Summary
Workday started fiscal 2024 with total revenue of $1.68 billion in the quarter ended April 30, 2023, up 17.4% from the prior-year quarter. The GAAP operating loss narrowed to $19.8 million. Operating margin was negative 1.2%, up 3.9 percentage points from the prior-year quarter. Net income was $136,000, and diluted EPS was $0.00, compared with a net loss and a loss per share in the prior-year quarter. The quarter swung to a GAAP profit from a loss a year earlier. Current deferred revenue rose to $3.23 billion, up 14.4% from the prior-year quarter. Operating cash flow was $277.3 million, down 36.9% from the prior-year quarter. Capital expenditures were $59.0 million.
Non-GAAP results show more of the operating leverage. Non-GAAP operating income was $395.9 million, or 23.5% of revenue, compared with $288.6 million and 20.1% in the prior-year quarter. Subscription revenue backlog reached $16.65 billion, up 31.6%, and the 24-month backlog was $9.79 billion, up 22.9%. Management said gross and net retention rates were over 95% and over 100%, respectively. Headcount was 17,866, up 12% from 15,932 a year earlier. New Workday Financial Management customers included Halifax Hospital Medical Center, Prometeia SpA, GreenYellow, Northeastern University, and Tokio Marine Management (Australasia). New Human Capital Management customers included Dollar Tree, Johor Corporation, Equinor ASA, and McLane Company. Workday expanded its partnership with Alight and made several artificial intelligence and machine learning announcements, including semantic search for Workday Peakon Employee Voice, Predictive Forecaster in Adaptive Planning, and ML APIs for Workday Extend. The company also built a native integration from Workday Extend to AWS, which is in early access with general availability expected later this year. Workday announced the appointment of Zane Rowe to chief financial officer. The company serves more than 10,000 organizations, including more than 50% of the Fortune 500. Workday joined Frontier, an advance market commitment to accelerate carbon removal, and was named one of the World's Most Ethical Companies by Ethisphere for the third consecutive year.
Guidance is for the full fiscal year and the next quarter. For fiscal 2024, Workday raised the low end of subscription revenue guidance to a range of $6.550 billion to $6.575 billion, representing 18% growth over the prior fiscal year. For the fiscal 2024 second quarter, the company guided subscription revenue to $1.611 billion to $1.613 billion, also 18% growth. Workday maintained its full-year non-GAAP operating margin guidance at 23%. Management also said it expects capital expenditures of approximately $300 million in fiscal 2024. Those targets depend on durable demand and on the company's ability to balance growth with margin expansion.
The main risks sit in the macro backdrop and in execution. Workday cited higher inflation, the U.S. Federal Reserve raising interest rates, instability in the global banking system, the ongoing conflict between Russia and Ukraine, and the remaining effects of the COVID-19 pandemic. Those conditions have created uncertainty and could lengthen sales cycles, especially for net new opportunities. They could also pressure customer renewals, collections, sales and marketing efforts, customer deployments, and product development. The company faces other risks around security breaches, service outages, competitive pricing pressure, industry consolidation, new competitors, and acceptance of newer technologies such as machine learning and artificial intelligence. On cash flow, the decline in operating cash flow reflected the first full-year payout of the performance-based cash bonus program, an interest payment on the Senior Notes that did not occur in the first quarter of fiscal 2023, and payments related to the workforce realignment announced in the fourth quarter of fiscal 2023. Those outflows were partly offset by increases in sales and related cash collections. Workday said its existing cash, cash equivalents, marketable securities, cash from operations, unbilled subscription amounts, and a $1.0 billion credit agreement are sufficient for the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.68B | $1.65B | +2.3% | $1.43B | +17.4% |
| Research & development | $600.5M | $615.6M | -2.5% | $541.5M | +10.9% |
| Sales & marketing | $518.6M | $489.9M | +5.9% | $429.3M | +20.8% |
| General & administrative | $167.6M | $176.3M | -4.9% | $133.9M | +25.2% |
| Total operating expenses | $1.70B | $1.74B | -1.8% | $1.51B | +13.0% |
| Operating income (loss) | -$19.8M | -$89.0M | +77.7% | -$72.8M | +72.8% |
| Operating margin | -1.2% | -5.4% | +4.2 pp | -5.1% | +3.9 pp |
| Net income (loss) | $136.0K | -$125.7M | +100.1% | -$102.2M | +100.1% |
| Net margin | 0.0% | -7.6% | +7.6 pp | -7.1% | +7.1 pp |
| Diluted EPS | $0.00 | -$0.49 | +$0.49 | -$0.41 | +$0.41 |
| Net retention rate | 95.0% | 95.0% | ±0.0 pp | — | — |
Risks
Recent macroeconomic conditions including inflation, rising interest rates, and global banking instability have led to increased customer scrutiny and lengthening of certain sales cycles, particularly within net new opportunities, as highlighted in MD&A; if uncertainty continues, it may negatively affect renewals, collections, and deployments.
The filing discloses an August 2022 Workday Recruiting issue that temporarily made certain information discoverable to unintended parties, and Workday has been the target of malicious cyber-attack attempts in the normal course of business.
Workday relies on third-party data centers and hosted infrastructure partners including AWS, Google, and Microsoft; in July 2022 high temperatures and power outages at two U.S. hosted data centers caused a brief temporary service outage for a subset of customers.
Workday is increasingly building AI and ML into offerings, including generative AI and large language models, and faces a lawsuit alleging its products enable discrimination plus compliance risk from the New York City Automated Employment Decision Tools law effective July 5, 2023.
The December 2022 resignation of Co-CEO Chano Fernandez and appointment of Carl Eschenbach, plus intense competition for AI, ML, senior sales, and engineering talent in the San Francisco Bay Area and remote work market, create execution and retention risk.
Workday has $3.0 billion of senior notes outstanding and a $1.0 billion revolving credit facility with a leverage covenant, and rising interest rates may make refinancing more difficult or costly.
The closures of Silicon Valley Bank and other regional banks in 2023 have created liquidity risks for the companies Workday has invested in, and volatility in marketable equity investments could materially affect quarterly results.
Evolving privacy laws, including GDPR fines of up to 4% of worldwide revenue, the CPRA effective January 1, 2023 with a lookback to January 1, 2022, and restrictive data residency rules in countries such as Russia, China, and India increase compliance costs and may limit service adoption.
Workday states its historic revenue growth rates have declined and may decline again as market penetration increases; MD&A reported total revenues up 17% but professional services revenues down 4% for the three months ended April 30, 2023.
The enterprise cloud applications market is intensely competitive with Oracle and SAP as primary competitors, and legacy vendors are expanding cloud offerings through acquisitions and alliances, which may pressure pricing and margins.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Non-GAAP Operating Income
24-Month Subscription Revenue Backlog
Gross Revenue Retention
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.