WDAY Q2 2025 Earnings

Call Details

• Call Title: Workday, Inc. Q2 2025 Earnings Call
• Date: August 22, 2024 at 8:30 PM UTC
• Management Team:
  • Carl Eschenbach (Chief Executive Officer)
  • Zane Rowe (Chief Financial Officer)
  • Doug Robinson (Co-President)
  • David Somers (Chief Product Officer)
  • Justin Furby (Vice President of Investor Relations)

Call Summary

Financial Performance

• Subscription revenue in Q2 was $1.903B, representing year-over-year growth of 17%.
• Professional services revenue in Q2 was $182M, and total revenue in Q2 was $2.085B, representing year-over-year growth of 17%.
• U.S. revenue in Q2 was $1.56B, up 16% year-over-year, while international revenue was $524M, up 18% year-over-year.
• Twelve‑month subscription revenue backlog (CRPO) was $6.8B at quarter end, up 16% year-over-year.
• Total subscription revenue backlog at quarter end was $21.58B, up 21% year-over-year.
• Non-GAAP operating income for Q2 was $518M, producing a non-GAAP operating margin of 24.9%.
• Operating cash flow in Q2 was $571M, which grew 34% year-over-year and was described as driven by strong collections.
• Workday ended the quarter with $7.4B in cash and marketable securities and reported headcount of over 19,900 workmates globally.

Guidance

• Workday reiterated FY25 subscription revenue guidance of $7.7B to $7.725B, reflecting approximately 17% growth versus prior year.
• The company expects Q3 FY25 subscription revenue of $1.955B, representing 16% growth versus the comparable period last year.
• FY25 professional services revenue is expected to be approximately $680M to $690M, with Q3 professional services revenue expected to be $175M.
• CRPO growth in Q3 is expected to be impacted by last year's early renewals, and the company expects CRPO growth of 14% to 15% for Q3.
• FY25 non-GAAP operating margin is now expected to be 25.25%, and Q3 FY25 non-GAAP operating margin is also expected to be 25.25%.
• The company stated GAAP operating margin for Q3 and full year are expected to be approximately 19 and 20 percentage points lower than the non-GAAP margins, respectively.
• FY25 non-GAAP tax rate expectation remains at 19%.
• Workday increased FY25 operating cash flow expectations to $2.350B and expects capital expenditures of approximately $330M in FY25.
• For FY26 and FY27, the company now expects subscription revenue growth in the mid-teens and expects to expand non-GAAP operating margin to 30% over that period.