On May 23, 2024, Workday Inc (WDAY, Financial) released its 8-K filing for the fiscal 2025 first quarter, showcasing robust financial performance. Workday, a leading provider of cloud-based human capital management (HCM), financial management, and business planning solutions, reported significant year-over-year growth in both revenue and earnings.
Company Overview
Workday is a software company that offers human capital management, financial management, and business planning solutions. Known for being a cloud-only software provider, Workday is headquartered in Pleasanton, California. Founded in 2005, Workday now employs over 18,000 employees.
Q1 Fiscal 2025 Financial Highlights
Workday Inc (WDAY, Financial) reported total revenues of $1.990 billion for the first quarter of fiscal 2025, marking an 18.1% increase from the same period last year. Subscription revenues were particularly strong, reaching $1.815 billion, up 18.8% year-over-year. These figures surpassed analyst estimates, which had projected revenues of $1.973.26 million.
Operating income for the quarter was $64 million, or 3.2% of revenues, a significant improvement from an operating loss of $20 million, or negative 1.2% of revenues, in the first quarter of fiscal 2024. Non-GAAP operating income also saw a notable increase, reaching $515 million, or 25.9% of revenues, compared to $396 million, or 23.5% of revenues, in the same period last year.
Key Metrics and Financial Achievements
Diluted net income per share was $0.40, compared to $0.00 in the first quarter of fiscal 2024. Non-GAAP diluted net income per share was $1.74, exceeding the analyst estimate of $0.28 and up from $1.33 in the same period last year. This strong performance underscores Workday's ability to generate substantial shareholder value.
Workday's 12-month subscription revenue backlog was $6.60 billion, up 17.9% from the same period last year, while the total subscription revenue backlog increased by 24.2% year-over-year to $20.68 billion. Operating cash flows were $372 million, compared to $277 million in the prior year, and free cash flows were $291 million, up from $218 million in the previous year.
Balance Sheet and Cash Flow
As of April 30, 2024, Workday's cash, cash equivalents, and marketable securities totaled $7.18 billion. The company repurchased approximately 0.5 million shares of Class A common stock for $134 million as part of its share repurchase programs, reflecting a commitment to returning value to shareholders.
| Metric | Q1 FY2025 | Q1 FY2024 |
|---|---|---|
| Total Revenues | $1.990 billion | $1.684 billion |
| Subscription Revenues | $1.815 billion | $1.528 billion |
| Operating Income | $64 million | $(20) million |
| Non-GAAP Operating Income | $515 million | $396 million |
| Diluted Net Income per Share | $0.40 | $0.00 |
| Non-GAAP Diluted Net Income per Share | $1.74 | $1.33 |
| Operating Cash Flows | $372 million | $277 million |
| Free Cash Flows | $291 million | $218 million |
Commentary and Analysis
“Q1 was another solid quarter of revenue growth and non-GAAP operating margin expansion for Workday, as we drive toward long-term, durable growth,” said Workday CEO Carl Eschenbach. “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, investments in key growth initiatives, and leadership in AI are paying off as more organizations turn to Workday to manage their two most important assets – their people and money.”
“Our first quarter performance was in line with our expectations across our key financial metrics,” said Zane Rowe, CFO, Workday. “We were pleased with our progress across key growth initiatives in Q1, which help build a foundation for long-term growth. Our updated subscription revenue guidance reflects the elevated sales scrutiny and lower customer headcount growth we experienced during the quarter. At the same time, we are increasing our margin outlook as we focus on driving increased efficiencies across the company.”
Conclusion
Workday Inc (WDAY, Financial) has demonstrated strong financial performance in the first quarter of fiscal 2025, exceeding analyst estimates and showcasing significant growth in revenue and earnings. The company's strategic investments in AI and key growth initiatives are paying off, positioning Workday for continued success in managing the critical assets of its clients. Investors and stakeholders will be keen to see how Workday builds on this momentum in the coming quarters.
Explore the complete 8-K earnings release (here) from Workday Inc for further details.
