Workday Inc Reports Q2 Fiscal 2025 Financial Results
Intellectia.AI Updated: 2024-08-25
Workday, Inc. Reports Q2 Fiscal 2025 Financial Results
Workday, Inc. (NASDAQ: WDAY) has reported its financial results for the second quarter of fiscal year 2025, ending July 31, 2024.
Key Financial Metrics
| Metric | Q2 FY25 | Q2 FY24 | YoY Change | Q1 FY25 | QoQ Change | Consensus Estimates |
|---|---|---|---|---|---|---|
| Total Revenue | $2.085 billion | $1.78 billion | +17% | $2.12 billion | -1.7% | $2.07 billion |
| Subscription Revenue | $1.903 billion | $1.63 billion | +17% | $1.90 billion | +0.2% | |
| Professional Services Rev. | $182 million | - | - | $182 million | 0% | |
| Non-GAAP Operating Income | $518 million | - | - | $522 million | -0.8% | |
| Non-GAAP Operating Margin | 24.9% | - | - | 24.6% | +0.3% | |
| GAAP Operating Margin | ~5.9% | - | - | - | - | |
| Operating Cash Flow | $571 million | - | +34% | - | - |
Financial Performance Interpretation
Workday delivered solid financial performance this quarter, surpassing revenue expectations with total revenue of $2.085 billion and a non-GAAP operating margin of 24.9%. Despite experiencing deal scrutiny and moderated headcount growth within its customer base, Workday managed to achieve a 17% year-over-year total revenue growth, aligning closely with the consensus estimate of $2.07 billion. The company experienced marginal quarter-over-quarter changes in key financial metrics but demonstrated robust cash flow from operations, growing 34% year-over-year.
Revenue Performance by Segments
| Segment | Q2 FY25 Revenue | Previous Guidance | YoY Change |
|---|---|---|---|
| Subscription Revenue | $1.903 billion | - | +17% |
| Professional Services Revenue | $182 million | $175 million (Q3) | - |
Segment Performance Interpretation
Subscription and Professional Services revenues both saw a 17% and consistent growth year-over-year, respectively. No specific previous guidance data was provided for the individual segments, but the company reaffirmed its subscription revenue guidance for the next quarter, projecting it at $1.955 billion with an expected growth of approximately 16%.
Comments from Company Officers CEO Carl Eschenbach highlighted Workday's solid financial results, mentioning the company’s 17% subscription revenue growth and a 25% non-GAAP operating margin. Eschenbach underscored the significant customer momentum, stating that multiple industry-leading companies such as J.B. Hunt, Nissan, and Target have expanded their relationship with Workday.
Dividends and Share Repurchase Program Workday accelerated its share buyback program in Q2, repurchasing $309 million worth of shares at an average price of $223.10 per share. The company's Board has authorized a new $1 billion share repurchase program following the nearing completion of its existing $500 million authorization.
Forward Guidance Workday reiterated its full-year FY25 subscription revenue guidance of $7.700 billion to $7.725 billion, reflecting a growth of approximately 17%. The company also anticipates a non-GAAP operating margin expansion to 25.25% for FY25, indicating a balanced approach toward growth and operational efficiency.
Stock Price Movement Following the earnings release, Workday’s stock experienced a minor decline of -1.04%, reflecting a slight investor concern despite the company's strong performance and forward guidance.
In summary, Workday remains committed to driving profitable growth at scale with a balanced investment approach, leveraging its strong market position and continuous innovation in AI-powered solutions.
