Workday, Inc.
CEO : Mr. Carl M. Eschenbach
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2025 Q3 | 16.2% YoY | 94.6% | -309.3% | 2024-08-22 |
Carl Eschenbach says,
Financial Performance and Growth Metrics
- Subscription revenue growth of 17%, which indicates robust demand for Workday’s services.
- The 12-month backlog grew by 16%, suggesting a strong pipeline and future revenue visibility.
- Achieved a 25% non-GAAP operating margin, showing efficient cost management and profitability.
Key Customer Wins and Expansion
- Expanded relationships with major companies including J.B. Hunt, Nissan, Target, and Trinity Health.
- New relationships formed with significant entities like Lam Research, the City of Cleveland, Colorado State University System, and Johns Hopkins.
- Notable wins in the Higher Education sector with institutions such as Florida A&M and Clemson University adopting Workday’s full suite.
- Strengthened leadership in the HCM market globally with key wins like GE Vernova and First Bus.
Technology and Innovation Highlights
- Launched new AI innovations to enhance recruiting and talent mobility, emphasizing the importance of these technologies.
- Introduced new APIs in the AI Gateway and Extend Developer Copilot, aiming to boost customization and application development.
- Reported more than 70 million users conducting over 800 billion transactions annually on the Workday platform, highlighting the platform’s extensive reach and capability.
- Significant enhancements in AI, with new capabilities leading to substantial improvements in talent management and operational efficiency.
Global Expansion and Strategic Partnerships
- Strong performance in APAC and Japan regions, with strategic wins and new relationships, particularly in Australia and New Zealand.
- Partner ecosystem contributions to new ACV more than doubled from last quarter, signifying the importance of partner-led growth.
- New partnerships, including with Salesforce, focusing on integrating important datasets to enhance employee and customer success.
Medium-term Outlook and Strategy
- Adjustments to the medium-term plans include a moderated pace of subscription revenue growth alongside accelerated margin expansion.
- The strategy focuses on gaining market share in core HR and Finance markets and delivering strong operating income growth.
- Commitment to continue innovating for customers and partners to drive durable and profitable growth.
| Metric | Growth/Value |
|---|---|
| Subscription Revenue Growth | 17% |
| 12-Month Backlog Growth | 16% |
| Non-GAAP Operating Margin | 25% |
| New AI Innovations | Enhanced Recruiting/Talent Mobility |
| Global Regions with Strong Performance | APAC, Japan |
Zane Rowe says,
Q2 2025 Financial Performance
- Subscription revenue for Q2 was $1.903 billion, marking a 17% increase compared to the previous year.
- Professional services revenue reached $182 million, contributing to a total Q2 revenue of $2.085 billion, also growing by 17%.
- U.S. revenue saw a growth of 16% to $1.56 billion, while international revenue grew by 18% to reach $524 million.
- The 12-month subscription revenue backlog, or cRPO, was $6.80 billion, indicating a 16% growth, affected by strong renewal activities in the preceding year.
- Total subscription revenue backlog increased by 21% to $21.58 billion.
Financial Health and Capital Management
- Non-GAAP operating income for Q2 was $518 million, with a non-GAAP operating margin of 24.9%.
- Operating cash flow for Q2 was $571 million, a significant increase of 34% driven by strong collections.
- The company repurchased $309 million of shares at an average price of $223.10, and a new $1 billion share repurchase program has been authorized.
- The quarter ended with $7.4 billion in cash and marketable securities.
Guidance and Future Expectations
- Full-year FY ‘25 subscription revenue is projected between $7.700 billion to $7.725 billion, representing a growth of around 17%.
- Subscription revenue for Q3 FY ‘25 is expected to be $1.955 billion, a growth of 16%.
- FY ‘25 professional services revenue is forecasted between $680 million and $690 million, with Q3 expected at $175 million.
- The FY ‘25 non-GAAP operating margin is expected to be 25.25%, with a similar margin predicted for Q3.
- Projected FY ‘25 operating cash flow has increased to $2.350 billion.
Long-term Growth and Strategic Focus
- Anticipated subscription revenue growth in the mid-teens for FY ‘26 and FY ‘27, with focus areas supporting growth across products and geographies.
- Non-GAAP operating margin is expected to expand to 30% by FY ’27.
- Success observed in full suite opportunities, partner ecosystems, and international markets, along with emerging areas like Federal and Built on Workday.
- The company is committed to investing in strategic growth areas while enhancing process efficiencies and ROI across the portfolio.
Upcoming Events
- The company will share more detailed insights at the financial analyst day scheduled for September 17.
Q & A sessions,
Operating Margin Expansion
- Workday has expanded its operating margin by 500 basis points over the past 2.5 years.
- Aiming for an additional 500 basis points increase in operating margin in the next few years.
- Efficiencies are being identified in global workforce strategy, leveraging new offices in India and Costa Rica.
- AI integration is driving internal efficiencies in finance, support, and software development.
Growth Strategy and Market Expansion
- Committed to a 15% growth rate as Workday scales beyond a $10 billion revenue threshold.
- Investments in partner communities and international markets are proving beneficial, especially in Europe, APAC, and Japan.
- Over 50% of addressable market opportunity is outside the US, indicating significant international growth potential.
- Focus on financial sectors, with a large percentage of workloads still on-premises, poised for cloud migration.
Monetization and AI Integration
- Adopting a measured, multi-pronged approach to AI monetization to maintain high renewal and satisfaction rates.
- Introduction of new SKUs like Talent Optimization and Extend Pro, leveraging AI as a competitive advantage.
- 50+ AI use cases now integrated into the platform, enhancing value but without immediate pricing uplift.
- HiredScore is emerging rapidly as part of the pipeline, reducing recruiting expenses for clients.
Medium Enterprise and Market Penetration
- Strategic push into medium and emerging enterprises with full suite HCM and financial solutions.
- Modified pricing and packaging to enhance appeal and accelerate deployment in these markets.
- Expansion strategy from the US to the UK, Europe, and APAC to mirror medium enterprise success.
- Partnerships are key in driving rapid adoption and deployment in new markets.
Innovations and Future Outlook
- Continuous innovation on the Workday platform, leveraging AI and GenAI technologies.
- Extend platform allows ecosystem partners to innovate and build on Workday’s infrastructure.
- Potential for M&A activity to support growth, executed with caution and strategic alignment.
- Confidence in growth and profitability driven by strategic investments and proven initiatives.
No bad stock 