Summary
Workday reported total revenues of $2.085 billion in the fiscal 2025 second quarter, up 16.7% from $1.787 billion in the prior year quarter. Subscription services revenue of $1.903 billion rose 17.2% from the same period last year and supplies most of the top line. First-half total revenues were $4.075 billion, up 17.4% from $3.471 billion. The customer base now tops 10,500 organizations, and the company appeared on the Fortune 500 list for the first time. Operational highlights included passing 70 million users under contract and more than 2,000 Workday Financial Management customers.
Profitability improved on both a GAAP and a non-GAAP basis. GAAP operating income was $111 million for the quarter, up 208.3% from $36 million a year earlier, and the GAAP operating margin rose to 5.3% from 2.0%. GAAP operating income for the six months was $175 million, compared with $16 million. Net income was $132 million for the quarter, up 67.1% from $79 million, and diluted net income per share was $0.49 versus $0.30. First-half net income was $239 million versus $79 million, and diluted net income per share was $0.89 versus $0.30. Non-GAAP operating income was $518 million, or 24.9% of revenues, compared with $421 million, or 23.6%, and non-GAAP diluted net income per share was $1.75 versus $1.43. Share-based compensation of $370 million, or 17.7% of revenues, remains the biggest reconciling item between the two sets of results.
Cash generation held up well. Operating cash flow was $571 million for the quarter, up 34.4% from $425 million in the prior year quarter, and first-half operating cash flow was $943 million versus $703 million. Free cash flows, a non-GAAP measure defined as operating cash flow minus capital expenditures, were $516 million for the quarter and $807 million for the six months. Capital expenditures were $55 million in the quarter, down 15.4% from $65 million, and $136 million for the six months. Deferred revenue was $3.61 billion at quarter end. Total subscription revenue backlog was $21.58 billion, up 20.9% from a year earlier, and the 12-month backlog was $6.80 billion, up 16.1%. Cash, cash equivalents, and marketable securities totaled $7.37 billion as of July 31, 2024. The company repurchased about 1.4 million Class A shares for $309 million and authorized up to an additional $1.0 billion of buybacks.
Guidance calls for steady subscription growth with a bit more margin expansion. For the full fiscal year 2025, management reiterated subscription revenue of $7.700 billion to $7.725 billion, described as growth of approximately 17%, and slightly raised its full-year non-GAAP operating margin expectation to 25.25%. For the fiscal 2025 third quarter, the company guided to subscription revenue of $1.955 billion, growth of 16%, and a non-GAAP operating margin of 25.25%. Management describes the macroeconomic environment as consistent with the prior quarter.
The risk list looks familiar. Management points to increased deal scrutiny and longer sales cycles, particularly in net new opportunities, along with reduced growth in headcount level commitments when existing customers renew. Some customers have received more flexible payment terms. The filing also flags geopolitical conflicts, elevated inflation, fluctuating interest rates, security breaches, service outages, and evolving regulation of AI. Headcount grew 11% to 19,908, and total costs and expenses rose 13% on higher employee-related spend, professional services and subcontractor costs, marketing programs, and facilities and IT expenses. Workday expects capital expenditures of approximately $330 million in fiscal 2025. Retention remains strong, with gross and net revenue retention rates exceeding 95% and 100%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.08B | $1.99B | +4.8% | $1.79B | +16.7% |
| Research & development | $649.0M | $656.0M | -1.1% | $609.7M | +6.4% |
| Sales & marketing | $611.0M | $573.0M | +6.6% | $524.2M | +16.6% |
| General & administrative | $203.0M | $208.0M | -2.4% | $168.5M | +20.4% |
| Total operating expenses | $1.97B | $1.93B | +2.5% | $1.75B | +12.8% |
| Operating income (loss) | $111.0M | $64.0M | +73.4% | $36.3M | +206.1% |
| Operating margin | 5.3% | 3.2% | +2.1 pp | 2.0% | +3.3 pp |
| Net income (loss) | $132.0M | $107.0M | +23.4% | $78.7M | +67.8% |
| Net margin | 6.3% | 5.4% | +1.0 pp | 4.4% | +1.9 pp |
| Diluted EPS | $0.49 | $0.40 | +$0.09 | $0.30 | +$0.19 |
| Customers | 10,500 | — | — | — | — |
Risks
Macroeconomic uncertainty, elevated inflation, fluctuating interest rates, and geopolitical conflicts are driving increased deal scrutiny and lengthening of certain sales cycles, particularly within net new opportunities, and reduced growth in headcount level commitments upon renewals. Workday has provided more flexible payment terms and may face further negative impacts on renewals, collections, and deployments.
Workday is increasingly building AI into its core offerings and faces evolving regulation such as the EU AI Act, plus a lawsuit alleging its products enable discrimination, though the majority of claims have been dismissed. Failure to address AI responsibilities, customer expectations, or regulatory requirements could increase R&D costs, slow adoption, and cause reputational or litigation harm.
The enterprise cloud applications market is intensely competitive with Oracle and SAP plus other vendors, and legacy vendors are expanding cloud offerings through acquisitions and alliances while generative AI is expected to intensify competition. Pricing pressures, price concessions, delayed payment terms, and long contract lifecycles for financial management solutions could reduce sales or margins.
In November 2023, Workday discovered a product issue that sent document notifications and PDF documents to unintended recipients within the same organization. The filing also notes that AI and generative AI are enabling more automated, targeted attacks and that supply chain attacks have increased in frequency and severity, raising risks of data loss, regulatory obligations, customer terminations, refunds, and litigation.
Effective February 1, 2024, Aneel Bhusri stepped down as Co-CEO and Carl Eschenbach became sole CEO, and Workday has no employment agreements requiring executive officers or key personnel to remain. It faces significant competition for talent, especially in product development, cybersecurity, senior sales, and engineers with AI experience, while hybrid work may amplify recruiting challenges.
Evolving privacy laws including GDPR, uncertainty around the EU-U.S. Data Privacy Framework, CCPA/CPRA, a growing patchwork of U.S. state laws, and restrictive data residency requirements in countries such as Russia, China, and India increase compliance costs. GDPR noncompliance can lead to fines up to 4% of worldwide revenue, private lawsuits, reputational damage, and loss of customers.
Workday depends on its partner network for additional revenue growth and expects service partners to increasingly contract directly with subscription customers for deployment services. If partners fail to perform, prioritize their own or competitors' products, or misrepresent Workday products, Workday's ability to sell and provide services may be harmed.
Growth depends on increasing sales outside the United States, exposing Workday to localization needs, data localization and anti-corruption laws, longer sales and payment cycles, currency fluctuations, tariffs, sanctions, and geopolitical instability. Most international costs are denominated in local currencies, and more sales contracts may be denominated in local currencies, which can impact operating results when translated into U.S. dollars.
Workday used $522 million in cash consideration for the acquisition of HiredScore, net of cash acquired, during the six months ended July 31, 2024. It may fail to realize expected benefits, incur impairment of acquired goodwill, face unknown liabilities, or divert management attention and financial resources from other strategic initiatives.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Gross Revenue Retention
Total Customers
Net Revenue Retention
Total Subscription Revenue Backlog (RPO)
12-Month Subscription Revenue Backlog (cRPO)
Free Cash Flows
Users under contract
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q2 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.