Summary
Workday reported total revenues of $1.990 billion for fiscal 2025's first quarter, up 18.2% from $1.684 billion a year earlier. Subscription revenues reached $1.815 billion, an increase of 18.8% year over year, while professional services revenue of $175 million grew 11%. GAAP operating income was $64 million, or 3.2% of revenues, a swing from an operating loss of $20 million, or negative 1.2% of revenues, in the prior-year quarter. Net income was $107 million and diluted net income per share was $0.40, compared with $0.00 a year earlier.
Backlog kept building. Total subscription revenue backlog was $20.68 billion, up 24.2% from the prior year, and the 12-month portion was $6.60 billion, up 17.9%. Management credited new customers, the timing of renewals, expansion of products sold to existing accounts, and longer contract durations. Cash generation tracked the growth. Operating cash flow was $372 million, up from $277 million, and capital expenditures were $81 million, up from $59 million. Free cash flow, which Workday defines as operating cash flow minus capital expenditures, was $291 million against $218 million. The company ended the quarter with $7.18 billion in cash, cash equivalents, and marketable securities and 19,415 employees, up 9% year over year.
Margin expansion came from revenue growth outrunning headcount growth, not from a broad cost reset. Non-GAAP operating income was $515 million, or 25.9% of revenues, compared with $396 million, or 23.5%, a year earlier. Share-based compensation of $385 million remains the largest bridge item between the GAAP and non-GAAP results at 19.3% of total revenues. Guidance carries the more cautious tone. For the full fiscal year ending January 31, 2025, Workday guides to subscription revenue of $7.700 billion to $7.725 billion, growth of approximately 17%, and a non-GAAP operating margin of 25.0%. For the fiscal 2025 second quarter ending July 31, 2024, guidance is subscription revenue of $1.895 billion, growth of approximately 17%, and a non-GAAP operating margin of 24.5%. Capital expenditures should reach approximately $330 million for the full fiscal year.
CFO Zane Rowe tied the updated subscription revenue outlook to elevated sales scrutiny and lower customer headcount growth during the quarter, even as the company raised its margin outlook. The MD&A repeats that theme. Deal scrutiny has increased and sales cycles for net new opportunities have lengthened, some renewals carry lower headcount commitments, and Workday has offered certain customers more flexible payment terms. Those dynamics sit alongside a still-healthy base. Gross retention was over 95% and net retention over 100%, and Workday says it is used by more than 60% of the Fortune 500 and more than 10,500 organizations. Product momentum includes the completed HiredScore acquisition for $512 million in cash consideration, net of cash acquired, more than 50 AI use cases in production, and 25 generative AI use cases on the roadmap. The company also repurchased about 0.5 million Class A shares for $134 million.
Risks look familiar but real. Workday lists security breaches and unauthorized access to customer data, service outages, privacy and AI regulation, competition and pricing pressure, reliance on partners, and global economic and geopolitical volatility, including the Russia-Ukraine and Israel-Hamas conflicts. The OECD's Pillar Two framework, which sets a 15% global minimum tax for large multinationals, is under review and could lift the tax bill, though the company does not currently expect a material impact. Near-term bookings also depend on deal scrutiny easing, and changes in sales may not show up quickly in reported results because of the subscription model.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.99B | $1.92B | +3.5% | $1.68B | +18.1% |
| Research & development | $656.0M | $635.1M | +3.3% | $600.5M | +9.3% |
| Sales & marketing | $573.0M | $558.4M | +2.6% | $518.6M | +10.5% |
| General & administrative | $208.0M | $189.9M | +9.6% | $167.6M | +24.1% |
| Total operating expenses | $1.93B | $1.84B | +4.5% | $1.70B | +13.0% |
| Operating income (loss) | $64.0M | $78.7M | -18.7% | -$19.8M | +423.2% |
| Operating margin | 3.2% | 4.1% | -0.9 pp | -1.2% | +4.4 pp |
| Net income (loss) | $107.0M | $1.19B | -91.0% | $136.0K | +78576.5% |
| Net margin | 5.4% | 61.8% | -56.4 pp | 0.0% | +5.4 pp |
| Diluted EPS | $0.40 | $4.48 | -$4.08 | $0.00 | +$0.40 |
| Net retention rate | 95.0% | 95.0% | ±0.0 pp | 95.0% | ±0.0 pp |
Risks
MD&A states recent macroeconomic events including higher inflation and interest rates and geopolitical conflicts have created uncertainty and could continue to impact customer spending, renewals, collections, and deployments. Workday has already experienced delays in purchasing decisions, increased demand for price concessions, and delayed payment terms.
MD&A says Workday has experienced moderation of revenue growth rates due to increased deal scrutiny and lengthening of certain sales cycles, particularly within net new opportunities, and lower headcount level commitments upon renewals. It may provide more flexible payment terms, which could affect future revenue and collections.
Risk Factors state Workday is defending a lawsuit alleging its products and services enable discrimination, and that AI in offerings may increase regulatory and litigation risk. The filing warns failure to address AI responsibilities or ethical issues could harm adoption and subject Workday to reputational harm, regulatory action, or litigation.
Risk Factors disclose that in November 2023 an issue in Workday's product affecting certain customers resulted in document notifications and PDF documents being sent to unintended recipients within the same organization. The filing also notes Workday is a target of malicious cyber-attack attempts and has experienced other security events.
Risk Factors highlight the February 1, 2024 leadership transition in which Aneel Bhusri stepped down as Co-CEO and Carl Eschenbach became sole CEO. Workday has no employment agreements requiring executives or key personnel to remain, and key employee changes could disrupt the business and hurt recruiting and retention.
Risk Factors describe the enterprise cloud applications market as intensely competitive, with primary competitors Oracle and SAP and other vendors, and warn that generative AI may intensify competition. Competitors may offer lower prices or more favorable terms, which could reduce sales and margins.
MD&A says the OECD Pillar Two model rules define a 15% global minimum tax and that countries are implementing legislation. Workday is still evaluating the impact and says it is possible Pillar Two could have a material adverse effect on its tax liability.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Non-GAAP Operating Income
24-Month Subscription Revenue Backlog
Gross Revenue Retention
12-Month Subscription Revenue Backlog
Free Cash Flow
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q1 FY2025 (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.