Executive Summary
Workday reported a solid Q4 2025 revenue print with meaningful year-over-year momentum but with profitability and margin metrics showing compression as the company continues to invest aggressively in growth initiatives. Revenue for Q4 2025 stood at $2.211 billion, up 15.8% year over year (YoY) and 2.4% quarter over quarter (QoQ), driven by ongoing demand for Workday’s cloud ERP, human capital management (HCM), and planning offerings. Gross profit was $1.672 billion, delivering a gross margin of 75.6%, while operating income was $75 million (operating margin of 3.39%), and net income reached $94 million (net margin 4.25%), with diluted EPS of $0.35.
The strength of operating cash flow and free cash flow remained a notable positive in the quarter. Cash provided by operating activities was $1.112 billion, and free cash flow totaled $1.026 billion, underscoring Workday’s ability to convert subscription and services revenue into substantial cash generation despite higher OPEX in pursuit of scale. The balance sheet remains highly liquid, with cash and short-term investments totaling about $8.02 billion and total assets of $17.98 billion; total stockholders’ equity stands at $9.03 billion.
However, investors should note a pronounced step-up in spending, contributing to a substantial YoY decline in net income (down ~92% YoY to $94 million from ~$1.19 billion in Q4 2024) and a relatively modest operating margin. The data imply that management continues to prioritize investment in R&D and go-to-market activities to sustain multi-product growth, including planning and spend-management capabilities. Looking ahead, the key questions center on whether operating leverage will improve as the company scales and whether gains in ARR, net revenue retention, and cross-sell discipline can lift profitability while preserving cash-generation characteristics.
Key Performance Indicators
QoQ: -54.55% | YoY:13.26%
QoQ: -51.30% | YoY:-92.09%
QoQ: -52.05% | YoY:-92.26%
Key Insights
Revenue: $2.211B in Q4 2025, YoY +15.8% and QoQ +2.4%. Gross profit: $1.672B, gross margin 75.6%.
Operating income: $75.0M, operating margin 3.39%.
EBITDA: $239.0M, EBITDA margin 10.8%.
Net income: $94.0M, net margin 4.25%, EPS $0.35 (diluted $0.35).
Weighted average shares (non-diluted/diluted): 265.8M / 270.0M.
Cash flow: CFO $1.112B; free cash flow $1.026B; operating cash flow yield (vs revenue) ~50.5%.
Capital expenditures: $86.0M; Free cash flow per share (FCFPS) $3.86; Operating cash flow...
Financial Highlights
Revenue: $2.211B in Q4 2025, YoY +15.8% and QoQ +2.4%. Gross profit: $1.672B, gross margin 75.6%.
Operating income: $75.0M, operating margin 3.39%.
EBITDA: $239.0M, EBITDA margin 10.8%.
Net income: $94.0M, net margin 4.25%, EPS $0.35 (diluted $0.35).
Weighted average shares (non-diluted/diluted): 265.8M / 270.0M.
Cash flow: CFO $1.112B; free cash flow $1.026B; operating cash flow yield (vs revenue) ~50.5%.
Capital expenditures: $86.0M; Free cash flow per share (FCFPS) $3.86; Operating cash flow per share (OCFPS) $4.18.
Balance sheet highlights: Cash & cash equivalents $1.543B; Short-term investments $6.474B; Total cash & short-term investments $8.018B; total assets $17.977B; total liabilities $8.943B; total stockholders’ equity $9.034B; long-term debt $3.263B; net debt $1.819B; deferred revenue (current) $4.467B; deferred revenue (non-current) $80M.
Key ratios: gross margin 75.6%; operating margin 3.39%; pretax margin 5.43%; net margin 4.25%; current ratio 1.85; cash conversion cycle ~63.8 days; ROE 1.04%; ROA 0.52%; debt-to-capitalization 27.1%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.21B |
15.81% |
2.36% |
| Gross Profit |
1.67B |
15.45% |
-8.68% |
| Operating Income |
75.00M |
13.26% |
-54.55% |
| Net Income |
94.00M |
-92.09% |
-51.30% |
| EPS |
0.35 |
-92.26% |
-52.05% |
Key Financial Ratios
operatingProfitMargin
6.31%
operatingCashFlowPerShare
$4.18
freeCashFlowPerShare
$3.86
priceEarningsRatio
188.15
Management Commentary
Transcript data not provided in the supplied material. No management quotes or highlighted call remarks are available for QQ4 2025. If transcripts become available, quotes can be extracted by theme (strategy, operations, market conditions) with context and significance.
Forward Guidance
No formal forward guidance is embedded in the provided dataset. Based on the quantitative results and industry dynamics, the sustainability of revenue growth appears linked to continued expansion of multi-product workloads (ERP, HCM, and planning), higher cross-sell contributions, and AI-enhanced analytics. Investors should monitor:
- ARR growth, dollar-based net retention (DBNRR), and multi-product attach rates to assess operating leverage potential.
- Profitability progression as investment intensity (R&D, GTM) moderates and as cross-sell and expansion cycles mature.
- Free cash flow and cash conversion efficiency, especially as stock-based compensation remains a non-cash but dilutive consideration in equity modeling.
- Net debt trajectory and liquidity runway, given the sizable cash balance and investment capacity. In sum, the investment thesis hinges on achieving stronger operating leverage while maintaining a durable cash-generating engine.