Summary
Workday reported fiscal 2022 second quarter total revenues of $1.26 billion, up 18.7% from the prior-year quarter. The company's GAAP operating loss narrowed to $1.12 million, and operating margin improved to negative 0.1%, up 1.5 percentage points from the prior-year quarter. Net income was $105.74 million, a swing to a profit, and diluted EPS was $0.41. Operating cash flow for the quarter was $198.47 million, up from the prior-year quarter. Deferred revenue, current portion, was $2.45 billion, up 22.5% year over year.
For the first six months of fiscal 2022, total revenues were $2.44 billion, up 17.1% year over year. Year-to-date net income was $59.21 million, a swing to a profit, and year-to-date operating cash flow was $650.90 million, up from the prior-year period. Year-to-date operating margin was negative 1.6%, up 6.1 percentage points from the prior-year period. The company said its customer community now has more than 55 million users, and more than half of the Fortune 500 have selected Workday, with approximately 90% of those live on its products.
Backlog metrics point to continued demand. The 24-month subscription revenue backlog was $6.88 billion, up 19.0% year over year. Total subscription revenue backlog was $10.58 billion, up 23.1% year over year. Non-GAAP operating income was $291.8 million, or 23.2% of revenues, compared with $257.7 million, or 24.3% of revenues, in the prior-year quarter. Non-GAAP operating margin declined because of higher headcount and marketing timing, partially offset by higher revenues. Workday also expanded its partnership with Google to include Google Cloud, announced plans to deliver payroll for Australia and Germany, and achieved Ready status for FedRAMP at a Moderate impact level.
Guidance was raised. For the third quarter of fiscal 2022, Workday guided subscription revenue to $1.156 billion to $1.158 billion, which would be 20% growth at the high end. For the full fiscal year 2022, the company raised subscription revenue guidance to $4.500 billion to $4.510 billion, or 19% growth, and raised non-GAAP operating margin guidance to 21.0%. Capital expenditures, excluding owned real estate projects, are expected to be approximately $270 million for fiscal 2022. The company does not expect additional investments in owned real estate projects during fiscal 2022.
Risks remain tied to the COVID-19 pandemic and the company's growth investments. Workday said the pandemic continues to create uncertainty and has affected its ability to generate new business, and that if economic uncertainty increases it could hurt new business, renewals, sales and marketing, revenue growth, customer deployments, customer solvency, and product development. Customers may request payment timing concessions, which could affect the timing and predictability of operating cash flows. The company also lists competition, pricing pressures, security breaches, service outages, regulatory risks, and acquisition integration among its risks. Workday has incurred GAAP operating losses since inception in 2005. The 2022 Notes are convertible at the option of holders during the third quarter of fiscal 2022, and if not converted, $1.15 billion in principal is due October 1, 2022. The company may receive additional conversion requests that require settlement in the third quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.26B | $1.18B | +7.3% | $1.06B | +18.7% |
| Research & development | $444.3M | $441.6M | +0.6% | $418.7M | +6.1% |
| Sales & marketing | $358.2M | $326.5M | +9.7% | $276.5M | +29.5% |
| General & administrative | $113.6M | $112.2M | +1.2% | $99.3M | +14.4% |
| Total operating expenses | $1.26B | $1.21B | +4.0% | $1.08B | +16.9% |
| Operating income (loss) | -$1.1M | -$38.3M | +97.1% | -$16.8M | +93.3% |
| Operating margin | -0.1% | -3.3% | +3.2 pp | -1.6% | +1.5 pp |
| Net income (loss) | $105.7M | -$46.5M | +327.3% | -$28.0M | +477.4% |
| Net margin | 8.4% | -4.0% | +12.4 pp | -2.6% | +11.0 pp |
| Diluted EPS | $0.41 | -$0.19 | +$0.60 | — | — |
Risks
The ongoing COVID-19 pandemic continues to create global economic volatility and uncertainty. Workday has experienced and may continue to experience delays in purchasing decisions, reduced renewal rates particularly within its subset of small and medium-sized planning customers, and reduced customer spend and delayed payments, which could materially impact future operating results.
Workday has experienced unfavorable impacts to new subscription bookings since March 2020 and reduced its fiscal 2022 subscription revenue outlook. Because it sells to large customers with long sales cycles and recognizes subscription revenue ratably over contracts typically three years or longer, downturns in new sales are not immediately reflected in operating results and negative impacts can be difficult to predict.
In April 2021, a malicious third party accessed the development environment of Peakon, a company Workday had recently acquired, and took a copy of Peakon's source code. Workday secured the environment and confirmed no customer data was accessed, but the incident and any similar future events could result in reputational damage, liabilities, or remediation costs.
Workday faces intense competition for highly skilled employees, especially engineers with machine learning and artificial intelligence experience, cybersecurity professionals, and senior sales executives. It has publicly committed to increasing its workforce by more than 20% in fiscal 2022 and may fail to attract, train, and retain personnel, which could harm growth prospects.
Workday has substantial indebtedness, including $1.15 billion of 0.25% convertible senior notes due October 1, 2022, that became convertible at holders' option during the third quarter of fiscal 2022. Through the filing date, converted principal was not material, but Workday may receive additional conversion requests or be required to repay the principal, which could reduce cash available for the business.
Workday holds equity investments whose fair value changes can cause material volatility in its statements of operations. In the second quarter of fiscal 2022, other income included net gains of $106 million on equity securities, of which $100 million related to an equity investment that completed its IPO, contributing to net income of $105.7 million; future losses on these investments could adversely impact financial results.
Workday acquired Peakon in fiscal 2022 for cash consideration of $679 million, net of cash acquired, in the six months ended July 31, 2021. Acquisitions may divert management attention, result in dilution or debt, and involve integration risks including retention of personnel and security risks of the acquired business.
Although Workday reported net income of $105.7 million and diluted EPS of $0.41 for the quarter, and GAAP operating margin improved to (0.1)% from (1.6)%, it had a history of cumulative losses and expects operating expenses to increase. MD&A cautions that the favorable margin impact in the three and six months ended July 31, 2021 is not anticipated to continue long-term.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Non-GAAP Operating Income
24-Month Subscription Revenue Backlog
Subscription Revenue
Total Revenues
Operating Cash Flow
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q2 FY2022 (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.