AWS for co-innovation and Google Cloud for marketplace access.
• Launched native Payroll solution in Australia.
• Recognized as a 2024 World's Most Ethical Companies by Ethisphere and one of America's Best Employers For Diversity by Forbes.

Financial Outlook

Fiscal Year 2025

Workday updated its guidance for the full fiscal year ending January 31, 2025:

• Subscription Revenue: $7.700 billion to $7.725 billion, growth of approximately 17%.
• Non-GAAP Operating Margin: 25.0%.

Second Quarter FY25

For Q2 FY25 ending July 31, 2024, Workday expects:

• Subscription Revenue: $1.895 billion, growth of approximately 17%.
• Non-GAAP Operating Margin: 24.5%.

Despite the strong performance and positive guidance, Workday's stock fell 11.23% in after-market trading, indicating investor concerns about future growth amid economic uncertainties.