Summary
Workday ended fiscal 2023 with fourth-quarter revenue of $1.65 billion, up 19.6% from the prior-year quarter. Full-year revenue reached $6.22 billion, up 21.0% from the prior year. The company reported total subscription revenue backlog of $16.45 billion, up 28.4%, and 24-month subscription revenue backlog of $9.68 billion, up 21.3%. Workday now serves more than 10,000 customers, including over 50% of the Fortune 500 and more than 25% of the Global 2000. Headcount was 17,744, up 17%. These figures show a business still adding scale even as management flags a less predictable selling environment.
The quarter's profitability remains mixed. GAAP operating loss was $89.0 million, or negative 5.4% of revenue. That operating loss and margin improved from the prior-year quarter. For the full year, GAAP operating loss was $222.2 million, or negative 3.6% of revenue, worse than the prior year. GAAP net loss was $125.7 million in the fourth quarter and $366.7 million for the full year. Full-year diluted EPS was negative $1.44, down from the prior year. Non-GAAP operating income was $305.3 million in the fourth quarter, or 18.5% of revenue, up from $237.1 million and 17.2% a year earlier. Full-year non-GAAP operating income was $1.21 billion, or 19.5% of revenue, down from $1.15 billion and 22.4%. The gap between GAAP and non-GAAP results is wide, mostly because of share-based compensation and related costs. Non-GAAP basic and diluted net income per share was $1.00 and $0.99 in the fourth quarter, compared with $0.82 and $0.78 a year earlier. For the full year, non-GAAP basic and diluted net income per share was $3.73 and $3.64, compared with $4.20 and $3.99.
Cash generation held up. Fourth-quarter operating cash flow was $694.5 million, up 12.9%. Full-year operating cash flow was $1.66 billion, flat with the prior year. Capital expenditures were $364 million for the full year. Deferred revenue stood at $3.60 billion at the end of the quarter. In fiscal 2023, increased sales and related cash collections were offset by cash outlays related to higher headcount, a return to travel and in-person events, a one-time intellectual property transfer tax payment, an interest payment on the Senior Notes, and other growth investments. The modest full-year operating cash flow growth shows how those costs are absorbing cash.
Management's full-year fiscal 2024 outlook calls for subscription revenue of $6.525 billion to $6.575 billion, growth of 17% to 18%, and a non-GAAP operating margin of 23.0%. That margin outlook includes a 150 basis point increase from a change in the useful life policy for servers and network equipment. Workday also expects capital expenditures of approximately $340 million in fiscal 2024. The guidance reflects an expectation that the environment will remain uncertain in the near term. Workday faces risks from inflation, rising interest rates, lengthening sales cycles, and potential pressure on renewals, deployments, and collections. Security breaches, service outages, competition, and regulatory risks around artificial intelligence and machine learning are also named concerns.
Operationally, Workday is investing in its customer base, key industries, partner ecosystem, and innovation, including a $250 million expansion of its Workday Ventures fund. The company appointed Carl Eschenbach as co-CEO to serve alongside Aneel Bhusri through January 2024, at which time Eschenbach is expected to become sole CEO and Bhusri executive chair. Workday also flagged a workforce realignment announced in the fourth quarter and a change to RSU vesting dates that accelerated share-based compensation expense. Those items added pressure to GAAP results. Retail momentum is growing, with more than 50% of retail organizations in the Fortune 500 having selected Workday. Execution on these priorities will determine whether Workday can keep revenue growth in the high teens while expanding non-GAAP margins.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.65B | $1.60B | +2.9% | $1.38B | +19.6% |
| Research & development | $615.6M | $565.7M | +8.8% | $537.7M | +14.5% |
| Sales & marketing | $489.9M | $470.2M | +4.2% | $410.9M | +19.2% |
| General & administrative | $176.3M | $153.7M | +14.7% | $138.6M | +27.1% |
| Total operating expenses | $1.74B | $1.63B | +6.8% | $1.48B | +17.5% |
| Operating income (loss) | -$89.0M | -$26.3M | -238.0% | -$101.0M | +11.9% |
| Operating margin | -5.4% | -1.6% | -3.8 pp | -7.3% | +1.9 pp |
| Net income (loss) | -$125.7M | -$74.7M | -68.2% | -$73.3M | -71.6% |
| Net margin | -7.6% | -4.7% | -3.0 pp | -5.3% | -2.3 pp |
| Diluted EPS | -$0.49 | -$0.29 | -$0.20 | -$0.29 | -$0.20 |
| Net retention rate | 95.0% | — | — | — | — |
Risks
Global economic and geopolitical volatility, inflation, rising interest rates, and recession concerns have caused delays in purchasing decisions and reduced customer demand. MD&A states Workday has experienced and may continue to experience lengthening of certain sales cycles, particularly within net new opportunities, and may see negative impacts on renewals, collections, and revenue growth.
Long and lengthening sales cycles, especially for net new opportunities, can delay recognition of new business. MD&A notes that recent macroeconomic events have negatively impacted the global economy and may harm customer renewals, deployments, collections, and other financial metrics if uncertainty continues.
Workday has experienced security incidents, including an August 2022 issue in Workday Recruiting that temporarily made certain information discoverable to unintended parties, and the December 2021 Log4j vulnerability. Future attacks or breaches could disrupt operations, expose sensitive customer data, and trigger regulatory, litigation, or remediation costs.
Workday is increasingly building AI and ML into its offerings, creating new legal and reputational risks. The New York City Automated Employment Decision Tools law took effect January 1, 2023, and may require customers to publicly disclose disparate impact analyses, potentially exposing Workday to regulatory action, legal liability, or reputational harm.
The markets for enterprise cloud applications are intensely competitive, with primary competitors Oracle and SAP and other vendors such as UKG, ADP, Infor, Ceridian, Microsoft, Anaplan, and Coupa. Competitors may offer lower prices or concessions, and MD&A notes economic uncertainty can prompt customers to request price concessions and delayed payment terms, which could pressure revenues and profitability.
In December 2022, Chano Fernandez resigned as Co-CEO and Carl Eschenbach was appointed Co-CEO alongside Aneel Bhusri, creating management transition risk. Workday also faces intense competition for skilled employees, especially in product development, cybersecurity, senior sales, and AI and ML roles, and may struggle to retain personnel if equity awards lose perceived value.
Workday depends 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. data center locations caused a brief temporary outage for a subset of customers, and future disruptions could lead to service credits, refunds, contract terminations, or renewal declines.
In April 2022 Workday issued $3.0 billion of senior notes and entered a $1.0 billion revolving credit facility. Fiscal 2023 other expense included $102 million of interest expense on debt, and covenants under the 2022 Credit Agreement require a specific leverage ratio, with a breach potentially accelerating repayment.
GAAP operating margin declined from (2.3)% for fiscal 2022 to (3.6)% for fiscal 2023, and non-GAAP operating margin declined from 22.4% to 19.5%. MD&A attributes the pressure to higher headcount, return to travel and in-person events, the workforce realignment, the performance-based cash bonus program, and accelerated share-based compensation.
Customers have no obligation to renew subscriptions and may renew for fewer elements or on different pricing terms. Although MD&A reports gross and net retention rates over 95% and over 100% in fiscal 2023, economic uncertainty can prompt requests for price concessions and delayed payment terms, and any renewal decline could reduce revenue growth.
Privacy and cross-border data transfer laws are rapidly evolving and require Workday to adapt to support customer compliance. Adverse interpretations or new legislation could impose significant obligations, increase compliance costs, or prevent Workday from offering certain services in some jurisdictions.
In November 2022 the board authorized a share repurchase program of up to $500 million. Any failure to repurchase stock after announcing the intention may negatively impact reputation and investor confidence, and repurchases reduce cash available for working capital, debt repayment, or acquisitions.
Workday invests in early to late stage companies and may not realize returns. Fiscal 2023 other expense included losses of $27 million on equity investments versus gains of $144 million in fiscal 2022, and volatility in public equity markets could cause material quarterly swings in financial results.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
24-Month Subscription Revenue Backlog
Gross Revenue Retention
Total Customers
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q4 FY2023 (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.