Summary
Workday closed fiscal 2025 third quarter with total revenues of $2.16 billion, up 15.8% from the prior-year quarter. GAAP operating income was $165 million, or 7.6% of revenues, up 87.5% from the prior-year quarter. Net income was $193 million, up 69.3%, and diluted EPS was $0.72, up 67.4%. For the nine months ended October 31, 2024, revenue was $6.24 billion, up 16.8%; operating income was $340 million, up 226.9%; net income was $432 million, up 123.8%; and diluted EPS was $1.61, up 120.5%. Operating margin for the quarter was 7.6%, up 2.9 percentage points from the prior-year quarter. The company also reported deferred revenue of $3.51 billion, up 6.4% from the prior-year quarter.
Operating cash flow was $406 million, down 10.0% from the prior-year quarter, and capital expenditures were $47 million, down 21.7%. Free cash flow, a non-GAAP measure, was $359 million compared with $391 million in the prior-year quarter. Non-GAAP operating income was $569 million, or 26.3% of revenues, compared with $462 million, or 24.8% of revenues, in the prior-year quarter. Management said revenue growth outpaced headcount growth and operating expenses moderated. Workday also repurchased approximately 0.6 million shares of Class A common stock for $157 million.
Workday unveiled Workday Illuminate, the next generation of Workday AI, at its annual customer conference, Workday Rising. The company introduced new AI agents and a new Workday Assistant to simplify common HR and finance processes. It added full suite customers for Workday Financial Management and Workday Human Capital Management, including CommonSpirit Health, Fitness and Lifestyle Group in Australia, New Jersey Institute of Technology, and the Department for Science, Innovation and Technology in the UK. Workday appointed Rob Enslin president and chief commercial officer. It announced updates to its partner ecosystem, including 12 new Industry Accelerators, Workday Wellness, and a partnership with Compa. The company closed the acquisition of Evisort, an AI-native document intelligence platform. Workday was named a Leader in the 2024 Gartner Magic Quadrants for Cloud HCM Suites for 1,000+ Employee Enterprises, Cloud ERP for Service-Centric Enterprises, and Financial Planning Software. The company had more than 10,500 customers, including more than 60% of the Fortune 500. Gross revenue retention was 98% as of October 31, 2024. Headcount was 20,493, up 12% from a year earlier. Total subscription revenue backlog was $22.19 billion, up 20.3% year over year, and 12-month subscription revenue backlog was $6.98 billion, up 15.3%.
Management guided for fiscal 2025 fourth quarter subscription revenue of $2.025 billion, representing growth of 15%, and a non-GAAP operating margin of 25.0%. For the full fiscal year 2025, Workday updated guidance to subscription revenue of $7.703 billion, growth of 17%, and a non-GAAP operating margin of 25.5%. The company expects capital expenditures of approximately $300 million in fiscal 2025. Management pointed to a seasonally strongest fourth quarter and a focus on durable, profitable growth at scale. Risks include macroeconomic uncertainty, elevated inflation, fluctuating interest rates, and geopolitical conflicts such as Russia-Ukraine and Israel-Hamas. The company said deal scrutiny and lengthening sales cycles, particularly for net new opportunities, and reduced growth in headcount level commitments upon renewals of existing customers could moderate revenue growth. Workday also flagged potential negative impacts on customer renewals, collections, sales and marketing, customer deployments, and product development if economic uncertainty continues. Other risks include security breaches, service outages, privacy laws, competition, reliance on partners, and regulatory risks related to AI. The company noted that acquisitions may not deliver expected benefits. The MD&A said recent macroeconomic events continue to create uncertainty, volatility, and disruption of financial markets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.16B | $2.08B | +3.6% | $1.87B | +15.8% |
| Research & development | $647.0M | $649.0M | -0.3% | $618.7M | +4.6% |
| Sales & marketing | $620.0M | $611.0M | +1.5% | $537.8M | +15.3% |
| General & administrative | $198.0M | $203.0M | -2.5% | $176.0M | +12.5% |
| Total operating expenses | $2.00B | $1.97B | +1.1% | $1.78B | +12.2% |
| Operating income (loss) | $165.0M | $111.0M | +48.6% | $87.9M | +87.8% |
| Operating margin | 7.6% | 5.3% | +2.3 pp | 4.7% | +2.9 pp |
| Net income (loss) | $193.0M | $132.0M | +46.2% | $113.7M | +69.7% |
| Net margin | 8.9% | 6.3% | +2.6 pp | 6.1% | +2.8 pp |
| Diluted EPS | $0.72 | $0.49 | +$0.23 | $0.43 | +$0.29 |
| Customers | 10,500 | 10,500 | ±0.0% | — | — |
Risks
MD&A states recent macroeconomic events including elevated inflation and fluctuating interest rates, as well as the Russia-Ukraine and Israel-Hamas conflicts, continue to impact the global economy and create uncertainty. It says customers may delay or reduce enterprise software spending, and Workday has provided more flexible payment terms.
MD&A says Workday has experienced, and may continue to experience, a moderation of revenue growth rates due to deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities. It also notes reduced growth in headcount level commitments upon renewals of existing customers.
Subscription services revenues are largely based on the size of customers' employee headcount, and MD&A reports reduced growth in headcount level commitments upon renewals of existing customers. Prolonged decreases in customers' headcounts or customer insolvencies from severe economic hardship could reduce subscription revenues upon renewal or outside the renewal period.
Workday is increasingly building AI into its product suite, and risk factors cite the EU AI Act and other evolving AI laws that may require increased research and development costs or divert resources. Workday is also defending a lawsuit alleging its products and services enable discrimination, with the majority of claims dismissed but the plaintiff potentially seeking to litigate against certain Workday customers.
MD&A reports cash consideration, net of cash acquired, of $522 million for HiredScore and $302 million for Evisort in the nine months ended October 31, 2024. Risk factors cite difficulties integrating technology and personnel, retaining key personnel, addressing security risks, and achieving expected benefits from acquisitions.
Risk factors disclose that in November 2023 Workday discovered an issue in its product affecting certain customers that resulted in document notifications and PDF documents being sent to unintended recipients within the same organization. They also cite supply chain attacks and AI-enabled attack methods as increasing security risk.
MD&A says the OECD Pillar Two model rules define a 15% global minimum tax for large multinational corporations, and Workday's analysis of potential impacts is ongoing and incomplete. It states that it is possible Pillar Two could have a material adverse effect on Workday's tax liability.
Risk factors state the markets for enterprise cloud applications are highly competitive, with Oracle and SAP as primary competitors, and that generative AI is expected to intensify competition. Pricing pressures, price concessions, and delayed payment terms from competitors could reduce sales or margins.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Total Customers
12-Month Subscription Revenue Backlog
Free Cash Flow
Gross Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q3 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.