EPS of $0.49 increased by 66.7% from previous year
Gross margin of 75.5%
Net income of 132.00M
""Workday empowers businesses to increase productivity, deliver incredible employee experience, and drive greater efficiencies across finance."" - Carl Eschenbach, CEO
In Q2 2025, Workday Inc. achieved notable financial growth, with total revenue reaching $2.085 billion, reflecting a 17% increase year-over-year. Subscription revenue specifically grew by 17%, signaling robust demand for Workday's cloud-based enterprise applications. Despite facing challenges such as deal scrutiny and moderated headcount growth within its customer base, Workday reported a strong non-GAAP operating margin of 24.9%, underscoring its commitment to profitability while expanding its customer base. Management emphasized their dedication to driving efficiencies and growth, particularly in the AI and financials sectors, reinforcing their competitive positioning in the marketplace.
Balance Sheet Metrics:
- Cash and Marketable Securities: $7.4 billion
- Total Assets: $16.234 billion
- Total Liabilities: $7.889 billion
- Total Equity: $8.345 billion
Cash Flow:
- Operating Cash Flow: $571 million (YoY: +34%)
- Free Cash Flow: $516 million
Management forecasts subscription revenue growth guidance of approximately 17% for FY 2025 and is optimistic about maintaining this trajectory heading into FY 2026, supported by a strong backlog of $21.58 billion
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.09B
16.69%
5.20%
Gross Profit
1.57B
17.58%
5.28%
Operating Income
111.00M
206.15%
91.38%
Net Income
132.00M
67.09%
23.36%
EPS
0.50
66.67%
25.00%
Key Financial Ratios
currentRatio
1.99
grossProfitMargin
75.5%
operatingProfitMargin
5.32%
netProfitMargin
6.33%
returnOnAssets
0.81%
returnOnEquity
1.58%
debtEquityRatio
0.4
operatingCashFlowPerShare
$2.15
freeCashFlowPerShare
$1.95
priceToBookRatio
7.22
priceEarningsRatio
114.13
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights:
- Carl Eschenbach, CEO, stated, 'Right now, companies are focusing their investments on areas that improve productivity and operations. Workday gives them the ultimate advantage.'
- On AI initiatives, Eschenbach noted, 'We see an opportunity to exponentially increase the value to our customers by reimagining end-to-end HR and Finance processes through the power of AI.'
- Zane Rowe, CFO, reiterated, 'We are committed to investing in organic growth, pursuing strategic M&A opportunities, and returning excess capital to shareholders.'
Management acknowledged the impact of moderated headcount growth within the customer base but reassured investors of their solid win rates and customer momentum. They also discussed the robust performance in international markets, including APAC and Japan, emphasizing future growth prospects.
"Workday empowers businesses to increase productivity, deliver incredible employee experience, and drive greater efficiencies across finance."
â Carl Eschenbach, CEO
"Our continued investment in Financials is helping us drive momentum across the platform."
â Carl Eschenbach, CEO
Forward Guidance
Workday's near-term outlook remains positive despite the economic landscape, with management targeting approximately $7.7 billion in subscription revenue for FY 2025, representing an estimated 17% growth. The company anticipates continued momentum in its subscription backlog and operational efficiency improvements. Management expects non-GAAP operating margins to expand further as they increasingly leverage AI-driven processes, ensuring long-term profitability. Notably, they plan to sustain investment in key growth areas while managing operational costs effectively. The focus remains on driving efficiencies across the business which suggests a resilience to potential market fluctuations.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
WDAY Focus
75.49%
5.32%
1.58%
114.13%
INTU
74.70%
10.90%
2.09%
125.19%
ZM
75.50%
17.40%
2.57%
21.31%
NOW
79.00%
9.14%
3.02%
154.81%
SNOW
66.80%
-40.90%
-7.67%
-34.36%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Workday Inc. stands out as a resilient player in the cloud application space, particularly in light of emerging technologies in AI and its commitment to innovation. The company's solid foundation, evident in its strong financials and strategic focus on efficiency while still investing in growth areas, positions it well for long-term growth. As the market stabilizes, Workday is likely to benefit from an expected uptick in IT spending and continued customer migrations to cloud-based solutions. Investors should monitor developments in Workday's AI initiatives and international expansion efforts closely, as these factors will be critical to its ability to maintain and accelerate growth.
Key Investment Factors
Growth Potential
Workday's expansion into new geographic markets and continued successes in verticals such as healthcare and higher education present significant growth potential. The integration of AI into their product suite opens additional revenue streams and increases customer value.
Profitability Risk
Moderated headcount growth at customer organizations poses a risk to transaction volumes and revenue growth. Additionally, economic uncertainties could impact IT spending, potentially affecting Workday's sales cycles and renewal rates.
Financial Position
Workday's financial health is strong, with substantial cash reserves ($7.4 billion) that provide flexibility for investments and acquisitions. The manageable debt levels (debt-to-capitalization at 28.7%) indicate an ability to navigate potential challenges effectively.
SWOT Analysis
Strengths
Leading position in the HCM and Financial Management segments with a strong product suite.
Robust cash position enabling strategic investments and share repurchase programs.
High customer satisfaction and retention rates, supported by a strong backlog of subscription revenue.
Weaknesses
Dependence on large enterprise customers for revenue may expose Workday to market volatility.
Moderated customer headcount growth could slow transaction volumes.
Opportunities
Expansion in international markets, particularly APAC and EMEA, shows promise for new customer acquisition.
AI innovations positioned to drive new revenue streams and enhance product offerings.
Threats
Intense competition from other SaaS providers could impact market share.
Economic downturns leading to reduced IT spending might affect performance.