Workday Announces Fiscal 2026 First Quarter Financial Results
Fiscal First Quarter Total Revenues of $2.240 Billion, Up 12.6% Year Over Year
Subscription Revenues of $2.059 Billion, Up 13.4% Year Over Year
PLEASANTON, Calif., May 22, 2025 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), the AI platform for managing people, money, and agents, today announced results for the fiscal 2026 first quarter ended April 30, 2025.
Fiscal 2026 First Quarter Results
-- Total revenues were $2.240 billion, an increase of 12.6% from the first
quarter of fiscal 2025. Subscription revenues were $2.059 billion, an
increase of 13.4% from the same period last year.
-- Operating income was $39 million, or 1.8% of revenues, compared to an
operating income of $64 million, or 3.2% of revenues, in the same period
last year. Operating income in the first quarter of fiscal 2026 was
impacted by restructuring expenses of $166 million. Non-GAAP operating
income for the first quarter was $677 million, or 30.2% of revenues,
compared to a non-GAAP operating income of $515 million, or 25.9% of
revenues, in the same period last year.(1)
-- Diluted net income per share was $0.25, compared to diluted net income
per share of $0.40 in the first quarter of fiscal 2025. Net income per
share in the first quarter of fiscal 2026 was impacted by restructuring
expenses of $166 million. Non-GAAP diluted net income per share was
$2.23, compared to non-GAAP diluted net income per share of $1.74 in the
same period last year.(1)
-- 12-month subscription revenue backlog was $7.63 billion, up 15.6% from
the same period last year. Total subscription revenue backlog was $24.62
billion, increasing 19.1% year-over-year.
-- Operating cash flows were $457 million compared to $372 million in the
prior year. Free cash flows were $421 million compared to $291 million
in the prior year.(1)
-- Workday repurchased approximately 1.3 million shares of Class A common
stock for $293 million as part of its share repurchase programs.
-- Cash, cash equivalents, and marketable securities were $7.97 billion as
of April 30, 2025.
(1) See the section titled "About Non-GAAP Financial Measures" in the accompanying financial
tables for further details.
Comments on the News
"Workday delivered another solid quarter, a testament to the durability of our business and the relevance of our platform as CEOs increasingly turn to us to drive efficiency, agility, and growth," said Carl Eschenbach, CEO, Workday. "We are delivering real ROI for our customers by helping them effectively manage their most critical assets--people and money--on one unified platform with AI at the core."
"Our first quarter results highlight the ongoing progress across our strategic growth areas and the continued efficiencies we are driving throughout the business," said Zane Rowe, CFO, Workday. "We remain focused on executing in this uncertain environment and are reiterating our fiscal 2026 subscription revenue guidance of $8.8 billion while increasing our fiscal 2026 non-GAAP operating margin guidance to approximately 28.5%."
Recent Highlights
-- Workday introduced new Illuminate Agents to accelerate hiring, enhance
frontline worker experiences, simplify financial processes, and improve
employee information access.
-- Evisort's AI-powered contract intelligence and contract lifecycle
management solutions became available through Workday.
-- Workday welcomed new customers including Dover Corporation, Mutual of
Omaha Insurance Company, and United Airlines, and expanded existing
relationships with ASDA stores, Chipotle, CVS Health, and Decathlon.
-- Workday was named a Leader in the 2025 Gartner(®) Magic Quadrant(TM)
for Higher Education Student Information System Software as a Service(1
)and Talent Acquisition (Recruiting) Suites.(2)
-- Workday was recognized as one of the 2025 World's Most Ethical
Companies(®) by Ethisphere for the fifth consecutive year.
-- Workday saw notable industry growth in Q1, with the technology & media
and manufacturing verticals each crossing $1 billion in annual recurring
revenue.
-- Workday continued its international expansion by going live on the AWS
U.K. public cloud and announcing a new location for its EMEA
headquarters in Dublin.
-- Workday announced that its Board of Directors approved a new share
repurchase program to repurchase up to an additional $1.0 billion of
shares of its Class A common stock.
(1) 2025 Gartner(R) Magic Quadrant(TM) for Higher Education Student Information System Software as a Service. By Grace Farrell,
Robert Yanckello, 24 March 2025.
(2) 2025 Gartner(R) Magic Quadrant(TM) for Talent Acquisition (Recruiting) Suites. By Rania Stewart, Jackie Watrous, Hiten Sheth,
Emi Chiba, 2 April 2025.
Financial Outlook
Workday is providing guidance for the fiscal 2026 second quarter ending July 31, 2025 as follows:
-- Subscription revenue of $2.160 billion, representing growth of 13.5%
-- Non-GAAP operating margin of 28.0%(1)
Workday is updating guidance for the fiscal 2026 full year ending January 31, 2026 as follows:
-- Subscription revenue of $8.800 billion, representing growth of 14.0%
-- Non-GAAP operating margin of 28.5%(1)
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
to predict with reasonable
certainty the amount and timing of adjustments that are used to calculate this non-GAAP financial measure, particularly
related to stock-based compensation
and its related tax effects, acquisition-related costs, and restructuring costs.
Earnings Call Details
Workday plans to host a conference call today to review its fiscal 2026 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 the AI platform for managing people, money, and agents. 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 11,000 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.
© 2025 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 our intended share repurchases, Workday's second quarter and full year fiscal 2026 subscription revenue and non-GAAP operating margin, growth, and strategy. 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; (xiii) adverse litigation results; and (xiv) 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, 2025 January 31,
2025
Assets
Current assets:
Cash and cash equivalents $972 $1,543
Marketable securities 6,998 6,474
Trade and other receivables, net 1,363 1,950
Deferred costs 268 267
Prepaid expenses and other current assets 362 311
Total current assets 9,963 10,545
Property and equipment, net 1,140 1,239
Operating lease right-of-use assets 355 336
Deferred costs, noncurrent 544 561
Acquisition-related intangible assets, net 340 361
Deferred tax assets 1,013 1,039
Goodwill 3,478 3,478
Other assets 379 418
Total assets $17,212 $17,977
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $92 $108
Accrued expenses and other current liabilities 271 296
Accrued compensation 548 578
Unearned revenue 3,812 4,467
Operating lease liabilities 98 99
Total current liabilities 4,821 5,548
Debt, noncurrent 2,985 2,984
Unearned revenue, noncurrent 65 80
Operating lease liabilities, noncurrent 310 279
Other liabilities 112 52
Total liabilities 8,293 8,943
Stockholders' equity:
Common stock 0 0
Additional paid-in capital 11,701 11,463
Treasury stock (1,601) (1,308)
Accumulated other comprehensive income (loss) (44) 84
Accumulated deficit (1,137) (1,205)
Total stockholders' equity 8,919 9,034
Total liabilities and stockholders' equity $17,212 $17,977
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,
2025 2024
Revenues:
Subscription services $2,059 $1,815
Professional services 181 175
Total revenues 2,240 1,990
Costs and expenses (1):
Costs of subscription services 350 290
Costs of professional services 187 199
Product development 663 656
Sales and marketing 623 573
General and administrative 212 200
Restructuring (2) 166 8
Total costs and expenses 2,201 1,926
Operating income 39 64
Other income, net 64 59
Income before provision for income taxes 103 123
Provision for income taxes 35 16
Net income $68 $107
Net income per share, basic $0.25 $0.40
Net income per share, diluted $0.25 $0.40
Weighted-average shares used to compute net income per share, basic 266,516 264,444
Weighted-average shares used to compute net income per share, diluted 270,296 270,298
(1) Costs and expenses include share-based compensation expense as follows:
Three Months Ended April 30,
2025 2024
Costs of subscription services $42 $38
Costs of professional services 30 31
Product development 183 173
Sales and marketing 92 72
General and administrative 70 71
Restructuring 42 0
Total share-based compensation expense $459 $385
(2) In February 2025, Workday announced a restructuring plan ("Fiscal 2026 Restructuring Plan") intended to prioritize its
investments and continue advancing
Workday's ongoing focus on durable growth. The plan reduced Workday's workforce by approximately 7.5%. In connection with
the plan, Workday has exited
certain owned office space. During the three months ended April 30, 2025, Workday recorded expenses of $132 million for
employee transition, severance
payments, employee benefits, and share-based compensation expense, and $34 million related to an impairment of office space
under the Fiscal 2026
Restructuring Plan. During the three months ended April 30, 2024, Workday recorded exit charges of $8 million associated
with office space reductions under
a separate restructuring plan.
Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended April 30,
2025 2024
Cash flows from operating activities:
Net income $68 $107
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 84 75
Share-based compensation expense 459 385
Amortization of deferred costs 68 59
Non-cash lease expense 27 25
Losses on investments, net 1 7
Accretion of discounts on marketable debt securities, net (20) (33)
Deferred income taxes 18 6
Other 47 1
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net 601 509
Deferred costs (53) (40)
Prepaid expenses and other assets (38) (21)
Accounts payable (4) 10
Accrued expenses and other liabilities (131) (193)
Unearned revenue (670) (525)
Net cash provided by operating activities 457 372
Cash flows from investing activities:
Purchases of marketable securities (1,345) (778)
Maturities of marketable securities 722 1,096
Sales of marketable securities 140 17
Capital expenditures (36) (81)
Business combinations, net of cash acquired 0 (512)
Purchases of non-marketable equity and other investments (4) 0
Net cash used in investing activities (523) (258)
Cash flows from financing activities:
Repurchases of common stock (290) (128)
Taxes paid related to net share settlement of equity awards (211) (239)
Net cash used in financing activities (501) (367)
Effect of exchange rate changes 1 0
Net decrease in cash, cash equivalents, and restricted cash (566) (253)
Cash, cash equivalents, and restricted cash at the beginning of period 1,554 2,024
Cash, cash equivalents, and restricted cash at the end of period $988 $1,771
Workday, Inc.
Reconciliations of GAAP to Non-GAAP Data
Reconciliations of Workday's GAAP to non-GAAP operating results are included in the following tables (in millions, except number of shares which are reflected in thousands, percentages, and per share data). See the section titled "About Non-GAAP Financial Measures" below for further details.
Three Months Ended April 30,
2025 2024
Non-GAAP operating income
---
Operating income $39 $64
Share-based compensation expense (1) 417 385
Employer payroll tax-related items on employee stock transactions (1) 27 38
Amortization of acquisition-related intangible assets 21 17
Acquisition-related costs 7 3
Restructuring costs 166 8
Non-GAAP operating income $677 $515
Non-GAAP operating margin
(2)
---
Operating margin 1.8 % 3.2 %
Share-based compensation expense (1) 18.6 % 19.3 %
Employer payroll tax-related items on employee stock transactions (1) 1.2 % 1.9 %
Amortization of acquisition-related intangible assets 0.9 % 0.9 %
Acquisition-related costs 0.3 % 0.2 %
Restructuring costs 7.4 % 0.4 %
Non-GAAP operating margin 30.2 % 25.9 %
Non-GAAP diluted net income per share
(2)(3)
---
Diluted net income per share $0.25 $0.40
Share-based compensation expense (1) 1.54 1.42
Employer payroll tax-related items on employee stock transactions (1) 0.10 0.14
Amortization of acquisition-related intangible assets 0.08 0.06
Acquisition-related costs 0.02 0.01
Restructuring costs 0.61 0.03
Losses on strategic investments, net 0.00 0.03
Income tax effects (0.37) (0.35)
Non-GAAP diluted net income per share $2.23 $1.74
(1) The Share-based compensation expense and Employer payroll tax-related items on employee stock transactions lines in the GAAP
to non-GAAP reconciliation
tables above exclude $42 million and $2 million, respectively, related to restructuring initiatives for the three months ended
April 30, 2025. These expenses are
included in the Restructuring costs lines.
(2)
Operating margin and diluted net income per share are calculated using unrounded data.
(3) For the three months ended April 30, 2025, GAAP and non-GAAP diluted net income per share were calculated based upon 270,296
diluted weighted-average
shares of common stock. 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.
Reconciliation of Workday's 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,
2025 2024
Net cash provided by operating activities $457 $372
Less: Capital expenditures (36) (81)
Free cash flows $421 $291
About Non-GAAP Financial Measures
Non-GAAP Financial Measures
To provide investors and others with additional information regarding Workday's results, the following non-GAAP financial measures are disclosed: non-GAAP operating income, non-GAAP operating margin, non-GAAP diluted net income 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 and non-GAAP operating margin differ from GAAP in that they exclude share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, and restructuring costs. Non-GAAP diluted net income per share differs from GAAP in that it excludes share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, restructuring 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:
-- Share-based compensation expense. Share-based compensation primarily
consists of non-cash expenses for employee restricted stock units and
our employee stock purchase plan. Although share-based compensation is
an important aspect of the compensation of our employees and executives,
this expense is determined using a number of factors, including our
stock price, volatility, and forfeiture rates, that are beyond our
control and generally unrelated to operational decisions and performance
in any particular period. Further, share-based compensation expense is
not reflective of the value ultimately received by the grant recipients.
-- Employer payroll tax-related items on employee stock transactions. We
exclude the employer payroll tax-related items on employee stock
transactions in order to show the full effect that excluding share-based
compensation expense has on our operating results. Similar to
share-based compensation expense, this tax expense is dependent on our
stock price and other factors that are beyond our control and do not
correlate to the operation of our business.
-- Amortization of acquisition-related intangible assets. For business
combinations, we generally allocate a portion of the purchase price to
intangible assets. The amount of the allocation is based on estimates
and assumptions made by management and is subject to amortization. The
amount of purchase price allocated to intangible assets and the term of
the related amortization can vary significantly and are unique to each
acquisition and thus we do not believe this activity is reflective of
our ongoing operations. Although we exclude the amortization of
acquisition-related intangible assets from these non-GAAP financial
measures, we believe that it is important for investors to understand
that such intangible assets were recorded as part of purchase accounting
and contribute to revenue generation.
-- Acquisition-related costs. Acquisition-related costs include direct
transaction costs, such as due diligence and advisory fees, and certain
compensation and integration-related expenses. We exclude the effects of
acquisition-related costs as we believe these transaction-specific
expenses are inconsistent in amount and frequency and do not correlate
to the operation of our business.
-- Restructuring costs. Restructuring costs are associated with a formal
restructuring plan and are primarily related to workforce reductions,
the closure of facilities, and other exit and disposal activities. We
exclude these expenses because they are not reflective of ongoing
business and operating results.
-- Gains and losses on strategic investments. Our strategic investments
include investments in early stage companies that are valuable to
Workday customers and complementary to Workday products. Gains and
losses on strategic investments may result from observable price
adjustments and impairment charges on non-marketable equity securities,
ongoing mark-to-market adjustments on marketable equity securities, and
the sale of equity investments. We do not rely on these securities to
fund our ongoing operations nor do we actively trade publicly held
securities, and therefore we do not consider the gains and losses on
these strategic investments to be reflective of our ongoing operations.
-- Income tax effects. We utilize a fixed long-term projected tax rate in
our computation of the non-GAAP income tax provision to provide better
consistency across the reporting periods. In projecting this long-term
non-GAAP tax rate, we utilize a three year financial projection that
excludes the direct impact of the items excluded from GAAP income in
calculating our non-GAAP income. The projected rate considers other
factors such as our current operating structure, existing tax positions
in various jurisdictions, and key legislation in major jurisdictions
where we operate. For fiscal 2026 and 2025, we determined the projected
non-GAAP tax rate to be 19%, which reflects currently available
information, as well as other factors and assumptions. We will
periodically re-evaluate this tax rate, as necessary, for significant
events, relevant tax law changes, material changes in the forecasted
geographic earnings mix, and any significant acquisitions.
Additionally, with regards to free cash flows, Workday's management believes that reducing cash provided by 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.
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SOURCE Workday Inc.
