Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloud applications for finance and human resources, recently announced its financial results for the first quarter of fiscal 2025. The company reported total revenues of $1.990 billion, a substantial increase of 18.1% compared to the same period last year. Subscription revenues, which comprise a significant portion of the total, rose by 18.8% to $1.815 billion.
Workday Announced Robust Financial Results for Q1 FY 2025
Workday’s operating income for the quarter was $64 million, or 3.2% of revenues, a notable improvement from the operating loss of $20 million, or negative 1.2% of revenues, in the first quarter of fiscal 2024. Non-GAAP operating income also saw a significant increase, reaching $515 million, or 25.9% of revenues, compared to $396 million, or 23.5% of revenues, in the same period last year.
The company’s diluted net income per share was $0.40, a significant improvement from $0.00 in the previous year, while non-GAAP diluted net income per share rose to $1.74 from $1.33.
The company’s financial performance was in line with its expectations across key metrics, despite elevated sales scrutiny and lower customer headcount growth. Workday successfully increased its non-GAAP operating margin through efficiencies across the organization.
The company also repurchased approximately 0.5 million shares of Class A common stock for $134 million and reported cash, cash equivalents, and marketable securities of $7.18 billion as of April 30, 2024.
However, Subscription Revenue Guidance Impacts Stock Price
Despite the strong financial results, Workday shares fell more than 11% today following the announced softer-than-expected current-quarter and full-year subscription revenue guidance.
The company projected current quarter subscription revenue of $1.895 billion, falling short of estimates of $1.903 billion. For the full fiscal year 2025, Workday reduced its subscription revenue guidance to between $7.7 billion and $7.725 billion, down from the prior range of $7.725 billion to $7.775 billion. However, the company did increase its annual adjusted operating margin by half a percentage point to 25%.
Workday’s net sales for the first quarter of fiscal 2025 were $1.99 billion, slightly ahead of the $1.97 billion consensus, while adjusted profit reached $1.74 per share, surpassing expectations of $1.58 per share. The company’s market cap stood at $69.21 billion as of May 23, 2024, with a 52-week range of $s147.57 – $230.15. The stock’s volume was 5,370,000, with a PE ratio (TTM) of 50.08 and an EPS (TTM) of $5.61.
Following the cautious outlook on subscription revenue guidance, Workday shares dropped by 11.2% to $231.60 at the time of writing. Despite the recent correction of more than 20%, the stock found support around the 200-day moving average, indicating potential resilience in the face of the current investor sentiment.
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Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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