Fiscal Third Quarter Total Revenues of
$1.87 Billion, Up 16.7% Year Over
Year
Subscription Revenues of $1.69 Billion, Up 18.1% Year Over
Year
12-Month Subscription Revenue Backlog of
$6.05 Billion, Up
21.9% Year Over Year
PLEASANTON, Calif., Nov. 28,
2023 /PRNewswire/ -- Workday, Inc. (NASDAQ:
WDAY), a leader in enterprise cloud applications for finance and
human resources, today announced results for the fiscal 2024 third
quarter ended October 31, 2023.
Fiscal 2024 Third Quarter Results
- Total revenues were $1.87
billion, an increase of 16.7% from the third quarter of
fiscal 2023. Subscription revenues were $1.69 billion, an increase of 18.1% from the same
period last year.
- Operating income was $87.9
million, or 4.7% of revenues, compared to an operating loss
of $26.3 million, or negative 1.6% of
revenues, in the same period last year. Non-GAAP operating income
for the third quarter was $462.1
million, or 24.8% of revenues, compared to a non-GAAP
operating income of $314.2 million,
or 19.7% of revenues, in the same period last
year.1
- Basic and diluted net income per share was $0.43, compared to basic and diluted net loss per
share of $0.29 in the third quarter
of fiscal 2023. Non-GAAP basic and diluted net income per share was
$1.56 and $1.53, respectively, compared to non-GAAP basic
and diluted net income per share of $1.01 and $0.99,
respectively, in the same period last year.2
- Total subscription revenue backlog was $18.45 billion, up 30.9% from the same period
last year. 12-month subscription revenue backlog was $6.05 billion, and 24-month subscription revenue
backlog was $10.58 billion, up 21.9%
and 22.7% year over year, respectively.
- Operating cash flows were $450.8
million compared to $408.7
million in the prior year. Free cash flows were $390.8 million compared to $349.8 million in the prior
year.3
- Cash, cash equivalents, and marketable securities were
$6.88 billion as of October 31, 2023.
Comments on the News
"Workday delivered a strong quarter, demonstrating how
organizations across industries and geographies are continuing to
place their trust in Workday," said Carl
Eschenbach, co-CEO, Workday. "The momentum across our
business is palpable, powered by our AI innovation, strength in
full platform deals, expanding partner ecosystem, and international
growth – with EMEA surpassing $1
billion annual recurring revenue in the quarter. Now with
over 5,000 core Workday HCM customers, more companies around the
world are turning to Workday to manage their most precious assets:
their people and money."
"Our strategy to build AI directly into the core of our products
continues to resonate with our customers and is fueled by our
platform strategy, unrivaled dataset, and emphasis on being
human-centric," said Aneel Bhusri,
co-founder, co-CEO, and chair, Workday. "We unveiled a series of
new AI capabilities at Workday Rising – including investments in
generative AI and conversational AI – that will benefit all users
with an emphasis on increasing productivity, growing and retaining
talent, streamlining business processes, and driving better
decision-making. With a commitment to delivering responsible and
trustworthy solutions, we are providing the innovation our
customers need to thrive in today's dynamic business
environment."
"Our strong third-quarter results demonstrate the durability of
our business and the ongoing market adoption for cloud Financials
and Human Capital Management," said Zane
Rowe, chief financial officer, Workday. "Following our
continued momentum in the third quarter, we are raising our fiscal
2024 subscription revenue guidance to $6.598
billion, representing 19% year-over-year growth. We are also
raising our fiscal 2024 non-GAAP operating margin guidance to
23.8%. Our focus is centered on investing to drive durable
long-term growth while expanding margins."
Recent Highlights
- Workday announced new full platform customers for Workday
Financial Management and Workday Human Capital Management (HCM),
with new wins including AdventHealth, Aurelius Group, Bentley
Systems, Globe Life, Houston Methodist, and Kern County.
- Workday surpassed 5,000 core Workday Human
Capital Management (HCM) customers in Q3.
- Workday announced several AI updates, including multiple
generative AI capabilities; new AI capabilities in Workday Adaptive
Planning; a Manager Insights Hub that surfaces automated insights
for managers to develop their teams; and enhancements to Workday
Extend to enable developers to leverage Workday AI services.
- Workday demonstrated continued expansion of its global partner
ecosystem with several updates including a new Workday AI
Marketplace to help customers easily find and deploy trusted AI
apps within the Workday ecosystem, an expanded partnership with
ADP to help deliver an enhanced frictionless global payroll,
compliance, and HR experience for joint customers, and an expanded
partnership with Accenture to help companies accelerate their
adoption of skills-based talent strategies.
- Workday celebrated its customers with more than 15,000
attendees at Workday Rising and more than 4,000 attendees at
Workday Rising EMEA.
- Workday was named a Leader in the Gartner® Magic
Quadrant™ for Cloud HCM Suites for 1,000+ Employee
Enterprises4 and Gartner® Magic Quadrant™ for
Cloud ERP for Service-Centric Enterprises.5
- Workday VNDLY was named a 2023 Top HR Product of the Year by
Human Resource Executive.
Earnings Call Details
Workday plans to host a conference call today to review its
fiscal 2024 third quarter financial results and to discuss its
financial outlook. The call is scheduled to begin at 1:30 p.m. PT/4:30 p.m.
ET and can be accessed via webcast. The webcast will be
available live, and a replay will be available following completion
of the live broadcast for approximately 90 days.
Workday uses the Workday Blog as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD.
1
|
Non-GAAP operating
income and non-GAAP operating margin exclude share-based
compensation expenses, employer payroll tax-related items
on employee stock transactions, and amortization expense for
acquisition-related intangible assets. See the section titled
"About Non-GAAP Financial Measures" in the accompanying financial
tables for further details.
|
2
|
Non-GAAP net
income per share excludes share-based compensation expenses,
employer payroll tax-related items on employee stock
transactions, amortization expense for acquisition-related
intangible assets, and income tax effects. See the section titled
"About Non-GAAP Financial Measures" in the accompanying financial
tables for further details.
|
3
|
Free cash flows are
defined as net cash provided by (used in) operating activities
minus total capital expenditures. See the section titled "About
Non-GAAP Financial Measures" in the accompanying financial tables
for further details.
|
4
|
Gartner, "Magic
Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises,"
Ranadip Chandra, Sam Grinter, Ron Hanscome, Chris Pang, Anand
Chouksey, Josie Xing, Harsh Kundulli, David Bobo, Laura Gardiner,
Hiten Sheth, Jackie Watrous, Travis Wickesberg, October 18,
2023.
|
5
|
Gartner, "Magic
Quadrant for Cloud ERP for Service-Centric Enterprises," Denis
Torii, Sam Grinter, Tim Faith, Naveen Mahendra, Neha Ralhan, Robert
Anderson, August 29, 2023.
|
Gartner Disclaimer
Gartner does not endorse any vendor, product or service depicted
in its research publications, and does not advise technology users
to select only those vendors with the highest ratings or other
designation. Gartner research publications consist of the opinions
of Gartner's research organization and should not be construed as
statements of fact. Gartner disclaims all warranties, expressed or
implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose. GARTNER is a
registered trademark and service mark, and MAGIC QUADRANT is a
registered trademark of Gartner, Inc., and/or its affiliates in the
U.S. and internationally and are used herein with permission. All
rights reserved.
About Workday
Workday is a leading provider of enterprise cloud
applications for finance and human resources, helping customers
adapt and thrive in a changing world. Workday applications for
financial management, human resources, planning, spend management,
and analytics are built with artificial intelligence and machine
learning at the core to help organizations around the world embrace
the future of work. Workday is used by more than 10,000
organizations around the world and across industries – from
medium-sized businesses to more than 50% of the Fortune 500. For
more information about Workday, visit workday.com.
© 2023 Workday, Inc. All rights reserved. Workday and the
Workday logo are registered trademarks of Workday, Inc. All other
brand and product names are trademarks or registered trademarks of
their respective holders.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Workday's
financial results as determined in accordance with GAAP are
included at the end of this press release following the
accompanying financial data. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, please see the section of the tables titled "About
Non-GAAP Financial Measures." The Company has not provided a
reconciliation of its forward outlook for non-GAAP operating margin
with its forward-looking GAAP operating margin in reliance on the
unreasonable efforts exception provided under Item 10(e)(1)(i)(B)
of Regulation S-K. The Company is unable, without unreasonable
efforts, to quantify share-based compensation expense, which is
excluded from our non-GAAP operating margin, as it requires
additional inputs such as the number of shares granted and market
prices that are not ascertainable.
Forward-Looking Statements
This press release contains forward-looking statements
including, among other things, statements regarding Workday's
full-year fiscal 2024 subscription revenues and non-GAAP operating
margin, growth and expansion, innovation, momentum, market
adoption, demand, strategy, and investments. These forward-looking
statements are based only on currently available information and
our current beliefs, expectations, and assumptions. Because
forward-looking statements relate to the future, they are subject
to risks, uncertainties, assumptions, and changes in circumstances
that are difficult to predict and many of which are outside of our
control. If the risks materialize, assumptions prove incorrect, or
we experience unexpected changes in circumstances, actual results
could differ materially from the results implied by these
forward-looking statements, and therefore you should not rely on
any forward-looking statements. Risks include, but are not limited
to: (i) breaches in our security measures or those of our
third-party providers, unauthorized access to our customers' or
other users' personal data, or disruptions in our data center or
computing infrastructure operations; (ii) service outages, delays
in the deployment of our applications, and the failure of our
applications to perform properly; (iii) the impact of recent
macroeconomic events, including inflation and rising interest
rates, on our business, as well as our customers, prospects,
partners, and service providers; (iv) privacy concerns and evolving
domestic or foreign laws and regulations; (v) our ability to manage
our growth effectively; (vi) competitive factors, including pricing
pressures, industry consolidation, entry of new competitors and new
applications, advancements in technology, and marketing initiatives
by our competitors; (vii) any loss of key employees or the
inability to attract, train, and retain highly skilled employees;
(viii) adoption of our applications and services by customers and
individuals, including any new features, enhancements, and
modifications, as well as our customers' and users' satisfaction
with the deployment, training, and support services they receive;
(ix) our reliance on our network of partners to drive additional
growth of our revenues; (x) adverse changes in general economic or
market conditions; (xi) the regulatory risks related to new and
evolving technologies such as AI and our ability to realize a
return on our development efforts; (xii) our ability to realize the
expected business or financial benefits of any acquisitions of or
investments in companies; (xiii) adverse changes in general
economic or market conditions; (xiv) the regulatory, economic, and
political risks associated with our domestic and international
operations; (xv) delays or reductions in information technology
spending; and (xvi) changes in sales, which may not be immediately
reflected in our results due to our subscription model. Further
information on these and additional risks that could affect
Workday's results is included in our filings with the Securities
and Exchange Commission ("SEC"), including our Form 10-Q for the
fiscal quarter ended October 31, 2023, and other reports that
we have filed and will file with the SEC from time to time, which
could cause actual results to vary from expectations. Workday
assumes no obligation to, and does not currently intend to, update
any such forward-looking statements after the date of this release,
except as required by law.
Any unreleased services, features, or functions referenced in
this document, our website, or other press releases or public
statements that are not currently available are subject to change
at Workday's discretion and may not be delivered as planned or at
all. Customers who purchase Workday services should make their
purchase decisions based upon services, features, and functions
that are currently available.
Workday,
Inc.
Condensed
Consolidated Balance Sheets
(in
thousands)
(unaudited)
|
|
|
October 31,
2023
|
|
January 31,
2023
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$ 1,563,939
|
|
$ 1,886,311
|
Marketable
securities
|
5,316,045
|
|
4,235,083
|
Trade and other
receivables, net
|
1,224,818
|
|
1,570,086
|
Deferred
costs
|
207,566
|
|
191,054
|
Prepaid expenses and
other current assets
|
261,795
|
|
225,690
|
Total current
assets
|
8,574,163
|
|
8,108,224
|
Property and equipment,
net
|
1,206,564
|
|
1,201,254
|
Operating lease
right-of-use assets
|
265,963
|
|
249,278
|
Deferred costs,
noncurrent
|
432,275
|
|
420,988
|
Acquisition-related
intangible assets, net
|
249,242
|
|
305,465
|
Goodwill
|
2,846,464
|
|
2,840,044
|
Other assets
|
351,262
|
|
360,985
|
Total
assets
|
$
13,925,933
|
|
$
13,486,238
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
79,333
|
|
$
153,751
|
Accrued expenses and
other current liabilities
|
234,906
|
|
260,131
|
Accrued
compensation
|
420,178
|
|
563,548
|
Unearned
revenue
|
3,196,648
|
|
3,559,393
|
Operating lease
liabilities
|
98,325
|
|
91,343
|
Total current
liabilities
|
4,029,390
|
|
4,628,166
|
Debt,
noncurrent
|
2,978,800
|
|
2,975,934
|
Unearned revenue,
noncurrent
|
62,148
|
|
74,540
|
Operating lease
liabilities, noncurrent
|
198,843
|
|
181,799
|
Other
liabilities
|
31,835
|
|
40,231
|
Total
liabilities
|
7,301,016
|
|
7,900,670
|
Stockholders'
equity:
|
|
|
|
Common
stock
|
264
|
|
259
|
Additional paid-in
capital
|
9,981,756
|
|
8,828,639
|
Treasury
stock
|
(471,481)
|
|
(185,047)
|
Accumulated other
comprehensive income (loss)
|
33,207
|
|
53,051
|
Accumulated
deficit
|
(2,918,829)
|
|
(3,111,334)
|
Total stockholders'
equity
|
6,624,917
|
|
5,585,568
|
Total liabilities
and stockholders' equity
|
$
13,925,933
|
|
$
13,486,238
|
Workday,
Inc.
Condensed
Consolidated Statements of Operations
(in thousands, except
per share data)
(unaudited)
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Subscription
services
|
$ 1,691,116
|
|
$ 1,432,393
|
|
$ 4,842,964
|
|
$ 4,071,804
|
Professional
services
|
174,559
|
|
166,710
|
|
493,789
|
|
497,754
|
Total
revenues
|
1,865,675
|
|
1,599,103
|
|
5,336,753
|
|
4,569,558
|
Costs and expenses
(1):
|
|
|
|
|
|
|
|
Costs of subscription
services
|
263,840
|
|
259,397
|
|
758,551
|
|
737,301
|
Costs of professional
services
|
181,400
|
|
176,396
|
|
552,233
|
|
524,398
|
Product
development
|
618,736
|
|
565,727
|
|
1,828,870
|
|
1,655,071
|
Sales and
marketing
|
537,816
|
|
470,196
|
|
1,580,639
|
|
1,358,198
|
General and
administrative
|
176,028
|
|
153,708
|
|
512,148
|
|
427,832
|
Total costs and
expenses
|
1,777,820
|
|
1,625,424
|
|
5,232,441
|
|
4,702,800
|
Operating income
(loss)
|
87,855
|
|
(26,321)
|
|
104,312
|
|
(133,242)
|
Other income (expense),
net
|
41,388
|
|
4,163
|
|
113,652
|
|
(48,789)
|
Income (loss) before
provision for (benefit from) income taxes
|
129,243
|
|
(22,158)
|
|
217,964
|
|
(182,031)
|
Provision for (benefit
from) income taxes
|
15,534
|
|
52,563
|
|
25,459
|
|
59,021
|
Net income
(loss)
|
$
113,709
|
|
$
(74,721)
|
|
$
192,505
|
|
$
(241,052)
|
Net income (loss) per
share, basic
|
$
0.43
|
|
$
(0.29)
|
|
$
0.74
|
|
$
(0.95)
|
Net income (loss) per
share, diluted
|
$
0.43
|
|
$
(0.29)
|
|
$
0.73
|
|
$
(0.95)
|
Weighted-average shares
used to compute net income (loss) per share, basic
|
262,153
|
|
255,753
|
|
260,747
|
|
253,975
|
Weighted-average shares
used to compute net income (loss) per share, diluted
|
266,377
|
|
255,753
|
|
264,087
|
|
253,975
|
|
|
|
|
|
(1) Costs and expenses
include share-based compensation expenses as follows:
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Costs of subscription
services
|
$
30,543
|
|
$
25,598
|
|
$
89,793
|
|
$
76,918
|
Costs of professional
services
|
28,738
|
|
26,577
|
|
87,532
|
|
79,999
|
Product
development
|
162,025
|
|
149,279
|
|
493,934
|
|
449,764
|
Sales and
marketing
|
64,805
|
|
61,186
|
|
211,560
|
|
180,233
|
General and
administrative
|
63,146
|
|
51,556
|
|
187,810
|
|
146,795
|
Total share-based
compensation expenses
|
$
349,257
|
|
$
314,196
|
|
$ 1,070,629
|
|
$
933,709
|
Workday,
Inc.
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
(unaudited)
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
113,709
|
|
$
(74,721)
|
|
$
192,505
|
|
$
(241,052)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
68,614
|
|
91,854
|
|
210,470
|
|
274,395
|
Share-based
compensation expenses
|
349,257
|
|
314,196
|
|
1,070,629
|
|
933,709
|
Amortization of
deferred costs
|
54,450
|
|
44,830
|
|
155,432
|
|
126,515
|
Non-cash lease
expense
|
24,454
|
|
23,359
|
|
72,611
|
|
68,318
|
(Gains) losses on
investments
|
9,488
|
|
(3,833)
|
|
16,764
|
|
20,746
|
Accretion of discounts
on marketable debt securities, net
|
(39,379)
|
|
(13,121)
|
|
(111,180)
|
|
(15,797)
|
Other
|
(10,037)
|
|
16,372
|
|
(19,696)
|
|
31,170
|
Changes in operating
assets and liabilities, net of business combinations:
|
|
|
|
|
|
|
|
Trade and other
receivables, net
|
37,719
|
|
61,885
|
|
327,647
|
|
200,008
|
Deferred
costs
|
(79,927)
|
|
(56,552)
|
|
(183,231)
|
|
(163,023)
|
Prepaid expenses and
other assets
|
71,644
|
|
2,435
|
|
78,279
|
|
(31,447)
|
Accounts
payable
|
(6,525)
|
|
18,116
|
|
(62,352)
|
|
20,884
|
Accrued expenses and
other liabilities
|
(32,159)
|
|
47,061
|
|
(219,470)
|
|
41,253
|
Unearned
revenue
|
(110,533)
|
|
(63,213)
|
|
(375,053)
|
|
(302,936)
|
Net cash provided by
(used in) operating activities
|
450,775
|
|
408,668
|
|
1,153,355
|
|
962,743
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of marketable
securities
|
(1,272,864)
|
|
(2,310,915)
|
|
(4,746,086)
|
|
(5,651,005)
|
Maturities of
marketable securities
|
1,124,276
|
|
2,181,147
|
|
3,595,718
|
|
3,767,509
|
Sales of marketable
securities
|
45,690
|
|
19,988
|
|
93,368
|
|
53,355
|
Owned real estate
projects
|
(1,424)
|
|
(181)
|
|
(3,112)
|
|
(446)
|
Capital expenditures,
excluding owned real estate projects
|
(58,524)
|
|
(58,665)
|
|
(181,053)
|
|
(286,013)
|
Business combinations,
net of cash acquired
|
(8,517)
|
|
—
|
|
(8,517)
|
|
—
|
Purchase of other
intangible assets
|
(700)
|
|
(700)
|
|
(10,200)
|
|
(700)
|
Purchases of
non-marketable equity and other investments
|
—
|
|
(3,250)
|
|
(10,500)
|
|
(20,173)
|
Sales and maturities of
non-marketable equity and other investments
|
54
|
|
4,513
|
|
54
|
|
11,674
|
Net cash provided by
(used in) investing activities
|
(172,009)
|
|
(168,063)
|
|
(1,270,328)
|
|
(2,125,799)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance
of debt, net of debt discount
|
—
|
|
—
|
|
—
|
|
2,978,077
|
Repayments and
extinguishment of debt
|
—
|
|
(1,149,622)
|
|
—
|
|
(1,843,605)
|
Payments for debt
issuance costs
|
—
|
|
—
|
|
—
|
|
(7,220)
|
Repurchases of common
stock
|
(144,686)
|
|
—
|
|
(283,333)
|
|
—
|
Proceeds from issuance
of common stock from employee equity plans, net of taxes paid for
shares withheld
|
(4,803)
|
|
710
|
|
82,493
|
|
85,002
|
Other
|
(69)
|
|
(161)
|
|
(474)
|
|
(538)
|
Net cash provided by
(used in) financing activities
|
(149,558)
|
|
(1,149,073)
|
|
(201,314)
|
|
1,211,716
|
Effect of exchange rate
changes
|
(787)
|
|
(920)
|
|
(698)
|
|
(1,750)
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
128,421
|
|
(909,388)
|
|
(318,985)
|
|
46,910
|
Cash, cash
equivalents, and restricted cash at the beginning of
period
|
1,447,834
|
|
2,497,043
|
|
1,895,240
|
|
1,540,745
|
Cash, cash
equivalents, and restricted cash at the end of
period
|
$ 1,576,255
|
|
$ 1,587,655
|
|
$ 1,576,255
|
|
$ 1,587,655
|
Workday,
Inc.
Reconciliation of
GAAP to Non-GAAP Data
Three Months Ended
October 31, 2023
(in thousands, except
percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
263,840
|
|
$
(30,543)
|
|
$
(9,140)
|
|
$
—
|
|
$
224,157
|
Costs of professional
services
|
181,400
|
|
(28,738)
|
|
(1,097)
|
|
—
|
|
151,565
|
Product
development
|
618,736
|
|
(162,025)
|
|
(3,006)
|
|
—
|
|
453,705
|
Sales and
marketing
|
537,816
|
|
(64,805)
|
|
(10,438)
|
|
—
|
|
462,573
|
General and
administrative
|
176,028
|
|
(63,146)
|
|
(1,305)
|
|
—
|
|
111,577
|
Operating income
(loss)
|
87,855
|
|
349,257
|
|
24,986
|
|
—
|
|
462,098
|
Operating
margin
|
4.7 %
|
|
18.7 %
|
|
1.4 %
|
|
— %
|
|
24.8 %
|
Other income (expense),
net
|
41,388
|
|
—
|
|
—
|
|
—
|
|
41,388
|
Income (loss) before
provision for (benefit from) income taxes
|
129,243
|
|
349,257
|
|
24,986
|
|
—
|
|
503,486
|
Provision for (benefit
from) income taxes
|
15,534
|
|
—
|
|
—
|
|
80,129
|
|
95,663
|
Net income
(loss)
|
$
113,709
|
|
$
349,257
|
|
$
24,986
|
|
$
(80,129)
|
|
$
407,823
|
Net income (loss) per
share, basic (1)
|
$
0.43
|
|
$
1.33
|
|
$
0.10
|
|
$
(0.30)
|
|
$
1.56
|
Net income (loss) per
share, diluted (1)
|
$
0.43
|
|
$
1.31
|
|
$
0.09
|
|
$
(0.30)
|
|
$
1.53
|
|
|
(1)
|
GAAP and non-GAAP net
income per share are both calculated based upon 262,153 basic and
266,377 diluted weighted-average shares of
common
stock.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $16.0 million and employer payroll tax-related
items
on employee stock
transactions of $9.0 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across
the reporting periods.
For fiscal 2024, the non-GAAP tax rate is 19%.
|
Workday,
Inc.
Reconciliation of
GAAP to Non-GAAP Data
Three Months Ended
October 31, 2022
(in thousands, except
percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
259,397
|
|
$
(25,598)
|
|
$
(14,100)
|
|
$
—
|
|
$
219,699
|
Costs of professional
services
|
176,396
|
|
(26,577)
|
|
(623)
|
|
—
|
|
149,196
|
Product
development
|
565,727
|
|
(149,279)
|
|
(1,899)
|
|
—
|
|
414,549
|
Sales and
marketing
|
470,196
|
|
(61,186)
|
|
(9,206)
|
|
—
|
|
399,804
|
General and
administrative
|
153,708
|
|
(51,556)
|
|
(531)
|
|
—
|
|
101,621
|
Operating income
(loss)
|
(26,321)
|
|
314,196
|
|
26,359
|
|
—
|
|
314,234
|
Operating
margin
|
(1.6) %
|
|
19.6 %
|
|
1.7 %
|
|
— %
|
|
19.7 %
|
Other income (expense),
net
|
4,163
|
|
—
|
|
—
|
|
—
|
|
4,163
|
Income (loss) before
provision for (benefit from) income taxes
|
(22,158)
|
|
314,196
|
|
26,359
|
|
—
|
|
318,397
|
Provision for (benefit
from) income taxes
|
52,563
|
|
—
|
|
—
|
|
7,933
|
|
60,496
|
Net income
(loss)
|
$
(74,721)
|
|
$
314,196
|
|
$
26,359
|
|
$
(7,933)
|
|
$
257,901
|
Net income (loss) per
share, basic (1)
|
$
(0.29)
|
|
$
1.23
|
|
$
0.10
|
|
$
(0.03)
|
|
$
1.01
|
Net income (loss) per
share, diluted (1)
|
$
(0.29)
|
|
$
1.23
|
|
$
0.10
|
|
$
(0.05)
|
|
$
0.99
|
|
|
(1)
|
GAAP net loss per share
is calculated based upon 255,753 basic and diluted weighted-average
shares of common stock. Non-GAAP net
income
per share is calculated based upon
255,753 basic and 261,777 diluted weighted-average shares of common
stock. The numerator used
to compute
non-GAAP diluted net income per share was
increased by $0.9 million for after-tax interest expense on our
convertible senior notes
in accordance
with the if-converted method.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $21.2 million and employer payroll tax-related items
on
employee stock
transactions of $5.2 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency across
the
reporting periods. For
fiscal 2023, the non-GAAP tax rate was 19%. Included in the per
share amount is a dilution impact of $0.02 from the
conversion
of GAAP diluted net loss per share to
non-GAAP diluted net income per share.
|
Workday,
Inc.
Reconciliation of
GAAP to Non-GAAP Data
Nine Months Ended
October 31, 2023
(in thousands, except
percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
758,551
|
|
$
(89,793)
|
|
$
(39,500)
|
|
$
—
|
|
$
629,258
|
Costs of professional
services
|
552,233
|
|
(87,532)
|
|
(5,537)
|
|
—
|
|
459,164
|
Product
development
|
1,828,870
|
|
(493,934)
|
|
(18,806)
|
|
—
|
|
1,316,130
|
Sales and
marketing
|
1,580,639
|
|
(211,560)
|
|
(35,222)
|
|
—
|
|
1,333,857
|
General and
administrative
|
512,148
|
|
(187,810)
|
|
(5,468)
|
|
—
|
|
318,870
|
Operating income
(loss)
|
104,312
|
|
1,070,629
|
|
104,533
|
|
—
|
|
1,279,474
|
Operating
margin
|
2.0 %
|
|
20.1 %
|
|
1.9 %
|
|
— %
|
|
24.0 %
|
Other income (expense),
net
|
113,652
|
|
—
|
|
—
|
|
—
|
|
113,652
|
Income (loss) before
provision for (benefit from) income taxes
|
217,964
|
|
1,070,629
|
|
104,533
|
|
—
|
|
1,393,126
|
Provision for (benefit
from) income taxes
|
25,459
|
|
—
|
|
—
|
|
239,235
|
|
264,694
|
Net income
(loss)
|
$
192,505
|
|
$
1,070,629
|
|
$
104,533
|
|
$
(239,235)
|
|
$
1,128,432
|
Net income (loss) per
share, basic (1)
|
$
0.74
|
|
$
4.11
|
|
$
0.40
|
|
$
(0.92)
|
|
$
4.33
|
Net income (loss) per
share, diluted (1)
|
$
0.73
|
|
$
4.05
|
|
$
0.40
|
|
$
(0.91)
|
|
$
4.27
|
|
|
(1)
|
GAAP and non-GAAP net
income per share are both calculated based upon 260,747 basic and
264,087 diluted weighted-average shares of
common
stock.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $58.4 million and employer payroll tax-related
items
on employee stock transactions of $46.2
million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across
the reporting periods. For fiscal 2024, the non-GAAP tax
rate is 19%.
|
Workday,
Inc.
Reconciliation of
GAAP to Non-GAAP Data
Nine Months Ended
October 31, 2022
(in thousands, except
percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
737,301
|
|
$
(76,918)
|
|
$
(45,022)
|
|
$
—
|
|
$
615,361
|
Costs of professional
services
|
524,398
|
|
(79,999)
|
|
(5,297)
|
|
—
|
|
439,102
|
Product
development
|
1,655,071
|
|
(449,764)
|
|
(17,146)
|
|
—
|
|
1,188,161
|
Sales and
marketing
|
1,358,198
|
|
(180,233)
|
|
(32,640)
|
|
—
|
|
1,145,325
|
General and
administrative
|
427,832
|
|
(146,795)
|
|
(3,772)
|
|
—
|
|
277,265
|
Operating income
(loss)
|
(133,242)
|
|
933,709
|
|
103,877
|
|
—
|
|
904,344
|
Operating
margin
|
(2.9) %
|
|
20.4 %
|
|
2.3 %
|
|
— %
|
|
19.8 %
|
Other income (expense),
net
|
(48,789)
|
|
—
|
|
—
|
|
—
|
|
(48,789)
|
Income (loss) before
provision for (benefit from) income taxes
|
(182,031)
|
|
933,709
|
|
103,877
|
|
—
|
|
855,555
|
Provision for (benefit
from) income taxes
|
59,021
|
|
—
|
|
—
|
|
103,534
|
|
162,555
|
Net income
(loss)
|
$
(241,052)
|
|
$
933,709
|
|
$
103,877
|
|
$
(103,534)
|
|
$
693,000
|
Net income (loss) per
share, basic (1)
|
$
(0.95)
|
|
$
3.68
|
|
$
0.41
|
|
$
(0.41)
|
|
$
2.73
|
Net income (loss) per
share, diluted (1)
|
$
(0.95)
|
|
$
3.68
|
|
$
0.41
|
|
$
(0.49)
|
|
$
2.65
|
|
|
(1)
|
GAAP net loss per share
is calculated based upon 253,975 basic and diluted weighted-average
shares of common stock. Non-GAAP net income
per share is calculated
based upon 253,975 basic and 262,742 diluted weighted-average
shares of common stock. The numerator used to
compute
non-GAAP diluted net income per share was
increased by $3.5 million for after-tax interest expense on our
convertible senior notes in
accordance
with the if-converted method.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $64.3 million and employer payroll tax-related items
on
employee stock
transactions of $39.5 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency across
the
reporting periods. For
fiscal 2023, the non-GAAP tax rate was 19%. Included in the per
share amount is a dilution impact of $0.08 from the
conversion
of GAAP diluted net loss per share to
non-GAAP diluted net income per share.
|
Workday,
Inc.
Reconciliation of
GAAP Cash Flows from Operations to Free Cash Flows
(A Non-GAAP Financial
Measure)
(in
thousands)
(unaudited)
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
(used in) operating activities
|
$
450,775
|
|
$
408,668
|
|
$ 1,153,355
|
|
$
962,743
|
Less: Total capital
expenditures (1)
|
(59,948)
|
|
(58,846)
|
|
(184,165)
|
|
(286,459)
|
Free cash
flows
|
$
390,827
|
|
$
349,822
|
|
$
969,190
|
|
$
676,284
|
|
|
(1)
|
Total capital
expenditures consists of Capital expenditures, excluding owned real
estate projects of $59 million, $59 million,
$181 million,
and $286 million for the three and nine months ended October
31, 2023, and 2022, respectively, and Owned
real estate projects of
$1 million, $0.2 million,
$3 million, and $0.4 million for the
three and nine months ended October 31,
2023, and 2022,
respectively.
|
About Non-GAAP Financial Measures
To provide investors and others with additional information
regarding Workday's results, we have disclosed the following
non-GAAP financial measures: non-GAAP operating income (loss),
non-GAAP operating margin, non-GAAP net income (loss) per share,
and free cash flows. Workday has provided a reconciliation of each
non-GAAP financial measure used in this earnings release to the
most directly comparable GAAP financial measure.
Non-GAAP operating income (loss) and non-GAAP operating margin
differ from GAAP in that they exclude share-based compensation
expenses, employer payroll tax-related items on employee
stock transactions, and amortization expense for
acquisition-related intangible assets. Non-GAAP net
income (loss) per share differs from GAAP in that it excludes
share-based compensation expenses, employer
payroll tax-related items on employee stock transactions,
amortization expense for acquisition-related intangible assets, and
income tax effects. Free cash flows differ from GAAP cash flows
from operating activities in that it treats total capital
expenditures as a reduction to cash flows.
Workday's management uses these non-GAAP financial measures to
understand and compare operating results across accounting periods,
for internal budgeting and forecasting purposes, for short- and
long-term operating plans, and to evaluate Workday's financial
performance. Management believes these non-GAAP financial measures
reflect Workday's ongoing business in a manner that allows for
meaningful period-to-period comparisons and analysis of trends in
Workday's business. Management also believes that these non-GAAP
financial measures provide useful information to investors and
others in understanding and evaluating Workday's operating results
and prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies.
Management believes excluding the following items from the GAAP
Condensed Consolidated Statements of Operations is useful to
investors and others in assessing Workday's operating performance
due to the following factors:
- Share-based compensation expenses. Although share-based
compensation is an important aspect of the compensation of our
employees and executives, management believes it is useful to
exclude share-based compensation expenses to better understand the
long-term performance of our core business and to facilitate
comparison of our results to those of peer companies. Share-based
compensation expenses are determined using a number of factors,
including our stock price, volatility, and forfeiture rates, that
are beyond our control and generally unrelated to operational
decisions and performance in any particular period. Further,
share-based compensation expenses are not reflective of the value
ultimately received by the grant recipients.
- Other operating expenses. Other operating expenses
includes employer payroll tax-related items on employee stock
transactions and amortization of acquisition-related intangible
assets. The amount of employer payroll tax-related items on
employee stock transactions is dependent on our stock price and
other factors that are beyond our control and do not correlate to
the operation of the business. For business combinations, we
generally allocate a portion of the purchase price to intangible
assets. The amount of the allocation is based on estimates and
assumptions made by management and is subject to amortization. The
amount of purchase price allocated to intangible assets and the
term of its related amortization can vary significantly and are
unique to each acquisition and thus we do not believe it is
reflective of ongoing operations. Although we exclude the
amortization of acquisition-related intangible assets from these
non-GAAP measures, management believes that it is important for
investors to understand that such intangible assets were recorded
as part of purchase accounting and contribute to revenue
generation.
- Income tax effects. We utilize a fixed long-term
projected tax rate in our computation of the non-GAAP income tax
provision to provide better consistency across the reporting
periods. In projecting this long-term non-GAAP tax rate, we utilize
a three-year financial projection that excludes the direct impact
of share-based compensation and related employer payroll taxes,
amortization of acquisition-related intangible assets, and
amortization of debt discount and issuance costs. The projected
rate considers other factors such as our current operating
structure, existing tax positions in various jurisdictions, and key
legislation in major jurisdictions where we operate. For fiscal
2024 and 2023, we determined the projected non-GAAP tax rate to be
19%, which reflects currently available information, as well as
other factors and assumptions. We will periodically re-evaluate
this tax rate, as necessary, for significant events, based on our
ongoing analysis of the 2017 U.S. Tax Cuts and Jobs Act, relevant
tax law changes, material changes in the forecasted geographic
earnings mix, and any significant acquisitions.
Additionally, with regards to free cash flows, Workday's
management believes that reducing cash provided by (used in)
operating activities by capital expenditures is meaningful to
investors and others because it provides an enhanced view of cash
flow generation from the ongoing operations of our business, and it
balances operating results, cash management, and capital
efficiency.
The use of the non-GAAP measures of non-GAAP operating income
(loss), non-GAAP operating margin, non-GAAP net income (loss) per
share, and free cash flows have certain limitations as they do not
reflect all items of expense or cash that affect Workday's
operations. Workday compensates for these limitations by
reconciling the non-GAAP financial measures to the most comparable
GAAP financial measures. These non-GAAP financial measures should
be considered in addition to, not as a substitute for or in
isolation from, measures prepared in accordance with GAAP. Further,
these non-GAAP measures may differ from the non-GAAP information
used by other companies, including peer companies, and therefore
comparability may be limited. Management encourages investors and
others to review Workday's financial information in its entirety
and not rely on a single financial measure.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/workday-announces-fiscal-2024-third-quarter-financial-results-301999619.html
SOURCE Workday Inc.