WDAY Q4 2023 Earnings

Call Details

• Call Title: Workday, Inc. Q4 2023 Earnings Call
• Date: February 27, 2023 at 9:30 PM UTC
• Management Team:
  • Justin Furby (Vice President of Investor Relations)
  • Aneel Bhusri (Co-CEO)
  • Carl Eschenbach (Co-CEO)
  • Barbara Larson (Chief Financial Officer)
  • Doug Robinson (Co-President)

Call Summary

Financial Performance

• Subscription revenue in Q4 was $1.50B, up 22% year-over-year.
• Full-year subscription revenue was $5.57B, up 22% year-over-year.
• Professional services revenue in Q4 was $151M and $649M for the full year.
• Total revenue outside of the U.S. in Q4 was $396M, representing 24% of total revenue.
• Non-GAAP operating income for Q4 was $305M, resulting in a non-GAAP operating margin of 18.5%.
• Full-year non-GAAP operating income was $1.21B, representing a non-GAAP operating margin of 19.5%.
• Q4 operating cash flow was $694M, up 13% year-over-year, and full-year operating cash flow was $1.66B.
• A one-time IP transfer tax of roughly $70M negatively impacted Q4 operating cash flow.

Guidance

• FY24 subscription revenue guidance was narrowed to $6.525B to $6.575B, representing 17% to 18% year-over-year growth with a midpoint of $6.55B.
• Q1 FY24 subscription revenue is expected to be $1.517B to $1.520B, representing 19% year-over-year growth.
• FY24 professional services revenue guidance is $630M to $650M, with Q1 professional services revenue expected to be $148M.
• FY24 non-GAAP operating margin is expected to be 23%, with Q1 non-GAAP operating margin of approximately 21.5%.
• The company expects FY24 operating cash flow of approximately $2.05B, representing growth of 24% year-over-year.
• Workday expects 24-month backlog to grow approximately 20% year-over-year in Q1 FY24.
• The change in server and network equipment useful life from three to five years is expected to reduce FY24 cost of subscription revenue by roughly $100M and benefit operating margin by about 150 basis points.