Human resource (HR) software provider Workday has reported a net income of $132m for the second quarter of fiscal year 2025 (Q2 FY25), a 67% increase compared to $79m for the same quarter of the previous fiscal year. The company’s growth was driven by strong performance in key segments, particularly human capital management (HCM) and financial management. Workday said its innovations in artificial intelligence (AI) and global payroll strategies also played a significant role in enhancing its offerings and customer value.
“Workday delivered a solid quarter of growth and operating margin expansion, as businesses of all sizes and industries around the world increasingly turn to Workday as their trusted partner in navigating the future of work,” said Workday’s chief executive, Carl Eschenbach. “Through the power of our unified, AI-powered platform and our expanding partner ecosystem, we’re reimagining HR and Finance to consistently increase the value we deliver to our customers. Our commitment to customer success, AI innovation, and delivering true business value will propel us into the future.”
Better than expected results for Workday
In the previous quarter, which is Q1 FY25, the enterprise cloud applications provider for finance and human resources posted a net income of $107m. Workday’s diluted net income per share in the reported second quarter ended 31 July 2024 was $0.49, an increase of 63% compared to $0.3 in the same quarter of FY24. The system software firm’s total revenues for Q2 FY25 were up by 16.6% to $2.1bn, compared to $1.78bn in Q2 FY24. In Q1 FY25, Workday’s net revenues were $1.99bn.
Workday’s subscription revenues were $1.8bn, an increase of 18.8% from the same period last fiscal year. The HR software company also reported a 12-month subscription revenue backlog of $6.6bn, a 17.9% increase from Q2 FY25. Its total subscription revenue backlog was $20.68bn, increasing 24.2% year-over-year (YoY).
The total costs and expenses for Workday were $1.97bn in the reported quarter, compared to $1.75bn in the corresponding quarter of FY24. For the six months ended 31 July 2024, Workday posted a net income of $239m, a surge of 202.5% compared to $79m in the first six months of FY24.
Workday’s total revenues for the first half of FY25 were $4.1bn, a 17.4% increase compared to $3.47bn in the corresponding period of the prior fiscal year. The company’s total costs and expenses increased to $3.9bn in the first six months of FY25 compared to $3.45bn in the first half of FY24.
Payroll income for firm up
During the reported quarter, Workday added several full platform customers for the HCM and financial management segments, including Clemson University, County of San Joaquin, and Presbyterian Healthcare Services.
Workday said the innovations to strengthen its global payroll strategy added to its performance. It included the global availability of Workday Payroll provided by Strada, and its new unified global payroll solution Global Payroll Connect.
When it comes to advancements in its AI offerings during the reported quarter, Workday launched AI services for Workday Extend. It also announced the general availability of Workday AI Marketplace and Built on Workday to help partners build, manage, and distribute finance and HCM apps and industry solutions.
Furthermore, Workday made HiredScore AI for Recruiting and HiredScore AI for Talent Mobility available through Workday to drive recruiter productivity. It also aimed at empowering hiring managers and employees.
Workday has revised its guidance for FY25, which concludes on 31 January 2025. The company now expects subscription revenue to fall between $7.7bn and $7.72bn, reflecting an approximate growth of 17%. In addition, the American company has projected a non-GAAP operating margin of 25% for the same period.
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