Financial Data and Key Metrics Changes - Workday reported a 17% growth in subscription revenue, totaling $1.903 billion for Q2 2025 [19] - Total revenue for Q2 reached $2.085 billion, also reflecting a 17% increase [19] - The 12-month subscription revenue backlog (cRPO) grew by 16% to $6.80 billion [20] - Non-GAAP operating margin was reported at 24.9%, with non-GAAP operating income of $518 million [20] - Operating cash flow increased by 34% to $571 million, driven by strong collections [20] Business Line Data and Key Metrics Changes - Workday Financial Management crossed the 2,000 customer milestone, indicating strong growth in this segment [8] - The company experienced healthy growth in full suite wins, contributing to overall momentum [7] - Professional services revenue for Q2 was $182 million, contributing to the total revenue growth [19] Market Data and Key Metrics Changes - US revenue grew by 16% to $1.56 billion, while international revenue increased by 18% to $524 million [19] - The company reported strong performance in APAC and Japan, with significant wins in EMEA [10] - Workday was ranked as the market share leader for Worldwide SaaS ERP revenue in 2023 by Gartner [8] Company Strategy and Development Direction - Workday aims to balance growth and margin expansion, with a focus on core markets of HR and Finance [17] - The company is investing in AI innovations to enhance customer value and operational efficiencies [11] - Workday is expanding its partner ecosystem, which has significantly contributed to new annual contract value (ACV) [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macro environment is consistent with previous quarters, indicating a new norm for IT spending [34] - The company expects subscription revenue growth in the mid-teens for FY '26 and FY '27, reflecting confidence in market opportunities [25] - Management emphasized the importance of operational efficiencies and targeted investments to support durable growth [26] Other Important Information - Workday announced a new $1 billion share repurchase program, reflecting commitment to returning capital to shareholders [21] - The company is preparing for its annual developer conference, expecting over 30,000 attendees [14] Q&A Session Summary Question: Additional efficiency at scale while investing in international - Management highlighted ongoing efforts to find efficiencies in global workforce strategy and technology [29] Question: Impact of elections and lower rates on short-term outlook - Management indicated that the current macro environment is expected to remain stable, regardless of external factors [34] Question: AI's impact on software landscape and customer spending - Management noted that customers are investing in AI alongside Workday, leveraging the company's clean data sets [37] Question: Confidence in mid-teens growth despite lower growth rate - Management cited strong partner contributions and international opportunities as key drivers of confidence in growth [39] Question: Growth initiatives review and potential sources of incremental growth - Management expressed confidence in current growth initiatives, particularly in financials and international markets [42] Question: Correlation between free cash flow margin and operating margin - Management indicated that while there may be differences, they are still ramping in several industries where payments do not correlate directly with revenue [53] Question: Vertical strength and pipeline perspective - Management confirmed continued strength in healthcare and higher education sectors, with multi-year opportunities [59]
Workday(WDAY) - 2025 Q2 - Earnings Call Transcript