Le Lézard
Classified in: Science and technology, Business
Subjects: ERN, ERP

Workday Announces Fiscal 2025 First Quarter Financial Results


Fiscal First Quarter Total Revenues of $1.990 Billion, Up 18.1% Year Over Year
Subscription Revenues of $1.815 Billion, Up 18.8% Year Over Year

PLEASANTON, Calif., May 23, 2024 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), a leading provider of solutions to help organizations manage their people and money, today announced results for the fiscal 2025 first quarter ended April 30, 2024.

Fiscal 2025 First Quarter Results

1

See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.

Comments on the News

"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."

Recent Highlights

1

Gartner, Voice of the Customer for Cloud HCM Suites for 1,000+ Employee Enterprises, Peer Contributors, 8 April 2024

Financial Outlook

Workday is updating its guidance for the fiscal 2025 full year ending January 31, 2025 as follows:

Workday is providing guidance for the fiscal 2025 second quarter ending July 31, 2024 as follows:

1

The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to quantify share-based compensation expense, which is excluded from our non-GAAP operating margin, as it requires additional inputs such as the number of shares granted and market prices that are not ascertainable.

Earnings Call Details

Workday plans to host a conference call today to review its fiscal 2025 first quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 1:30 p.m. PT/4:30 p.m. ET and can be accessed via webcast. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 90 days.

Workday uses the Workday Blog as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Workday

Workday is a leading enterprise platform that helps organizations manage their most important assets ? their people and money. The Workday platform is built with AI at the core to help customers elevate people, supercharge work, and move their business forever forward. Workday is used by more than 10,500 organizations around the world and across industries ? from medium-sized businesses to more than 60% of the Fortune 500. For more information about Workday, visit workday.com.

© 2024 Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding Workday's full-year and second quarter fiscal 2025 subscription revenue and non-GAAP operating margin, growth, demand, strategy, and investments. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to: (i) breaches in our security measures or those of our third-party providers, unauthorized access to our customers' or other users' personal data, or disruptions in our data center or computing infrastructure operations; (ii) service outages, delays in the deployment of our applications, and the failure of our applications to perform properly; (iii) privacy concerns and evolving domestic or foreign laws and regulations; (iv) the impact of continuing global economic and geopolitical volatility on our business, as well as on our customers, prospects, partners, and service providers; (v) any loss of key employees or the inability to attract, train, and retain highly skilled employees; (vi) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications, advancements in technology, and marketing initiatives by our competitors; (vii) our reliance on our network of partners to drive additional growth of our revenues; (viii) the regulatory, economic, and political risks associated with our domestic and international operations; (ix) adoption of our applications and services by customers and individuals, including any new features, enhancements, and modifications, as well as our customers' and users' satisfaction with the deployment, training, and support services they receive; (x) the regulatory risks related to new and evolving technologies such as AI and our ability to realize a return on our development efforts; (xi) our ability to realize the expected business or financial benefits of any acquisitions of or investments in companies; (xii) delays or reductions in information technology spending; and (xiii) changes in sales, which may not be immediately reflected in our results due to our subscription model. Further information on these and additional risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.

Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.

Workday, Inc.

Condensed Consolidated Balance Sheets

(in millions)

(unaudited)



April 30, 2024


January 31, 2024

Assets




Current assets:




Cash and cash equivalents

$              1,752


$              2,012

Marketable securities

5,430


5,801

Trade and other receivables, net

1,133


1,639

Deferred costs

232


232

Prepaid expenses and other current assets

327


255

Total current assets

8,874


9,939

Property and equipment, net

1,238


1,234

Operating lease right-of-use assets

323


289

Deferred costs, noncurrent

489


509

Acquisition-related intangible assets, net

351


233

Deferred tax assets

1,056


1,065

Goodwill

3,257


2,846

Other assets

353


337

Total assets

$           15,941


$            16,452

Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$                   76


$                   78

Accrued expenses and other current liabilities

254


287

Accrued compensation

451


544

Unearned revenue

3,552


4,057

Operating lease liabilities

95


89

Total current liabilities

4,428


5,055

Debt, noncurrent

2,981


2,980

Unearned revenue, noncurrent

61


70

Operating lease liabilities, noncurrent

268


227

Other liabilities

40


38

Total liabilities

7,778


8,370

Stockholders' equity:




Common stock

0


0

Additional paid-in capital

10,512


10,400

Treasury stock

(742)


(608)

Accumulated other comprehensive income (loss)

17


21

Accumulated deficit

(1,624)


(1,731)

Total stockholders' equity

8,163


8,082

Total liabilities and stockholders' equity

$            15,941


$            16,452

 

Workday, Inc.

Condensed Consolidated Statements of Operations

(in millions, except number of shares which are reflected in thousands and per share data)

(unaudited)



Three Months Ended April 30,


2024


2023

Revenues:




Subscription services

$              1,815


$              1,528

Professional services

175


156

Total revenues

1,990


1,684

Costs and expenses (1):




Costs of subscription services

290


239

Costs of professional services

199


178

Product development

656


600

Sales and marketing

573


519

General and administrative

208


168

Total costs and expenses

1,926


1,704

Operating income (loss)

64


(20)

Other income (expense), net

59


27

Income (loss) before provision for (benefit from) income taxes

123


7

Provision for (benefit from) income taxes

16


7

Net income (loss)

$                 107


$                     0

Net income (loss) per share, basic

$                0.40


$                0.00

Net income (loss) per share, diluted

$                0.40


$                0.00

Weighted-average shares used to compute net income (loss) per share, basic

264,444


258,820

Weighted-average shares used to compute net income (loss) per share, diluted

270,298


261,371


(1) Costs and expenses include share-based compensation expenses as follows:


Three Months Ended April 30,


2024


2023

Costs of subscription services

$                    38


$                    29

Costs of professional services

31


30

Product development

173


170

Sales and marketing

72


80

General and administrative

71


60

Total share-based compensation expenses

$                  385


$                  369

 

Workday, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)



Three Months Ended April 30,


2024


2023

Cash flows from operating activities:




Net income (loss)

$                 107


$                     0

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:




Depreciation and amortization

75


70

Share-based compensation expenses

385


369

Amortization of deferred costs

59


49

Non-cash lease expense

25


24

(Gains) losses on investments

7


8

Accretion of discounts on marketable debt securities, net

(33)


(34)

Deferred income taxes

6


2

Other

1


(5)

Changes in operating assets and liabilities, net of business combinations:




Trade and other receivables, net

509


473

Deferred costs

(40)


(35)

Prepaid expenses and other assets

(21)


(19)

Accounts payable

10


(58)

Accrued expenses and other liabilities

(193)


(223)

Unearned revenue

(525)


(344)

Net cash provided by (used in) operating activities

372


277

Cash flows from investing activities:




Purchases of marketable securities

(778)


(1,888)

Maturities of marketable securities

1,096


1,232

Sales of marketable securities

17


22

Capital expenditures

(81)


(59)

Business combinations, net of cash acquired

(512)


0

Purchase of other intangible assets

0


(9)

Purchases of non-marketable equity and other investments

0


(11)

Net cash provided by (used in) investing activities

(258)


(713)

Cash flows from financing activities:




Repurchases of common stock

(128)


0

Proceeds from issuance of common stock from employee equity plans

0


1

Taxes paid related to net share settlement of equity awards

(239)


(3)

Net cash provided by (used in) financing activities

(367)


(2)

Effect of exchange rate changes

0


(1)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(253)


(439)

Cash, cash equivalents, and restricted cash at the beginning of period

2,024


1,895

Cash, cash equivalents, and restricted cash at the end of period

$              1,771


$              1,456

 

Workday, Inc.
Reconciliations of GAAP to Non-GAAP Data

Reconciliations of our GAAP to non-GAAP operating results are included in the following table (in millions, except percentages and per share data). See the section titled "About Non-GAAP Financial Measures" below for further details.


Three Months Ended April 30,


2024


2023

Non-GAAP operating income (loss)




Operating income (loss)

$                64


$              (20)

Share-based compensation expenses

385


369

Employer payroll tax-related items on employee stock transactions

38


26

Amortization of acquisition-related intangible assets

17


21

Acquisition-related costs

3


0

Realignment costs

8


0

Non-GAAP operating income (loss)

$              515


$             396





Non-GAAP operating margin(1)




Operating margin

3.2 %


(1.2) %

Share-based compensation expenses

19.3 %


21.9 %

Employer payroll tax-related items on employee stock transactions

1.9 %


1.5 %

Amortization of acquisition-related intangible assets

0.9 %


1.3 %

Acquisition-related costs

0.2 %


0.0 %

Realignment costs

0.4 %


0.0 %

Non-GAAP operating margin

25.9 %


23.5 %





Non-GAAP diluted net income (loss) per share(1)(2)




Diluted net income (loss) per share

$             0.40


$            0.00

Share-based compensation expenses

1.42


1.41

Employer payroll tax-related items on employee stock transactions

0.14


0.10

Amortization of acquisition-related intangible assets

0.06


0.08

Acquisition-related costs

0.01


0.00

Realignment costs

0.03


0.00

Losses (gains) on strategic investments, net

0.03


0.03

Income tax effects

(0.35)


(0.29)

Non-GAAP diluted net income (loss) per share

$             1.74


$            1.33



(1)

Operating margin and diluted net income (loss) per share are calculated using unrounded data.

(2)

For the three months ended April 30, 2024, GAAP and non-GAAP diluted net income per share were
calculated based upon 270,298 diluted weighted-average shares of common stock. For the three
months ended April 30, 2023, GAAP and non-GAAP diluted net income per share were calculated
based upon 261,371 diluted weighted-average shares of common stock.

 

Reconciliation of our GAAP cash flows from operating activities to non-GAAP free cash flow is as follows (in millions). See the section titled "About Non-GAAP Financial Measures" below for further details.


Three Months Ended April 30,


2024


2023

Net cash provided by (used in) operating activities

$                 372


$                 277

Less: Capital expenditures

(81)


(59)

Free cash flows

$                 291


$                 218

 

About Non-GAAP Financial Measures

Change in Non-GAAP Financial Measures

Effective beginning fiscal 2025, Workday will exclude certain acquisition-related costs, realignment costs, and gains and losses on strategic investments from its non-GAAP results as these items may vary from period to period independent of the operating performance of Workday's business. Prior period amounts have been recast for gains and losses on strategic investments to conform to this presentation. There was no impact to prior period amounts presented in this release for acquisition-related costs or realignment costs since no qualifying costs were incurred in the first quarter of fiscal 2024. 

Non-GAAP Financial Measures

To provide investors and others with additional information regarding Workday's results, we have disclosed the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP diluted net income (loss) per share, and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Non-GAAP operating income (loss) and non-GAAP operating margin differ from GAAP in that they exclude share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, and realignment costs. Non-GAAP diluted net income (loss) per share differs from GAAP in that it excludes share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, realignment costs, gains and losses on strategic investments, and income tax effects. Free cash flows differ from GAAP cash flows from operating activities in that it treats capital expenditures as a reduction to cash flows.

Workday's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Workday's financial performance. Management believes these non-GAAP financial measures reflect Workday's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Workday's business. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Workday's operating results and prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.

Management believes excluding the following items from the GAAP Condensed Consolidated Statements of Operations is useful to investors and others in assessing Workday's operating performance due to the following factors:

Additionally, with regards to free cash flows, Workday's management believes that reducing cash provided by (used in) operating activities by capital expenditures is meaningful to investors and others because it provides an enhanced view of cash flow generation from the ongoing operations of our business, and it balances operating results, cash management, and capital efficiency.

The use of these non-GAAP measures have certain limitations as they do not reflect all items of expense or cash that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.

Gartner Disclaimer

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, PEER INSIGHTS is a registered trademark and service mark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences, and should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose.

SOURCE Workday Inc.


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