Workday has announced the results of its second quarter of fiscal 2024. Aneel Bhusri, co-Founder, Co-CEO, and Chair of Workday, commented. “Workday delivered another strong quarter, driven by our ongoing focus on employees, customers, and innovation – including our leadership in AI and ML.
“We’re seeing continued momentum with more than 3,000 customers sharing their data with our ML models, more than 50 million ML inferences processed per day, and multiple generative AI capabilities in development including several that we plan to unveil next month at Workday Rising. We believe this momentum will continue to grow as more companies look to Workday as their trusted partner in responsible implementation of AI and ML.”
The key figures from the result included:
- Total Revenues of $1.79 Billion, Up 16.3% Year Over Year
- Subscription Revenues of $1.62 Billion, Up 18.8% Year Over Year
- Operating income was $36.3 million, or 2.0% of revenues. Compared to an operating loss of $34.1 million, or negative 2.2% of revenues, in the same period last year
- Non-GAAP operating income for the second quarter was $421.4 million, or 23.6% of revenues. Compared to a non-GAAP operating income of $301.6 million, or 19.6% of revenues, in the same period last year
- 24-Month Subscription Revenue Backlog of $10.27 Billion, Up 22.7% Year Over Year
- Total Subscription Revenue Backlog of $17.85 Billion, Up 32.5% Year Over Year
- Operating cash flows were $425.3 million compared to $114.4 million in the prior year
This a strong set of results, and Workday is seeing a decline in the caution it has previously seen from enterprises. Zane Rowe, Chief Financial Officer, Workday commented. “The strength of our Q2 results and momentum going into the second half of our fiscal year highlight the compelling opportunity ahead for Workday.
“We are raising our fiscal 2024 subscription revenue guidance to a range of $6.570 billion to $6.590 billion, representing 18% year-over-year growth. We expect third-quarter subscription revenue to be $1.678 billion to $1.680 billion, or 17% growth. In addition, we are raising our fiscal 2024 non-GAAP operating margin guidance to 23.5%, and we plan on maintaining a disciplined approach of investing in long-term growth while expanding margins.”
Getting stronger across industries
This is the first quarter that its retail and hospitality sector crossed the $1 billion ARR, joining Financial Services, which continues to grow. Workday also saw new customer wins across North America, EMEA and Asia.
New customers for Workday in Europe included Symrise AG (Germany), National Westminster Bank (UK), and ALD Automotive SA (France). For Workday Financial Management it includes KinderCare, Metropolitan Community College, Nordic Consulting Inc., Palomar Health, and The Medical College of Wisconsin.
New customers for Workday Human Capital Management (HCM) included Commercial Vehicle Group, Mercy Aged and Community Care, and SoftwareOne AG. The firm now has over 5,000 core Workday Financial Management and Workday HCM customers.
Workday is also excited about the government sector, a year after it received FedRAMP Authorised status. Carl Eschenbach, co-CEO of Workday, stated. “We’re still in a very early days of state and local government. I think there are only 15 states at this point who have decided to do a full-platform replacement, which leaves, 35 or 36 states up for opportunity for us going forward. We think we have a really good solution for that market. On the federal side, we’re just starting.
“We said we were excited to see our first customer, a civilian agency, do a full-platform rollout on our FedRAMP Cloud. Even without having FedRAMP high on the cloud, we have a lot of opportunity with the existing agencies, and we see that as a rich market for us going forward.” (Source: The Motley Fool)
Enterprise Times: What does this mean
Another solid set of results from Workday as it continues to grow and eat into the market share of Oracle, SAP and a host of legacy ERP solutions. Eschenbach added. “We’re incredibly well positioned going into the second half of our fiscal year as Workday is increasingly seen as the system of trust for enterprises around the world. Our customers – now representing more than 65 million users under contract – rely on Workday to manage critical business processes.
“Our growing customer base, continued global expansion, industry growth, and partner ecosystem momentum set us up for durable long-term success. These factors, combined with the diversity of our products, the strength of our value proposition, and our winning culture, make Workday one of the most enduring software businesses of our time.”
The future looks good for Workday. The big question is, while it continues to grow internationally and across different sectors, will it soon make another acquisition to bring another solution or industry vertical onto its platform?
