Workday has announced its Q1 fiscal 2024 results ending April 30th 2023. Workday continued its growth in revenue and bookings. The total subscription revenue backlog at the end of the quarter was $16.65 billion, up 32%. Aneel Bhusri, co-founder, co-CEO, and chair, of Workday, commented, “Workday had a strong first quarter, underscoring the value proposition of the full Workday platform combined with our unique approach to artificial intelligence and machine learning.
“We’ve been delivering AI and ML capabilities for nearly a decade and approach its application with a heavy emphasis on being human-centric, using these capabilities to augment people and organizations to make them more productive, better informed, and to help them reduce business risk. We remain committed to innovation and infusing AI and ML across our entire product portfolio, while adhering to our core values and expanding the value we bring to our global customer community.”
The quarter produced some significant highlights, including:
- Total revenues of $1.68 billion, up 17.4% year over year
- Subscription revenues were $1.53 billion, up 20.1% year over year
- Operating loss was $19.8 million, or negative 1.2% of revenues, down from $72.8 million, or negative 5.1% of revenues, year over year
- Operating cash flows were $277.3 million compared to $439.7 million in the prior year.
- Cash, cash equivalents, and marketable securities were $6.33 billion as of April 30, 2023.
Carl Eschenbach, co-CEO of Workday, added, “Our continued global momentum illustrates how companies have come to rely on Workday as the intelligent digital backbone supporting their most critical assets: people and money. As we look ahead, we will continue to innovate even faster, take an industry-first approach, and maintain a vibrant and engaged partner ecosystem, which will help us drive strong customer satisfaction in the markets in which we operate around the world.”
Momentum in Finance continues
During Q1, Workday also had considerable success with its finance solutions, including Workday Financial Management and Workday Adaptive Planning. During Q1, several customers celebrated go-lives. They included Whole Foods, Vanderbilt University Medical Center, and Extendicare. Other successes included GreenYellow, Insignia Financial, KBP Brands, LCMC Health, Stevens Transport, and Tokio Marine Management (Australasia).
Terrance Wampler, group general manager, office of the CFO products, Workday, commented, “With Workday solutions for the office of the CFO, organizations benefit from our native AI and ML capabilities that help streamline business processes, remove inefficiencies, and improve employee experiences. Workday is the only major cloud financial management provider that embeds AI and ML in its foundation, automating core business processes and driving finance transformation for our customers.”
As Workday expands its geographic footprint, revenue from outside the US reached $420 million in Q1, representing 25% of the total revenue.
Enterprise Times: What does this mean
Barbara Larson noted, “We expect Q2 subscription revenue to be 1.611 billion to 1.613 billion, representing 18% year-over-year growth.” Another strong set of results from Workday, with a strong pipeline, would indicate that the company will continue its growth trajectory.
Despite the looming risk of recession, Workday sees little impact on sales. When asked about challenges, Eschenbach noted, “We’re clearly seeing deals go for another level or two of approval, including all the way up to the CFO office. And that hasn’t changed throughout the last four months. In fact, it’s pretty consistent with what we even saw at the end of last year.” (Source The Motley Fool).
Workday continues a solid growth trajectory and is also starting to win huge swathes of business internationally. What Workday no longer seems to do in the analyst calls is talk so much about the competition and from whom it is winning business.
Workday has the advantage that its customers are all net-new, so it must remove a legacy solution. For example, WholeFoods has presumably moved some of its finance off Oracle NetSuite. However, that move may have been more down to the company’s acquisition by Amazon (a Workday customer) rather than dissatisfaction with NetSuite. Extendicare Health Services moved from Oracle. Tokio Marine Management uses SAP in Japan, it is unclear what it used in Australia, but this could be treated at worst as a competitive win.
