Summary
Workday closed fiscal 2025 with revenue of $8.45 billion, up 16.4% from the prior-year period. Fourth-quarter revenue was $2.21 billion, up 15.0% from the prior-year quarter. Deferred revenue ended the year at $4.55 billion, up 10.2% from the prior-year quarter. Operating cash flow was $2.46 billion for the full year, up 14.5%, and $1.11 billion in the quarter, up 11.6%. Capital expenditures were $269 million for the full year, up 15.9%, and $86 million in the quarter, up 75.5%. Free cash flows, a non-GAAP measure, were $2.2 billion for fiscal 2025, compared to $1.9 billion in the prior year. The difference between operating cash flow and free cash flow reflects the capital spending on data center and office space projects. Management said the improvement in operating cash flow came from higher cash collections and additional interest income, offset by increased employee-related payments and supplier payments.
Profitability showed a split between the full year and the fourth quarter. Full-year GAAP operating income was $415 million, up 126.8%, and the full-year operating margin was 4.9%, up 2.4 percentage points. Fourth-quarter GAAP operating income was $75 million, down 5.1% from the prior-year quarter, and the fourth-quarter operating margin was 3.4%, down 0.7 percentage points. Full-year net income was $526 million, down 61.9%, while fourth-quarter net income was $94 million, down 92.1% from the prior-year quarter. Diluted EPS for fiscal 2025 was $1.95, down 62.6% from the prior-year period. The prior-year period included a large income tax benefit from a valuation allowance release, according to MD&A. That tax benefit makes the net income comparisons look worse than the operating trends. The fourth-quarter operating margin decline also shows that the company is still investing heavily in growth, even as full-year margin expanded.
Operational trends remained healthy. Non-GAAP operating income was $2.2 billion for fiscal 2025, up 26%, and non-GAAP operating margin was 25.9%, up from 24.0% in the prior year. Gross revenue retention was approximately 98% as of January 31, 2025, and the company served more than 11,000 customers around the world. Its customer base spans professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality. Headcount reached 20,482, up 9% from 18,824. Management pointed to expansion within existing customers and new customer additions as drivers of backlog growth. Subscription contracts typically have a term of three years or longer and are generally noncancelable, which supports revenue visibility. Management also said demand remains strong and near-term revenues are relatively predictable because of the subscription-based business model. The gross revenue retention rate measures recurring revenue retained from existing customers and does not account for add-ons or net expansions.
Risks and guidance round out the quarter. Management flagged macroeconomic pressure from increased tariffs, elevated inflation, fluctuating interest rates and foreign currency exchange rates, and geopolitical instability. The company has seen deal scrutiny, longer sales cycles, especially for net new opportunities, and reduced growth in headcount commitments on renewals. It has offered more flexible payment terms. Those conditions could hurt renewals, collections, sales and marketing, deployments, product development, or other metrics. In February 2025, Workday announced a Fiscal 2026 Restructuring Plan to cut approximately 8% of its workforce and exit certain owned office space. It expects $230 million to $250 million in total charges, with $200 million to $210 million tied to employee transition, severance, benefits, and share-based compensation, and the rest tied to office space impairment. The plan is expected to be substantially complete by the second quarter of fiscal 2026, subject to local law and consultation requirements. For fiscal 2026, capital expenditures are expected to be approximately $250 million. The company also expects product development, sales and marketing, and general and administrative expenses as a percentage of total revenues to decrease over the longer term as it scales. Workday is focused on expanding operating margin by driving scale and building efficiencies across the business through investments in people, processes, and systems.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.21B | $2.16B | +2.4% | $1.92B | +15.0% |
| Research & development | $674.0M | $647.0M | +4.2% | $635.1M | +6.1% |
| Sales & marketing | $628.0M | $620.0M | +1.3% | $558.4M | +12.5% |
| General & administrative | $211.0M | $198.0M | +6.6% | $189.9M | +11.1% |
| Total operating expenses | $2.14B | $2.00B | +7.1% | $1.84B | +15.9% |
| Operating income (loss) | $75.0M | $165.0M | -54.5% | $78.7M | -4.7% |
| Operating margin | 3.4% | 7.6% | -4.3 pp | 4.1% | -0.7 pp |
| Net income (loss) | $94.0M | $193.0M | -51.3% | $1.19B | -92.1% |
| Net margin | 4.3% | 8.9% | -4.7 pp | 61.8% | -57.6 pp |
| Diluted EPS | $0.35 | $0.72 | -$0.37 | $4.48 | -$4.13 |
Risks
Recent macroeconomic events including increased tariffs, elevated inflation, fluctuating interest rates and foreign currency exchange rates, and geopolitical instability are pressuring global customer spending. MD&A notes Workday has experienced delays in purchasing decisions, increased demand for price concessions, delayed payment terms, and may continue to provide more flexible payment terms.
MD&A states Workday has experienced and may continue to experience moderation of revenue growth rates due to deal scrutiny and lengthening of certain sales cycles, particularly within net new opportunities. Because subscription revenue is recognized over contracts that typically run three years or longer, downturns in new sales are not immediately reflected in operating results but affect future periods.
Subscription revenue is largely based on the size of customers' employee headcount, and MD&A notes reduced growth in headcount level commitments upon renewals of existing customers. Risk factors also warn that prolonged decreases in customer headcounts, including customer reductions in force or insolvencies, can materially impact subscription services revenues.
The market for enterprise cloud applications, including AI-powered solutions, is intensely competitive, with Workday naming Oracle and SAP and expecting competition to intensify with generative and agentic AI. MD&A identifies AI solutions as a strategic growth area while risk factors note legacy vendors are expanding cloud and AI offerings through acquisitions, alliances, and organic development.
Workday is increasingly building AI into its product suite and faces evolving regulation such as the EU AI Act, which it is analyzing for compliance. It is also defending against a lawsuit alleging its products and services enable discrimination, which could lead to compliance costs, reputational harm, and legal liability.
The Fiscal 2026 Restructuring Plan announced in February 2025 is expected to reduce approximately 8% of Workday's workforce and could negatively impact its ability to attract, retain, and motivate employees. The plan follows the fiscal 2025 CEO transition and is expected to be substantially complete by the second quarter of fiscal 2026.
Workday depends on third-party data centers and cloud providers including AWS and Google Cloud, and it has experienced disruptions at certain U.S. data centers due to high temperatures and power outages that caused a brief temporary outage for a subset of customers. Interruptions can damage reputation, cause refunds or service credits, and lead to contract terminations.
Workday has acquired companies including HiredScore and Evisort and may pursue more acquisitions, which could divert management attention, disrupt operations, and fail to realize expected benefits. Risk factors cite integration challenges including retaining key personnel, maintaining controls, and addressing security risks of acquired businesses.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscription Revenue Backlog
Non-GAAP Operating Income
Total Customers
12-Month Subscription Revenue Backlog
Gross Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from Workday, Inc.'s SEC filings for Q4 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.