Workday (WDAY) Financials

Over the last several years, Workday, Inc. (NASDAQ: WDAY) has demonstrated steady revenue growth and evolving profitability, alongside significant investments in operations and strategic activities. Below is a summary of the key financial trends observed from the company's quarterly statements from 2022 through Q1 2026.

• Consistent Revenue Growth: Operating revenue has grown robustly from approximately $1.37 billion in Q4 2022 to $2.24 billion in Q1 2026, reflecting strong demand for Workday's offerings.
• Improved Gross Profit: Gross profit rose from about $986 million in Q4 2022 to over $1.7 billion in Q1 2026, maintaining a healthy margin despite growing revenue.
• Growing Cash from Operations: Net cash from continuing operating activities fluctuated but grew significantly in recent quarters, peaking near $1.1 billion in Q4 2025 before stabilizing around $457 million in Q1 2026, supporting operational strength.
• Strategic Investments in PPE: Continued investments in property, plant, and equipment ranging from $33 million to $86 million quarterly indicate investments in infrastructure to support future growth.
• Expanding Equity Base: Total common equity increased from about $4.2 billion in early 2022 to nearly $9.0 billion by Q1 2026, highlighting an improving balance sheet and shareholder value creation.

• Operating Expenses Trend: Selling, general & administrative, marketing, and R&D expenses have all increased substantially as the company scales, with total operating expenses approximately matching revenues, often resulting in slim or negative operating income.
• Variable Net Income: Consolidated net income shows variability from losses in early 2023 (e.g., -$125.9M in Q4 2023) to modest profits more recently ($68M in Q1 2026), indicating ongoing efforts to achieve consistent profitability.
• Share Counts Stable: Weighted average diluted shares outstanding have been stable around 250-270 million, implying limited dilution but steady share issuance.
• Substantial Deferred Revenue: Deferred revenue, both current and noncurrent, remains high, exceeding $3 billion in recent quarters, reflecting growing customer subscriptions and recurring revenue strength.
• Debt Levels Stable to Elevated: Long-term debt has risen from about $635 million in early 2022 to roughly $3.0 billion in later periods, contributing to financial flexibility but increasing leverage considerations.

• Continued Net Losses Until Recently: Workday experienced several quarters of net losses or minimal net income through 2022 and 2023, suggesting operational challenges or high costs associated with growth efforts.
• Heavy Marketing and R&D Spend: Marketing and research & development expenses consistently exceed $600 million per quarter recently, which pressures margins and requires sustained revenue growth to offset.
• Significant Investments in Securities: Purchase of investments often exceeds sales, leading to net outflows of hundreds of millions per quarter, impacting cash flow negatively.
• Substantial Equity Repurchases: Repurchase of common equity programs have consumed hundreds of millions quarterly, which may reduce cash reserves and increase financial risk depending on cash flow stability.
• Operating Income Margins Compressing: Although revenues grow, total operating income is low and occasionally negative (e.g., -$20 million in Q1 2024), indicating margin pressures and continued costs expansion.

Summary: Workday has demonstrated strong revenue and gross profit growth over the last four years, investing heavily in sales, marketing, R&D, and capital expenditures to fuel future expansion. The company has recently returned to modest profitability after multiple quarters of losses, amidst growing deferred revenue that supports recurring revenue visibility. However, margin compression from high operating expenses and sizable equity repurchases presents challenges. Investors should monitor Workday’s ability to convert its revenue growth into sustainable profits while managing leverage and cash usage prudently.