HR software provider Workday targets $7.7 bn in subscription revenue

Human resources software provider Workday said it expects subscription revenue of $7.70 billion to $7.725 billion for fiscal year 2025, representing growth of approximately 17 percent, against its prior forecast of $7.73 billion to $7.78 billion.
Workday customersWorkday is facing challenges such as lower customer headcount growth as a hiring slowdown and IT budget cuts soften demand for its payroll services.

“Our updated subscription revenue guidance reflects the elevated sales scrutiny and lower customer headcount growth we experienced during the quarter,” said Workday CFO Zane Rowe in its earnings report.

Pleasanton, California-based Workday expects subscription revenue of about $1.90 billion, representing growth of approximately 17 percent, for the fiscal 2025 second quarter ending July 31, 2024.

REVENUE

Workday reported revenue of $1.99 billion, an increase of 18.1 percent from the first quarter of fiscal 2024, for the fiscal 2025 first quarter ended April 30, 2024. Subscription revenues were $1.815 billion, an increase of 18.8 percent from the same period last year.

Workday has generated revenue of $1.49 billion (up 18 percent) from the United States, and $497 million (up 18 percent) from International markets. The international wins in Q1 included OCP Group, Knight Frank, and Aman Resorts.

Workday says more than 65 million users are generating more than 800 billion transactions per year on its digital platform.

Workday has more than 900 Extend customers and 1,600 apps.

Workday Extend Pro, which includes AI Gateway, as well as Developer Copilot launching later this year, enables customers and partners to build AI-first apps that leverage the power of its platform.

Workday posted operating income of $64 million, or 3.2 percent of revenues, compared to an operating loss of $20 million, or negative 1.2 percent of revenues, in the same period last year.

Workday said its 12-month subscription revenue backlog was $6.60 billion, up 17.9 percent from the same period last year. Total subscription revenue backlog was $20.68 billion, increasing 24.2 percent year-over-year.

Workday says more than 90 percent of nearly 2,000 FINs customers are now leveraging the power of HCM platform as well. In Q1, Workday added several full platform HCM and FINs customers, including Baptist Health, Covenant Health Systems, the city of Milwaukee, and Onin Group, the largest privately held staffing company in the U.S.

Workday had a number of expansions within the office of the CFO, including AllianceBernstein, Hospital Sisters Health System, and John Muir Health.

During Q1, Workday also expanded its leadership in HCM, adding new relationships with organizations including ALS Group USA, Carhartt, and one of the largest P&C insurers in the world, which expanded its core financial footprint to add HCM.

Workday had several HCM expansions and renewals, including ING Bank, Sandvik AB, and Valeo Management Services. Asda, Electrolux, Topgolf, county of Richland, Apex Group, and LVHN went live on Workday.

ACHIEVEMENTS

Workday is used by more than 60 percent of the Fortune 500, including HPE, Keybank, Salesforce, and Unum.

Workday added several full platform customers for Workday Financial Management and Workday Human Capital Management (HCM), including City of Milwaukee, H. Lee Moffitt Cancer Center, and The Onin Group.

Workday announced that the Defense Intelligence Agency (DIA), the key intelligence agency for national defense in the United States, has selected Workday Government Cloud to support DIA on its mission to rapidly accelerate recruitment and onboarding efforts.

Workday completed its acquisition of HiredScore, giving the company a comprehensive AI-powered talent acquisition and internal mobility solution. Workday says its shared customers are realizing a 25 percent increase in recruiter capacity with AI.

Workday now has more than 50 AI use cases in production and 25 generative AI use cases on its roadmap.

Workday expanded its relationship with AWS to include co-innovation across industries and enhanced go-to-market investments, and formed a new partnership with Google Cloud, providing GCP customers access to purchase Workday products through the Google Cloud Marketplace.

Baburajan Kizhakedath

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