Workday reports better-than-expected Q3

Workday building | Workday first quarter

Workday has announced results for the fiscal 2022 third quarter ended October 31, 2021. 

Total revenues were $1.33bn, an increase of 20 percent from the third quarter of fiscal 2021. Subscription revenue was $1.17bn, an increase of 21 percent from the same period last year. 

Operating income was $23.9m, or 1.8 percent of revenues, compared to an operating loss of $14.1m, or negative 1.3 percent of revenues, in the same period last year, while operating cash flows were $384.7m compared to $293.8m in the prior year. 

Non-GAAP operating income for the third quarter was $332.m, or 25 percent of revenues, compared to a non-GAAP operating income of $268.1m, or 24.2 percent of revenues, in the same period last year.  

Aneel Bhusri, co-founder, co-CEO, and chairman of Workday, said: “We delivered another strong quarter as we continue to expand our addressable market through our diverse product portfolio and multiple go-to-market levers, helping to support our sustained growth. I remain optimistic about the great opportunity in front of us, supported by our employees’ incredible efforts, our relentless focus on innovation, and our growing customer community – which consists of some of the world’s largest organisations that are making long-term investments in their future with Workday.” 

Chano Fernandez, co-CEO of Workday, added: “In the third quarter, we continued to see increased demand exceed our expectations, with more global organisations selecting our products to manage their people and finances, and existing customers expanding their Workday footprint. As we look to the future, we will continue to accelerate our investments in our go-to-market efforts and our people, who are so critical to our success.” 

Robynne Sisco, co-president and chief financial officer at Workday, said: “We are raising our fiscal 2022 guidance for subscription revenue to a range of $4.533bn to $4.535bn, growth of 20 percent. We expect fourth-quarter subscription revenue of $1.216bn to $1.218bn, growth of 21 percent. We are also raising our fiscal 2022 non-GAAP operating margin guidance to 22 percent.” 

Despite reporting better-than-expected results, Workday stock dipped after the company revealed it has entered into a definitive agreement to acquire VNDLY, an industry leader in cloud-based external workforce and vendor management technology, for $510m in cash. The deal is expected to close in the first quarter next year.