Workday Inc (WDAY) Reports Robust Fiscal 2024 Third Quarter Results

Subscription Revenue and Operating Income Surge as Company Raises Full-Year Guidance

  • Fiscal Q3 total revenues reached $1.87 billion, a 16.7% increase year over year.
  • Subscription revenues climbed to $1.69 billion, marking an 18.1% rise from the previous year.
  • Non-GAAP operating income soared to $462.1 million, with margins expanding to 24.8%.
  • Workday Inc (WDAY) raises fiscal 2024 subscription revenue guidance to $6.598 billion.
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On November 28, 2023, Workday Inc (WDAY, Financial) released its 8-K filing, announcing financial results for the third quarter of fiscal year 2024, which ended on October 31, 2023. The company reported a significant increase in total revenues, which rose to $1.87 billion, up 16.7% from the third quarter of the previous fiscal year. This growth was driven by a substantial 18.1% increase in subscription revenues, which reached $1.69 billion.

Financial Performance Highlights

Workday Inc (WDAY, Financial) demonstrated strong financial performance with operating income reaching $87.9 million, a stark contrast to the operating loss of $26.3 million reported in the same period last year. Non-GAAP figures were even more impressive, with operating income hitting $462.1 million, or 24.8% of revenues, compared to $314.2 million, or 19.7% of revenues, in the prior year's quarter.

The company's net income per share on a basic and diluted basis was $0.43, reversing a net loss per share of $0.29 in the third quarter of fiscal 2023. Non-GAAP net income per share also saw a significant increase, with basic and diluted figures of $1.56 and $1.53, respectively, up from $1.01 and $0.99 in the same period last year.

Strategic and Operational Progress

Workday Inc (WDAY, Financial) has made notable strides in its strategic and operational goals. The company's total subscription revenue backlog rose to $18.45 billion, marking a 30.9% increase from the previous year. The 12-month subscription revenue backlog now stands at $6.05 billion, up 21.9% year over year. Operating cash flows and free cash flows also improved, reaching $450.8 million and $390.8 million, respectively.

Co-CEO Carl Eschenbach commented on the company's success, stating,

Workday delivered a strong quarter, demonstrating how organizations across industries and geographies are continuing to place their trust in Workday."
He also highlighted the company's AI innovation, full platform deals, expanding partner ecosystem, and international growth as key drivers of momentum.

Financial Position and Outlook

As of October 31, 2023, Workday Inc (WDAY, Financial) reported cash, cash equivalents, and marketable securities totaling $6.88 billion. Following the positive results, the company has raised its fiscal 2024 subscription revenue guidance to $6.598 billion, representing a 19% year-over-year growth, and increased its non-GAAP operating margin guidance to 23.8%.

Chief Financial Officer Zane Rowe expressed confidence in the company's trajectory,

Our strong third-quarter results demonstrate the durability of our business and the ongoing market adoption for cloud Financials and Human Capital Management."

Balance Sheet and Cash Flow Analysis

The balance sheet of Workday Inc (WDAY, Financial) remains robust, with a significant increase in cash and marketable securities compared to the previous fiscal year-end. The company's assets have grown, with current assets now totaling $8.57 billion. Liabilities have seen a slight decrease, with total current liabilities at $4.03 billion.

The condensed consolidated statements of cash flows reveal that the company's operating activities have generated more cash compared to the same period last year, contributing to the company's strong free cash flow position.

In conclusion, Workday Inc (WDAY, Financial)'s fiscal 2024 third quarter results reflect a company that is not only growing its top line but also improving its profitability and cash generation. The raised guidance for subscription revenue and operating margins indicates management's confidence in the company's continued performance and market position. Investors and potential members may find Workday Inc (WDAY)'s financial resilience and strategic advancements compelling as they consider the company's prospects in a dynamic business environment.

Explore the complete 8-K earnings release (here) from Workday Inc for further details.