Fiscal Fourth Quarter Total Revenues of
$1.65 Billion, Up 19.6% Year Over
Year
Subscription Revenues of $1.50 Billion, Up 21.7% Year Over
Year
24-Month Subscription Revenue Backlog of
$9.68 Billion, Up
21.3% Year Over Year
Total Subscription Revenue Backlog
of $16.45 Billion, Up 28.4% Year Over
Year
Fiscal Year 2023 Total Revenues of
$6.22 Billion, Up 21.0% Year Over
Year
Subscription Revenues of $5.57 Billion, Up 22.5% Year Over
Year
Operating Cash Flows of $1.66
Billion, Up 0.4% Year Over Year
PLEASANTON, Calif., Feb. 27,
2023 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), a
leader in enterprise cloud applications for finance and human
resources, today announced results for the fiscal 2023 fourth
quarter and full year ended January 31, 2023.
Fiscal 2023 Fourth Quarter Results
- Total revenues were $1.65
billion, an increase of 19.6% from the fourth quarter of
fiscal 2022. Subscription revenues were $1.50 billion, an increase of 21.7% from the same
period last year.
- Operating loss was $89.0 million,
or negative 5.4% of revenues, compared to an operating loss of
$101.0 million, or negative 7.3% of
revenues, in the same period last year. Non-GAAP operating income
for the fourth quarter was $305.3
million, or 18.5% of revenues, compared to a non-GAAP
operating income of $237.1 million,
or 17.2% of revenues, in the same period last
year.1
- Basic and diluted net loss per share was $0.49, compared to basic and diluted net loss per
share of $0.29 in the fourth quarter
of fiscal 2022. Non-GAAP basic and diluted net income per share was
$1.00 and $0.99, respectively, compared to non-GAAP basic
and diluted net income per share of $0.82 and $0.78,
respectively, in the same period last year.2
Fiscal Year 2023 Results
- Total revenues were $6.22
billion, an increase of 21.0% from fiscal 2022. Subscription
revenues were $5.57 billion, an
increase of 22.5% from the prior year.
- Operating loss was $222.2
million, or negative 3.6% of revenues, compared to an
operating loss of $116.5 million, or
negative 2.3% of revenues, in fiscal 2022. Non-GAAP operating
income was $1.21 billion, or 19.5% of
revenues, compared to a non-GAAP operating income of $1.15 billion, or 22.4% of revenues, in the prior
year.1
- Basic and diluted net loss per share was $1.44, compared to basic and diluted net income
per share of $0.12 in fiscal 2022.
Non-GAAP basic and diluted net income per share was $3.73 and $3.64,
respectively, compared to non-GAAP basic and diluted net income per
share of $4.20 and $3.99, respectively, in the prior
year.2
- Operating cash flows were $1.66
billion compared to $1.65
billion in the prior year.
- Cash, cash equivalents, and marketable securities were
$6.12 billion as of January 31, 2023.
Comments on the News
"We closed our fiscal year with another solid quarter, further
reinforcing the strength of our value proposition as more
organizations continue to select Workday to help manage their
people and finances," said Aneel
Bhusri, co-founder, co-CEO, and chair, Workday. "Despite the
unpredictable environment, we remain well-positioned to drive the
future of work for our more than 10,000 customers thanks to our
amazing employees and unique approach to embedding artificial
intelligence and machine learning into the very core of our
platform."
"We have a clear strategy in place heading into fiscal 2024, and
our land opportunity with net new finance and HR customers is wide
open as we continue to gain ground with both large and medium-sized
enterprises across the globe," said Carl
Eschenbach, co-CEO, Workday. "We are doubling down in
strategic growth areas by investing in our customer base, focusing
on key industries, evolving and investing in our partner ecosystem,
and relentlessly focusing on innovation. I am excited for the year
ahead as we work together to execute on Workday's path to becoming
one of the largest and most profitable software companies in the
world."
"Our solid fourth quarter and full-year fiscal 2023 results
underscore the durable demand for our solutions, as organizations
of all sizes continue to prioritize finance and HR modernization,"
said Barbara Larson, chief financial
officer, Workday. "We are maintaining the midpoint of our
preliminary fiscal year 2024 subscription revenue guidance while
increasing our fiscal 2024 non-GAAP operating margin outlook to the
high end. We now expect subscription revenue of $6.525 billion to $6.575
billion, growth of 17% to 18%, and non-GAAP operating margin
of 23.0%, which includes a 150 basis point increase resulting from
a change in our useful life policy for servers and network
equipment. Our outlook reflects our strong fourth quarter execution
and the scale of our model, balanced with our expectation that the
environment will remain uncertain in the
near-term."1
Recent Highlights
- Workday announced the appointment of Carl Eschenbach to co-CEO to serve alongside
Aneel Bhusri through January 2024, at which time Carl is expected to
assume sole CEO responsibilities and Aneel will assume a full-time
role as executive chair and will remain as chair of the Board of
Directors.
- Workday appointed Sayan
Chakraborty to co-president, Robynne
Sisco to vice chair, and elected Mark Hawkins as an independent director of its
Board of Directors.
- Workday now serves the financial management and HR needs of
more than 10,000 customers globally, which includes over 50% of the
Fortune 500 and more than 25% of the Global 2000.
- Workday's continued industry focus continues to pay off with
growing momentum within the retail industry, with more than 50% of
the retail organizations in the Fortune 500 having selected
Workday, and able to benefit from the newly introduced AI and
ML-based demand forecasting, which helps drive greater accuracy and
cost effectiveness in the retail space.
- Workday announced a $250 million
expansion of its Workday Ventures fund to power innovation in AI
and ML.
- Workday released its first-ever commercial at the Big Game on
Sunday, February 12, focused on what
it means to be a "rock star" in the workplace.
- Workday was listed on JUST Capital's 2023 JUST 100, which ranks
America's largest publicly traded companies on the most important
issues as determined by the American public, including the
environment, how companies treat employees and customers, and how
they support their communities.
Earnings Call Details
Workday plans to host a conference call today to review its
fiscal 2023 fourth quarter and full year financial results and to
discuss its financial outlook. The call is scheduled to begin at
1:30 p.m. PT/4:30 p.m. ET and can be accessed via webcast. The
webcast will be available live, and a replay will be available
following completion of the live broadcast for approximately 90
days.
Workday uses the Workday Blog as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD.
1 Non-GAAP operating income and non-GAAP
operating margin exclude share-based compensation expenses,
employer payroll tax-related items on employee stock
transactions, and amortization expense for acquisition-related
intangible assets. See the section titled "About Non-GAAP
Financial Measures" in the accompanying financial tables for
further details.
2 Non-GAAP net income per share excludes
share-based compensation expenses, employer
payroll tax-related items on employee stock transactions,
amortization expense for acquisition-related intangible assets, and
income tax effects. See the section titled "About Non-GAAP
Financial Measures" in the accompanying financial tables for
further details.
About Workday
Workday is a leading provider of enterprise cloud
applications for finance and human
resources, helping customers adapt and thrive in a changing
world. Workday applications for financial management, human
resources, planning, spend management, and analytics are built
with artificial intelligence and machine learning at the core to
help organizations around the world embrace the future of work.
Workday is used by more than 10,000 organizations around the
world and across industries – from medium-sized businesses to more
than 50% of the Fortune 500. For more information
about Workday, visit workday.com.
© 2023 Workday, Inc. All rights reserved. Workday and the
Workday logo are registered trademarks of Workday, Inc. All other
brand and product names are trademarks or registered trademarks of
their respective holders.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Workday's
financial results as determined in accordance with GAAP are
included at the end of this press release following the
accompanying financial data. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, please see the section of the tables titled "About
Non-GAAP Financial Measures." The Company has not provided
a reconciliation of its forward outlook for non-GAAP operating
margin with its forward-looking GAAP operating margin in reliance
on the unreasonable efforts exception provided under Item
10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without
unreasonable efforts, to quantify share-based compensation expense,
which is excluded from our non-GAAP operating margin, as it
requires additional inputs such as the number of shares granted and
market prices that are not ascertainable.
Forward-Looking Statements
This press release contains forward-looking statements
including, among other things, statements regarding the timing and
impact of Workday's future leadership structure, Workday's
full-year fiscal 2024 subscription revenues and non-GAAP operating
margin, growth, innovation, opportunities, demand, strategy, and
investments. These forward-looking statements are based only on
currently available information and our current beliefs,
expectations, and assumptions. Because forward-looking statements
relate to the future, they are subject to risks, uncertainties,
assumptions, and changes in circumstances that are difficult to
predict and many of which are outside of our control. If the risks
materialize, assumptions prove incorrect, or we experience
unexpected changes in circumstances, actual results could differ
materially from the results implied by these forward-looking
statements, and therefore you should not rely on any
forward-looking statements. Risks include, but are not limited to:
(i) breaches in our security measures or those of our third-party
providers, unauthorized access to our customers' or other users'
personal data, or disruptions in our data center or computing
infrastructure operations; (ii) service outages, delays in the
deployment of our applications, and the failure of our applications
to perform properly; (iii) the impact of recent macroeconomic
events, including inflation and rising interest rates, on our
business, as well as our customers, prospects, partners, and
service providers; (iv) our ability to manage our growth
effectively; (v) competitive factors, including pricing pressures,
industry consolidation, entry of new competitors and new
applications, advancements in technology, and marketing initiatives
by our competitors; (vi) the development of the market for
enterprise cloud applications and services; (vii) acceptance of our
applications and services by customers and individuals, including
any new features, enhancements, and modifications, as well as the
acceptance of any underlying technology such as machine learning
and artificial intelligence; (viii) our ability to implement our
plans, objectives, and other expectations with respect to any of
our acquired companies; (ix) adverse changes in general economic or
market conditions; (x) the regulatory, economic, and political
risks associated with our domestic and international operations;
(xi) the regulatory risks related to new and evolving technologies
such as machine learning and artificial intelligence; (xii) delays
or reductions in information technology spending; and (xiii)
changes in sales, which may not be immediately reflected in our
results due to our subscription model. Further information on these
and additional risks that could affect Workday's results is
included in our filings with the Securities and Exchange Commission
("SEC"), including our Form 10-K for the fiscal year ended
January 31, 2023, and other reports
that we have filed and will file with the SEC from time to time,
which could cause actual results to vary from expectations. Workday
assumes no obligation to, and does not currently intend to, update
any such forward-looking statements after the date of this
release.
Any unreleased services, features, or functions referenced in
this document, our website, or other press releases or public
statements that are not currently available are subject to change
at Workday's discretion and may not be delivered as planned or at
all. Customers who purchase Workday services should make their
purchase decisions based upon services, features, and functions
that are currently available.
Workday,
Inc. Condensed Consolidated Balance Sheets (in
thousands)
(unaudited)
|
|
|
January 31,
2023
|
|
January 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$ 1,886,311
|
|
$ 1,534,273
|
Marketable
securities
|
4,235,083
|
|
2,109,888
|
Trade and other
receivables, net
|
1,570,086
|
|
1,242,545
|
Deferred
costs
|
191,054
|
|
152,957
|
Prepaid expenses and
other current assets
|
225,690
|
|
174,402
|
Total current
assets
|
8,108,224
|
|
5,214,065
|
Property and equipment,
net
|
1,201,254
|
|
1,123,075
|
Operating lease
right-of-use assets
|
249,278
|
|
247,808
|
Deferred costs,
noncurrent
|
420,988
|
|
341,259
|
Acquisition-related
intangible assets, net
|
305,465
|
|
391,002
|
Goodwill
|
2,840,044
|
|
2,840,044
|
Other assets
|
360,985
|
|
341,252
|
Total
assets
|
$
13,486,238
|
|
$
10,498,505
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
153,751
|
|
$
55,487
|
Accrued expenses and
other current liabilities
|
260,131
|
|
195,590
|
Accrued
compensation
|
563,548
|
|
402,885
|
Unearned
revenue
|
3,559,393
|
|
3,110,947
|
Operating lease
liabilities
|
91,343
|
|
80,503
|
Debt,
current
|
—
|
|
1,222,443
|
Total current
liabilities
|
4,628,166
|
|
5,067,855
|
Debt,
noncurrent
|
2,975,934
|
|
617,354
|
Unearned revenue,
noncurrent
|
74,540
|
|
71,533
|
Operating lease
liabilities, noncurrent
|
181,799
|
|
182,456
|
Other
liabilities
|
40,231
|
|
24,225
|
Total
liabilities
|
7,900,670
|
|
5,963,423
|
Stockholders'
equity:
|
|
|
|
Common
stock
|
259
|
|
251
|
Additional paid-in
capital
|
8,828,639
|
|
7,284,174
|
Treasury
stock
|
(185,047)
|
|
(12,467)
|
Accumulated other
comprehensive income (loss)
|
53,051
|
|
7,709
|
Accumulated
deficit
|
(3,111,334)
|
|
(2,744,585)
|
Total stockholders'
equity
|
5,585,568
|
|
4,535,082
|
Total liabilities
and stockholders' equity
|
$
13,486,238
|
|
$
10,498,505
|
Workday,
Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share data)
(unaudited)
|
|
|
Three Months Ended
January 31,
|
|
Year Ended January
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Subscription
services
|
$
1,495,402
|
|
$
1,229,173
|
|
$
5,567,206
|
|
$
4,546,313
|
Professional
services
|
150,858
|
|
146,968
|
|
648,612
|
|
592,485
|
Total
revenues
|
1,646,260
|
|
1,376,141
|
|
6,215,818
|
|
5,138,798
|
Costs and expenses
(1):
|
|
|
|
|
|
|
|
Costs of subscription
services
|
274,146
|
|
220,208
|
|
1,011,447
|
|
795,854
|
Costs of professional
services
|
179,333
|
|
169,589
|
|
703,731
|
|
632,241
|
Product
development
|
615,589
|
|
537,738
|
|
2,270,660
|
|
1,879,220
|
Sales and
marketing
|
489,895
|
|
410,947
|
|
1,848,093
|
|
1,461,921
|
General and
administrative
|
176,255
|
|
138,621
|
|
604,087
|
|
486,012
|
Total costs and
expenses
|
1,735,218
|
|
1,477,103
|
|
6,438,018
|
|
5,255,248
|
Operating income
(loss)
|
(88,958)
|
|
(100,962)
|
|
(222,200)
|
|
(116,450)
|
Other income (expense),
net
|
11,039
|
|
17,141
|
|
(37,750)
|
|
132,632
|
Income (loss) before
provision for (benefit from) income taxes
|
(77,919)
|
|
(83,821)
|
|
(259,950)
|
|
16,182
|
Provision for (benefit
from) income taxes
|
47,778
|
|
(10,568)
|
|
106,799
|
|
(13,191)
|
Net income
(loss)
|
$
(125,697)
|
|
$
(73,253)
|
|
$
(366,749)
|
|
$
29,373
|
Net income (loss) per
share, basic
|
$
(0.49)
|
|
$
(0.29)
|
|
$
(1.44)
|
|
$
0.12
|
Net income (loss) per
share, diluted
|
$
(0.49)
|
|
$
(0.29)
|
|
$
(1.44)
|
|
$
0.12
|
Weighted-average shares
used to compute net income (loss) per share, basic
|
257,322
|
|
250,043
|
|
254,819
|
|
247,249
|
Weighted-average shares
used to compute net income (loss) per share, diluted
|
257,322
|
|
250,043
|
|
254,819
|
|
254,032
|
|
|
|
|
|
(1) Costs and expenses
include share-based compensation expenses as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Year Ended January
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Costs of subscription
services
|
$
29,201
|
|
$
23,235
|
|
$
106,119
|
|
$
85,713
|
Costs of professional
services
|
30,217
|
|
30,112
|
|
110,216
|
|
113,443
|
Product
development
|
169,209
|
|
147,790
|
|
618,973
|
|
543,135
|
Sales and
marketing
|
69,015
|
|
57,571
|
|
249,248
|
|
215,692
|
General and
administrative
|
63,271
|
|
43,225
|
|
210,066
|
|
154,422
|
Total share-based
compensation expenses
|
$
360,913
|
|
$
301,933
|
|
$ 1,294,622
|
|
$ 1,112,405
|
Workday,
Inc. Condensed Consolidated Statements of Cash
Flows (in thousands)
(unaudited)
|
|
|
Three Months Ended
January 31,
|
|
Year Ended January
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(125,697)
|
|
$
(73,253)
|
|
$
(366,749)
|
|
$
29,373
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
89,962
|
|
88,750
|
|
364,357
|
|
343,723
|
Share-based
compensation expenses
|
360,913
|
|
292,235
|
|
1,294,622
|
|
1,100,584
|
Amortization of
deferred costs
|
48,096
|
|
37,953
|
|
174,611
|
|
138,797
|
Amortization and
writeoff of debt discount and issuance costs
|
955
|
|
997
|
|
6,955
|
|
3,988
|
Non-cash lease
expense
|
23,432
|
|
21,529
|
|
91,750
|
|
86,235
|
(Gains) losses on
investments
|
10,034
|
|
(20,366)
|
|
30,780
|
|
(145,845)
|
Other
|
3,272
|
|
(6,997)
|
|
12,645
|
|
(14,213)
|
Changes in operating
assets and liabilities, net of business combinations:
|
|
|
|
|
|
|
|
Trade and other
receivables, net
|
(518,608)
|
|
(379,190)
|
|
(318,600)
|
|
(207,933)
|
Deferred
costs
|
(129,414)
|
|
(108,695)
|
|
(292,437)
|
|
(238,453)
|
Prepaid expenses and
other assets
|
17,377
|
|
(14,106)
|
|
(14,070)
|
|
(35,153)
|
Accounts
payable
|
64,889
|
|
13,531
|
|
85,773
|
|
9,414
|
Accrued expenses and
other liabilities
|
94,712
|
|
74,780
|
|
135,965
|
|
50,671
|
Unearned
revenue
|
754,529
|
|
687,981
|
|
451,593
|
|
529,516
|
Net cash provided by
(used in) operating activities
|
694,452
|
|
615,149
|
|
1,657,195
|
|
1,650,704
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of marketable
securities
|
(1,531,956)
|
|
(541,689)
|
|
(7,182,961)
|
|
(2,858,729)
|
Maturities of
marketable securities
|
1,181,324
|
|
500,625
|
|
4,948,833
|
|
2,804,103
|
Sales of marketable
securities
|
50,969
|
|
171,730
|
|
104,324
|
|
199,016
|
Owned real estate
projects
|
(3,790)
|
|
(3)
|
|
(4,236)
|
|
(171,501)
|
Capital expenditures,
excluding owned real estate projects
|
(73,539)
|
|
(73,355)
|
|
(359,552)
|
|
(264,267)
|
Business combinations,
net of cash acquired
|
—
|
|
(450,334)
|
|
—
|
|
(1,190,199)
|
Purchase of other
intangible assets
|
—
|
|
(8,007)
|
|
(700)
|
|
(8,007)
|
Purchases of
non-marketable equity and other investments
|
(3,000)
|
|
(38,485)
|
|
(23,173)
|
|
(123,011)
|
Sales and maturities of
non-marketable equity and other investments
|
(135)
|
|
—
|
|
11,539
|
|
5,169
|
Other
|
—
|
|
(1)
|
|
—
|
|
—
|
Net cash provided by
(used in) investing activities
|
(380,127)
|
|
(439,519)
|
|
(2,505,926)
|
|
(1,607,426)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance
of debt, net of debt discount
|
—
|
|
—
|
|
2,978,077
|
|
—
|
Repayments and
extinguishment of debt
|
—
|
|
(9,409)
|
|
(1,843,605)
|
|
(37,614)
|
Payments for debt
issuance costs
|
—
|
|
—
|
|
(7,220)
|
|
—
|
Repurchases of common
stock
|
(74,666)
|
|
—
|
|
(74,666)
|
|
—
|
Proceeds from issuance
of common stock from employee equity plans, net of taxes paid for
shares withheld
|
66,972
|
|
71,947
|
|
151,974
|
|
148,328
|
Other
|
(201)
|
|
(54)
|
|
(739)
|
|
(463)
|
Net cash provided by
(used in) financing activities
|
(7,895)
|
|
62,484
|
|
1,203,821
|
|
110,251
|
Effect of exchange rate
changes
|
1,155
|
|
(620)
|
|
(595)
|
|
(705)
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
307,585
|
|
237,494
|
|
354,495
|
|
152,824
|
Cash, cash
equivalents, and restricted cash at the beginning of
period
|
1,587,655
|
|
1,303,251
|
|
1,540,745
|
|
1,387,921
|
Cash, cash
equivalents, and restricted cash at the end of
period
|
$
1,895,240
|
|
$
1,540,745
|
|
$
1,895,240
|
|
$
1,540,745
|
Workday,
Inc. Reconciliation of GAAP to Non-GAAP Data Three
Months Ended January 31, 2023
(in thousands, except percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
274,146
|
|
$
(29,201)
|
|
$
(14,747)
|
|
$
—
|
|
$
230,198
|
Costs of professional
services
|
179,333
|
|
(30,217)
|
|
(1,381)
|
|
—
|
|
147,735
|
Product
development
|
615,589
|
|
(169,209)
|
|
(6,016)
|
|
—
|
|
440,364
|
Sales and
marketing
|
489,895
|
|
(69,015)
|
|
(9,850)
|
|
—
|
|
411,030
|
General and
administrative
|
176,255
|
|
(63,271)
|
|
(1,343)
|
|
—
|
|
111,641
|
Operating income
(loss)
|
(88,958)
|
|
360,913
|
|
33,337
|
|
—
|
|
305,292
|
Operating
margin
|
(5.4) %
|
|
21.9 %
|
|
2.0 %
|
|
— %
|
|
18.5 %
|
Other income (expense),
net
|
11,039
|
|
—
|
|
—
|
|
—
|
|
11,039
|
Income (loss) before
provision for (benefit from) income taxes
|
(77,919)
|
|
360,913
|
|
33,337
|
|
—
|
|
316,331
|
Provision for (benefit
from) income taxes
|
47,778
|
|
—
|
|
—
|
|
12,325
|
|
60,103
|
Net income
(loss)
|
$
(125,697)
|
|
$
360,913
|
|
$
33,337
|
|
$
(12,325)
|
|
$
256,228
|
Net income (loss) per
share, basic (1)
|
$
(0.49)
|
|
$
1.40
|
|
$
0.13
|
|
$
(0.04)
|
|
$
1.00
|
Net income (loss) per
share, diluted (1)
|
$
(0.49)
|
|
$
1.40
|
|
$
0.13
|
|
$
(0.05)
|
|
$
0.99
|
|
|
(1)
|
GAAP net loss per share
is calculated based upon 257,322 basic and diluted weighted-average
shares of common stock. Non-GAAP
net income per share is
calculated based upon 257,322 basic and 258,367 diluted
weighted-average shares of common stock.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $21.2 million and employer payroll
tax-related items on
employee stock transactions of $12.1 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across the reporting
periods. For fiscal 2023, the non-GAAP tax rate was 19%.
|
Workday,
Inc. Reconciliation of GAAP to Non-GAAP Data Three
Months Ended January 31, 2022
(in thousands, except percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
220,208
|
|
$
(23,235)
|
|
$
(14,356)
|
|
$
—
|
|
$
182,617
|
Costs of professional
services
|
169,589
|
|
(30,112)
|
|
(1,970)
|
|
—
|
|
137,507
|
Product
development
|
537,738
|
|
(147,790)
|
|
(7,362)
|
|
—
|
|
382,586
|
Sales and
marketing
|
410,947
|
|
(57,571)
|
|
(10,945)
|
|
—
|
|
342,431
|
General and
administrative
|
138,621
|
|
(43,225)
|
|
(1,534)
|
|
—
|
|
93,862
|
Operating income
(loss)
|
(100,962)
|
|
301,933
|
|
36,167
|
|
—
|
|
237,138
|
Operating
margin
|
(7.3) %
|
|
21.9 %
|
|
2.6 %
|
|
— %
|
|
17.2 %
|
Other income (expense),
net
|
17,141
|
|
—
|
|
—
|
|
—
|
|
17,141
|
Income (loss) before
provision for (benefit from) income taxes
|
(83,821)
|
|
301,933
|
|
36,167
|
|
—
|
|
254,279
|
Provision for (benefit
from) income taxes
|
(10,568)
|
|
—
|
|
—
|
|
58,881
|
|
48,313
|
Net income
(loss)
|
$
(73,253)
|
|
$
301,933
|
|
$
36,167
|
|
$
(58,881)
|
|
$
205,966
|
Net income (loss) per
share, basic (1)
|
$
(0.29)
|
|
$
1.21
|
|
$
0.14
|
|
$
(0.24)
|
|
$
0.82
|
Net income (loss) per
share, diluted (1)
|
$
(0.29)
|
|
$
1.21
|
|
$
0.14
|
|
$
(0.28)
|
|
$
0.78
|
|
|
(1)
|
GAAP net loss per share
is calculated based upon 250,043 basic and diluted weighted-average
shares of common stock.
Non-GAAP net income per
share is calculated based upon 250,043 basic and 264,581 diluted
weighted-average shares of common
stock. The numerator
used to compute non-GAAP diluted net income per share was increased
by $1.3 million for after-tax interest
expense on our
convertible senior notes in accordance with the if-converted
method.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $20.7 million and employer payroll
tax-related items on
employee stock transactions of $15.5 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across the reporting
periods. For fiscal 2022, the non-GAAP tax rate was 19%. Included
in the per share amount is a dilution impact
of $0.04 from the
conversion of GAAP diluted net loss per share to non-GAAP diluted
net income per share.
|
Workday,
Inc. Reconciliation of GAAP to Non-GAAP Data Year
Ended January 31, 2023
(in thousands, except percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$ 1,011,447
|
|
$
(106,119)
|
|
$
(59,769)
|
|
$
—
|
|
$
845,559
|
Costs of professional
services
|
703,731
|
|
(110,216)
|
|
(6,678)
|
|
—
|
|
586,837
|
Product
development
|
2,270,660
|
|
(618,973)
|
|
(23,162)
|
|
—
|
|
1,628,525
|
Sales and
marketing
|
1,848,093
|
|
(249,248)
|
|
(42,490)
|
|
—
|
|
1,556,355
|
General and
administrative
|
604,087
|
|
(210,066)
|
|
(5,115)
|
|
—
|
|
388,906
|
Operating income
(loss)
|
(222,200)
|
|
1,294,622
|
|
137,214
|
|
—
|
|
1,209,636
|
Operating
margin
|
(3.6) %
|
|
20.8 %
|
|
2.3 %
|
|
— %
|
|
19.5 %
|
Other income (expense),
net
|
(37,750)
|
|
—
|
|
—
|
|
—
|
|
(37,750)
|
Income (loss) before
provision for (benefit from) income taxes
|
(259,950)
|
|
1,294,622
|
|
137,214
|
|
—
|
|
1,171,886
|
Provision for (benefit
from) income taxes
|
106,799
|
|
—
|
|
—
|
|
115,859
|
|
222,658
|
Net income
(loss)
|
$
(366,749)
|
|
$1,294,622
|
|
$
137,214
|
|
$
(115,859)
|
|
$
949,228
|
Net income (loss) per
share, basic (1)
|
$
(1.44)
|
|
$
5.08
|
|
$
0.54
|
|
$
(0.45)
|
|
$
3.73
|
Net income (loss) per
share, diluted (1)
|
$
(1.44)
|
|
$
5.08
|
|
$
0.54
|
|
$
(0.54)
|
|
$
3.64
|
|
|
(1)
|
GAAP net loss per share
is calculated based upon 254,819 basic and diluted weighted-average
shares of common stock.
Non-GAAP net income per
share is calculated based upon 254,819 basic and 261,641 diluted
weighted-average shares of common
stock. The numerator
used to compute non-GAAP diluted net income per share was increased
by $3.5 million for after-tax interest
expense on our
convertible senior notes in accordance with the if-converted
method.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $85.5 million and employer payroll
tax-related items on
employee stock transactions of $51.7 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across the reporting
periods. For fiscal 2023, the non-GAAP tax rate was 19%. Included
in the per share amount is a dilution impact
of $0.09 from the
conversion of GAAP diluted net loss per share to non-GAAP diluted
net income per share.
|
Workday,
Inc. Reconciliation of GAAP to Non-GAAP Data Year
Ended January 31, 2022
(in thousands, except percentages and per share data)
(unaudited)
|
|
|
GAAP
|
|
Share-Based
Compensation
Expenses
|
|
Other
Operating
Expenses (2)
|
|
Income Tax
and Dilution
Effects (3)
|
|
Non-GAAP
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs of subscription
services
|
$
795,854
|
|
$
(85,713)
|
|
$
(54,551)
|
|
$
—
|
|
$
655,590
|
Costs of professional
services
|
632,241
|
|
(113,443)
|
|
(11,181)
|
|
—
|
|
507,617
|
Product
development
|
1,879,220
|
|
(543,135)
|
|
(32,935)
|
|
—
|
|
1,303,150
|
Sales and
marketing
|
1,461,921
|
|
(215,692)
|
|
(47,457)
|
|
—
|
|
1,198,772
|
General and
administrative
|
486,012
|
|
(154,422)
|
|
(7,625)
|
|
—
|
|
323,965
|
Operating income
(loss)
|
(116,450)
|
|
1,112,405
|
|
153,749
|
|
—
|
|
1,149,704
|
Operating
margin
|
(2.3) %
|
|
21.6 %
|
|
3.1 %
|
|
— %
|
|
22.4 %
|
Other income (expense),
net
|
132,632
|
|
—
|
|
—
|
|
—
|
|
132,632
|
Income (loss) before
provision for (benefit from) income taxes
|
16,182
|
|
1,112,405
|
|
153,749
|
|
—
|
|
1,282,336
|
Provision for (benefit
from) income taxes
|
(13,191)
|
|
—
|
|
—
|
|
256,835
|
|
243,644
|
Net income
(loss)
|
$
29,373
|
|
$ 1,112,405
|
|
$
153,749
|
|
$
(256,835)
|
|
$ 1,038,692
|
Net income (loss) per
share, basic (1)
|
$
0.12
|
|
$
4.50
|
|
$
0.62
|
|
$
(1.04)
|
|
$
4.20
|
Net income (loss) per
share, diluted (1)
|
$
0.12
|
|
$
4.38
|
|
$
0.61
|
|
$
(1.12)
|
|
$
3.99
|
|
|
(1)
|
GAAP net income per
share is calculated based upon 247,249 basic and 254,032 diluted
weighted-average shares of common stock.
Non-GAAP net income per
share is calculated based upon 247,249 basic and 261,849 diluted
weighted-average shares of common
stock. The numerator
used to compute non-GAAP diluted net income per share was increased
by $5.2 million for after-tax interest
expense on our
convertible senior notes in accordance with the if-converted
method.
|
(2)
|
Other operating
expenses include amortization of acquisition-related intangible
assets of $78.1 million and employer payroll tax-related
items on employee stock
transactions of $75.6 million.
|
(3)
|
We utilize a fixed
long-term projected tax rate in our computation of the non-GAAP
income tax provision to provide better consistency
across the reporting
periods. For fiscal 2022, the non-GAAP tax rate was 19%. Included
in the per share amount is a dilution impact
of $0.11 from the
conversion of GAAP diluted net income per share to non-GAAP diluted
net income per share.
|
About Non-GAAP Financial Measures
To provide investors and others with additional information
regarding Workday's results, we have disclosed the following
non-GAAP financial measures: non-GAAP operating income (loss),
non-GAAP operating margin, and non-GAAP net income (loss) per
share. Workday has provided a reconciliation of each non-GAAP
financial measure used in this earnings release to the most
directly comparable GAAP financial measure. Non-GAAP operating
income (loss) and non-GAAP operating margin differ from GAAP in
that they exclude share-based compensation expenses, employer
payroll tax-related items on employee stock transactions,
and amortization expense for acquisition-related intangible
assets. Non-GAAP net income (loss) per share differs from
GAAP in that it excludes share-based compensation expenses,
employer payroll tax-related items on employee stock
transactions, amortization expense for acquisition-related
intangible assets, and income tax effects.
Workday's management uses these non-GAAP financial measures to
understand and compare operating results across accounting periods,
for internal budgeting and forecasting purposes, for short- and
long-term operating plans, and to evaluate Workday's financial
performance. Management believes these non-GAAP financial measures
reflect Workday's ongoing business in a manner that allows for
meaningful period-to-period comparisons and analysis of trends in
Workday's business. Management also believes that these non-GAAP
financial measures provide useful information to investors and
others in understanding and evaluating Workday's operating results
and prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies.
Management believes excluding the following items from the GAAP
Condensed Consolidated Statements of Operations is useful to
investors and others in assessing Workday's operating performance
due to the following factors:
- Share-based compensation expenses. Although share-based
compensation is an important aspect of the compensation of our
employees and executives, management believes it is useful to
exclude share-based compensation expenses to better understand the
long-term performance of our core business and to facilitate
comparison of our results to those of peer companies. Share-based
compensation expenses are determined using a number of factors,
including our stock price, volatility, and forfeiture rates, that
are beyond our control and generally unrelated to operational
decisions and performance in any particular period. Further,
share-based compensation expenses are not reflective of the value
ultimately received by the grant recipients.
- Other operating expenses. Other operating expenses
includes employer payroll tax-related items on employee stock
transactions and amortization of acquisition-related intangible
assets. The amount of employer payroll tax-related items on
employee stock transactions is dependent on our stock price and
other factors that are beyond our control and do not correlate to
the operation of the business. For business combinations, we
generally allocate a portion of the purchase price to intangible
assets. The amount of the allocation is based on estimates and
assumptions made by management and is subject to amortization. The
amount of purchase price allocated to intangible assets and the
term of its related amortization can vary significantly and are
unique to each acquisition and thus we do not believe it is
reflective of ongoing operations. Although we exclude the
amortization of acquisition-related intangible assets from these
non-GAAP measures, management believes that it is important for
investors to understand that such intangible assets were recorded
as part of purchase accounting and contribute to revenue
generation.
- Income tax effects. We utilize a fixed long-term
projected tax rate in our computation of the non-GAAP income tax
provision to provide better consistency across the reporting
periods. In projecting this long-term non-GAAP tax rate, we utilize
a three-year financial projection that excludes the direct impact
of share-based compensation and related employer payroll taxes,
amortization of acquisition-related intangible assets, and
amortization of debt discount and issuance costs. The projected
rate considers other factors such as our current operating
structure, existing tax positions in various jurisdictions, and key
legislation in major jurisdictions where we operate. For fiscal
2024 and 2023, we determined the projected non-GAAP tax rate to be
19%, which reflects currently available information, as well as
other factors and assumptions. We will periodically re-evaluate
this tax rate, as necessary, for significant events, based on our
ongoing analysis of the 2017 U.S. Tax Cuts and Jobs Act, relevant
tax law changes, material changes in the forecasted geographic
earnings mix, and any significant acquisitions.
The use of non-GAAP operating income (loss), non-GAAP operating
margin, and non-GAAP net income (loss) per share measures have
certain limitations as they do not reflect all items of expense
that affect Workday's operations. Workday compensates for these
limitations by reconciling the non-GAAP financial measures to the
most comparable GAAP financial measures. These non-GAAP financial
measures should be considered in addition to, not as a substitute
for or in isolation from, measures prepared in accordance with
GAAP. Further, these non-GAAP measures may differ from the non-GAAP
information used by other companies, including peer companies, and
therefore comparability may be limited. Management encourages
investors and others to review Workday's financial information in
its entirety and not rely on a single financial measure.
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SOURCE Workday Inc.