On February 25, 2025, Workday Inc (WDAY, Financial) released its 8-K filing detailing its financial results for the fourth quarter and full fiscal year 2025, ending January 31, 2025. Workday, a leading cloud-only software provider specializing in human capital management, financial management, and business planning solutions, reported significant growth in both quarterly and annual revenues.

Quarterly and Annual Financial Highlights

For the fourth quarter, Workday reported total revenues of $2.211 billion, marking a 15.0% increase from the same period last year. Subscription revenues reached $2.040 billion, up 15.9% year-over-year. These figures fell short of the analyst estimates of $2.183 billion in revenue. However, the diluted net income per share was $0.35, which fell short of the estimated $0.51. The non-GAAP diluted net income per share was $1.92, surpassing last year's $1.57.

For the full fiscal year 2025, Workday achieved total revenues of $8.446 billion, a 16.4% increase from fiscal 2024, with subscription revenues rising 16.9% to $7.718 billion. The annual diluted net income per share was $1.95, compared to $5.21 in the previous year, impacted by restructuring expenses and the absence of a prior year's tax benefit. The non-GAAP diluted net income per share was $7.30, up from $5.90 last year.

Operational and Strategic Insights

Workday's operating income for the fourth quarter was $75 million, or 3.4% of revenues, impacted by $75 million in restructuring expenses. The non-GAAP operating income was $584 million, or 26.4% of revenues, reflecting strong operational efficiency. For the fiscal year, operating income was $415 million, or 4.9% of revenues, with non-GAAP operating income at $2.186 billion, or 25.9% of revenues.

Workday's CEO, Carl Eschenbach, emphasized the company's value proposition, stating,

“Our fourth quarter performance is a testament to Workday’s value proposition as organizations seek to boost productivity, run more efficiently, and deliver incredible employee experiences.”

“Our fourth quarter results were driven by solid performance across key growth areas of the business, including continued momentum with our full suite and financials products, growing demand for our AI SKUs, and strong execution across industry verticals.”

Balance Sheet and Cash Flow Analysis

Workday's balance sheet remains robust, with cash, cash equivalents, and marketable securities totaling $8.02 billion as of January 31, 2025. Operating cash flows increased by 14.5% year-over-year to $2.461 billion, while free cash flows rose to $2.192 billion from $1.917 billion in the prior year. The company repurchased approximately 2.9 million shares of Class A common stock for $700 million, reflecting a commitment to returning value to shareholders.

Analysis and Future Outlook

Workday's strong revenue growth and strategic investments in AI and cloud solutions underscore its competitive position in the software industry. The company's focus on expanding its product offerings and enhancing customer experiences is evident in its financial performance. However, the impact of restructuring expenses and the absence of prior tax benefits have affected net income figures.

Looking ahead, Workday's guidance for fiscal 2026 includes a subscription revenue target of $8.800 billion, representing 14% growth, and a non-GAAP operating margin of approximately 28.0%. The company's strategic initiatives, including the launch of the Workday Agent System of Record and new partnerships, are expected to drive future growth and operational efficiencies.

Explore the complete 8-K earnings release (here) from Workday Inc for further details.