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.