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Workday Announces Fiscal 2024 Third Quarter Financial Results

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·Fiscal Third Quarter Total Revenues of $1.87 Billion, Up 16.7% Year Over Year
·Subscription Revenues of $1.69 Billion, Up 18.1% Year Over Year
·12-Month Subscription Revenue Backlog of $6.05 Billion, Up 21.9% Year Over Year
 
PLEASANTON, Calif., November 28, 2023 — Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloud applications for finance and human resources, today announced results for the fiscal 2024 third quarter ended October 31, 2023.
 
Fiscal 2024 Third Quarter Results
 
•Total revenues were $1.87 billion, an increase of 16.7% from the third quarter of fiscal 2023. Subscription revenues were $1.69 billion, an increase of 18.1% from the same period last year.
•Operating income was $87.9 million, or 4.7% of revenues, compared to an operating loss of $26.3 million, or negative 1.6% of revenues, in the same period last year. Non-GAAP operating income for the third quarter was $462.1 million, or 24.8% of revenues, compared to a non-GAAP operating income of $314.2 million, or 19.7% of revenues, in the same period last year.1
•Basic and diluted net income per share was $0.43, compared to basic and diluted net loss per share of $0.29 in the third quarter of fiscal 2023. Non-GAAP basic and diluted net income per share was $1.56 and $1.53, respectively, compared to non-GAAP basic and diluted net income per share of $1.01 and $0.99, respectively, in the same period last year.2
•Total subscription revenue backlog was $18.45 billion, up 30.9% from the same period last year. 12-month subscription revenue backlog was $6.05 billion, and 24-month subscription revenue backlog was $10.58 billion, up 21.9% and 22.7% year over year, respectively.
•Operating cash flows were $450.8 million compared to $408.7 million in the prior year. Free cash flows were $390.8 million compared to $349.8 million in the prior year.3
•Cash, cash equivalents, and marketable securities were $6.88 billion as of October 31, 2023.
 
Comments on the News
 
“Workday delivered a strong quarter, demonstrating how organizations across industries and geographies are continuing to place their trust in Workday,” said Carl Eschenbach, co-CEO, Workday. “The momentum across our business is palpable, powered by our AI innovation, strength in full platform deals, expanding partner ecosystem, and international growth – with EMEA surpassing $1 billion annual recurring revenue in the quarter. Now with over 5,000 core Workday HCM customers, more companies around the world are turning to Workday to manage their most precious assets: their people and money.”
 
“Our strategy to build AI directly into the core of our products continues to resonate with our customers and is fueled by our platform strategy, unrivaled dataset, and emphasis on being human-centric,” said Aneel Bhusri, co-founder, co-CEO, and chair, Workday. “We unveiled a series of new AI capabilities at Workday Rising – including investments in generative AI and conversational AI – that will benefit all users with an emphasis on increasing productivity, growing and retaining talent, streamlining business processes, and driving better decision-making. With a commitment to delivering responsible and trustworthy solutions, we are providing the innovation our customers need to thrive in today’s dynamic business environment.”
 
“Our strong third-quarter results demonstrate the durability of our business and the ongoing market adoption for cloud Financials and Human Capital Management,” said Zane Rowe, chief financial officer, Workday. “Following our continued momentum in the third quarter, we are raising our fiscal 2024 subscription revenue guidance to $6.598 billion, representing 19% year-over-year growth. We are also raising our fiscal 2024 non-GAAP operating margin guidance to 23.8%. Our focus is centered on investing to drive durable long-term growth while expanding margins.”

Recent Highlights

 
Earnings Call Details
 
Workday plans to host a conference call today to review its fiscal 2024 third 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.
 
1Non-GAAP operating income and non-GAAP operating margin exclude share-based compensation expenses, employer payroll tax-related items on employee stock transactions, and amortization expense for acquisition-related intangible assets. See the section titled “About Non-GAAP Financial Measures” in the accompanying financial tables for further details.
2Non-GAAP net income per share excludes share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, and income tax effects. See the section titled “About Non-GAAP Financial Measures” in the accompanying financial tables for further details.
3Free cash flows are defined as net cash provided by (used in) operating activities minus total capital expenditures. See the section titled “About Non-GAAP Financial Measures” in the accompanying financial tables for further details.
4Gartner, “Magic Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises,” Ranadip Chandra, Sam Grinter, Ron Hanscome, Chris Pang, Anand Chouksey, Josie Xing, Harsh Kundulli, David Bobo, Laura Gardiner, Hiten Sheth, Jackie Watrous, Travis Wickesberg, October 18, 2023.
5Gartner, “Magic Quadrant for Cloud ERP for Service-Centric Enterprises,” Denis Torii, Sam Grinter, Tim Faith, Naveen Mahendra, Neha Ralhan, Robert Anderson, August 29, 2023.
 
Gartner Disclaimer
 
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark, and MAGIC QUADRANT is a registered trademark of Gartner, Inc., and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.
 
 
 
About Workday
 
Workday is a leading provider of enterprise cloud applications for finance and human resources, helping customers adapt and thrive in a changing world. Workday applications for financial management, human resources, planning, spend management, and analytics are built with artificial intelligence and machine learning at the core to help organizations around the world embrace the future of work. Workday is used by more than 10,000 organizations around the world and across industries – from medium-sized businesses to more than 50% of the Fortune 500. For more information about Workday, visit workday.com.
 
© 2023 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.
 
Use of Non-GAAP Financial Measures
 
Reconciliations of non-GAAP financial measures to Workday’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “About Non-GAAP Financial Measures.” 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.
 
Forward-Looking Statements
 
This press release contains forward-looking statements including, among other things, statements regarding Workday’s full-year fiscal 2024 subscription revenues and non-GAAP operating margin, growth and expansion, innovation, momentum, market adoption, 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) the impact of recent macroeconomic events, including inflation and rising interest rates, on our business, as well as our customers, prospects, partners, and service providers; (iv) privacy concerns and evolving domestic or foreign laws and regulations; (v) our ability to manage our growth effectively; (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) any loss of key employees or the inability to attract, train, and retain highly skilled employees; (viii) 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; (ix) our reliance on our network of partners to drive additional growth of our revenues; (x) adverse changes in general economic or market conditions; (xi) the regulatory risks related to new and evolving technologies such as AI and our ability to realize a return on our development efforts; (xii) our ability to realize the expected business or financial benefits of any acquisitions of or investments in companies; (xiii) adverse changes in general economic or market conditions; (xiv) the regulatory, economic, and political risks associated with our domestic and international operations; (xv) delays or reductions in information technology spending; and (xvi) 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 Form 10-Q for the fiscal quarter ended October 31, 2023, 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.

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