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Fiscal Third Quarter Total Revenues of $1.60 Billion, Up 20.5% Year Over Year
Subscription Revenues of $1.43 Billion, Up 22.3% Year Over Year
24-Month Subscription Revenue Backlog of $8.62 Billion, Up 21.1% Year Over Year
Total Subscription Revenue Backlog of $14.10 Billion, Up 28.5% Year Over Year
PLEASANTON, Calif., Nov. 29, 2022 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloud applications for finance and human resources, today announced results for the fiscal 2023 third quarter ended October 31, 2022.
Fiscal 2023 Third Quarter Results
Comments on the News
"We delivered another solid quarter, demonstrating how our cloud finance and HR solutions are vital for global organizations navigating today's changing world," said Aneel Bhusri, co-founder, co-CEO, and chairman, Workday. "There is no question that the current macro environment presents increased uncertainty, but, due to the great work of our employees and our continued innovation, we are confident in the long-term opportunity and our ability to navigate the road ahead."
"Our strong third-quarter results illustrate how global organizations are continuing to choose Workday as the backbone of their digital transformation in the face of constant change," said Chano Fernandez, co-CEO, Workday. "As we look ahead, we will continue to focus our efforts on industry investments and driving innovation with our open and connected partner ecosystem, which are critical to our customers' success."
"We delivered solid third-quarter results, a testament to strong execution across the company as well as the strategic and mission-critical nature of our solutions," said Barbara Larson, chief financial officer, Workday. "Our updated outlook reflects the ongoing momentum in our business and the power of our business model, while continuing to balance the current environment. We are raising the low end of our fiscal 2023 subscription revenue guidance to a range of $5.555 billion to $5.557 billion, or 22% growth. We are also raising our fiscal 2023 non-GAAP operating margin guidance to 19.2%, reflecting our commitment to delivering healthy growth and profitability."
Recent Highlights
Earnings Call Details
Workday plans to host a conference call today to review its fiscal 2023 third quarter 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.
3 Gartner, "Magic Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises," by Sam Grinter, Chris Pang, Jeff Freyermuth, Ron Hanscome, Helen Poitevin, Ranadip Chandra, John Kostoulas, Emi Chiba, Rania Stewart, October 31, 2022.
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Gartner and Magic Quadrant are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.
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 have been adopted by thousands of 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.
© 2022 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." A reconciliation of our forward outlook for non-GAAP operating margin with our forward-looking GAAP operating margin is not available without unreasonable efforts as the quantification of share-based compensation expense, which is excluded from our non-GAAP operating margin, 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 Workday's full-year fiscal 2023 subscription revenues and non-GAAP operating margin, our intended share repurchases, growth, innovation, opportunities, demand, momentum, 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) our ability to implement our plans, objectives, and other expectations with respect to any of our acquired companies; (ii) the impact of recent macroeconomic events on our business, as well as our customers, prospects, partners, and service providers; (iii) 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; (iv) service outages, delays in the deployment of our applications, and the failure of our applications to perform properly; (v) our ability to manage our growth effectively; (vi) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications, advancements in technology, and marketing initiatives by our competitors; (vii) the development of the market for enterprise cloud applications and services; (viii) 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; (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-Q for the fiscal quarter ended October 31, 2022, and our future reports that we may 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) | |||
October 31, 2022 | January 31, 2022 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 1,575,955 | $ 1,534,273 | |
Marketable securities | 3,916,130 | 2,109,888 | |
Trade and other receivables, net | 1,040,468 | 1,242,545 | |
Deferred costs | 171,100 | 152,957 | |
Prepaid expenses and other current assets | 266,622 | 174,402 | |
Total current assets | 6,970,275 | 5,214,065 | |
Property and equipment, net | 1,219,127 | 1,123,075 | |
Operating lease right-of-use assets | 268,110 | 247,808 | |
Deferred costs, noncurrent | 359,624 | 341,259 | |
Acquisition-related intangible assets, net | 326,670 | 391,002 | |
Goodwill | 2,840,044 | 2,840,044 | |
Other assets | 405,937 | 341,252 | |
Total assets | $ 12,389,787 | $ 10,498,505 | |
Liabilities and stockholders' equity | |||
Current liabilities: | |||
Accounts payable | $ 75,803 | $ 55,487 | |
Accrued expenses and other current liabilities | 334,961 | 195,590 | |
Accrued compensation | 406,799 | 402,885 | |
Unearned revenue | 2,815,599 | 3,110,947 | |
Operating lease liabilities | 90,237 | 80,503 | |
Debt, current | — | 1,222,443 | |
Total current liabilities | 3,723,399 | 5,067,855 | |
Debt, noncurrent | 2,974,979 | 617,354 | |
Unearned revenue, noncurrent | 63,736 | 71,533 | |
Operating lease liabilities, noncurrent | 196,078 | 182,456 | |
Other liabilities | 22,487 | 24,225 | |
Total liabilities | 6,980,679 | 5,963,423 | |
Stockholders' equity: | |||
Common stock | 257 | 251 | |
Additional paid-in capital | 8,400,756 | 7,284,174 | |
Treasury stock | (110,382) | (12,467) | |
Accumulated other comprehensive income (loss) | 104,114 | 7,709 | |
Accumulated deficit | (2,985,637) | (2,744,585) | |
Total stockholders' equity | 5,409,108 | 4,535,082 | |
Total liabilities and stockholders' equity | $ 12,389,787 | $ 10,498,505 |
Workday, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) | |||||||
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues: | |||||||
Subscription services | $ 1,432,393 | $ 1,171,517 | $ 4,071,804 | $ 3,317,140 | |||
Professional services | 166,710 | 155,746 | 497,754 | 445,517 | |||
Total revenues | 1,599,103 | 1,327,263 | 4,569,558 | 3,762,657 | |||
Costs and expenses (1): | |||||||
Costs of subscription services | 259,397 | 200,700 | 737,301 | 575,646 | |||
Costs of professional services | 176,396 | 159,024 | 524,398 | 462,652 | |||
Product development | 565,727 | 455,615 | 1,655,071 | 1,341,482 | |||
Sales and marketing | 470,196 | 366,323 | 1,358,198 | 1,050,974 | |||
General and administrative | 153,708 | 121,656 | 427,832 | 347,391 | |||
Total costs and expenses | 1,625,424 | 1,303,318 | 4,702,800 | 3,778,145 | |||
Operating income (loss) | (26,321) | 23,945 | (133,242) | (15,488) | |||
Other income (expense), net | 4,163 | 21,557 | (48,789) | 115,491 | |||
Income (loss) before provision for (benefit from) income taxes | (22,158) | 45,502 | (182,031) | 100,003 | |||
Provision for (benefit from) income taxes | 52,563 | 2,090 | 59,021 | (2,623) | |||
Net income (loss) | $ (74,721) | $ 43,412 | $ (241,052) | $ 102,626 | |||
Net income (loss) per share, basic | $ (0.29) | $ 0.17 | $ (0.95) | $ 0.42 | |||
Net income (loss) per share, diluted | $ (0.29) | $ 0.17 | $ (0.95) | $ 0.40 | |||
Weighted-average shares used to compute net income (loss) per share, basic | 255,753 | 248,468 | 253,975 | 246,348 | |||
Weighted-average shares used to compute net income (loss) per share, diluted | 255,753 | 254,760 | 253,975 | 253,917 |
(1) Costs and expenses include share-based compensation expenses as follows: | |||||||
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Costs of subscription services | $ 25,598 | $ 21,340 | $ 76,918 | $ 62,478 | |||
Costs of professional services | 26,577 | 29,105 | 79,999 | 83,331 | |||
Product development | 149,279 | 135,591 | 449,764 | 395,345 | |||
Sales and marketing | 61,186 | 55,645 | 180,233 | 158,121 | |||
General and administrative | 51,556 | 39,437 | 146,795 | 111,197 | |||
Total share-based compensation expenses | $ 314,196 | $ 281,118 | $ 933,709 | $ 810,472 |
Workday, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) | |||||||
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ (74,721) | $ 43,412 | $ (241,052) | $ 102,626 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 91,854 | 87,127 | 274,395 | 254,973 | |||
Share-based compensation expenses | 314,196 | 278,995 | 933,709 | 808,349 | |||
Amortization of deferred costs | 44,830 | 35,482 | 126,515 | 100,844 | |||
Non-cash lease expense | 23,359 | 21,407 | 68,318 | 64,706 | |||
(Gains) losses on investments | (3,833) | (25,222) | 20,746 | (125,479) | |||
Other | 3,251 | 4,408 | 15,373 | (4,225) | |||
Changes in operating assets and liabilities, net of business combinations: | |||||||
Trade and other receivables, net | 61,885 | 6,649 | 200,008 | 171,257 | |||
Deferred costs | (56,552) | (50,654) | (163,023) | (129,758) | |||
Prepaid expenses and other assets | 2,435 | 18,050 | (31,447) | (21,047) | |||
Accounts payable | 18,116 | (12,007) | 20,884 | (4,117) | |||
Accrued expenses and other liabilities | 47,061 | 2,498 | 41,253 | (24,109) | |||
Unearned revenue | (63,213) | (25,491) | (302,936) | (158,465) | |||
Net cash provided by (used in) operating activities | 408,668 | 384,654 | 962,743 | 1,035,555 | |||
Cash flows from investing activities: | |||||||
Purchases of marketable securities | (2,310,915) | (722,275) | (5,651,005) | (2,317,040) | |||
Maturities of marketable securities | 2,181,147 | 674,246 | 3,767,509 | 2,303,478 | |||
Sales of marketable securities | 19,988 | — | 53,355 | 27,286 | |||
Owned real estate projects | (181) | (4) | (446) | (171,498) | |||
Capital expenditures, excluding owned real estate projects | (58,665) | (33,335) | (286,013) | (190,912) | |||
Business combinations, net of cash acquired | — | (60,645) | — | (739,865) | |||
Purchase of other intangible assets | (700) | — | (700) | — | |||
Purchases of non-marketable equity and other investments | (3,250) | (26,720) | (20,173) | (84,526) | |||
Sales and maturities of non-marketable equity and other investments | 4,513 | 1,874 | 11,674 | 5,169 | |||
Other | — | — | — | 1 | |||
Net cash provided by (used in) investing activities | (168,063) | (166,859) | (2,125,799) | (1,167,907) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of debt, net of debt discount | — | — | 2,978,077 | — | |||
Repayments and extinguishment of debt | (1,149,622) | (9,384) | (1,843,605) | (28,205) | |||
Payments for debt issuance costs | — | — | (7,220) | — | |||
Proceeds from issuance of common stock from employee equity plans, net of taxes paid for shares withheld | 710 | 1,894 | 85,002 | 76,381 | |||
Other | (161) | (33) | (538) | (409) | |||
Net cash provided by (used in) financing activities | (1,149,073) | (7,523) | 1,211,716 | 47,767 | |||
Effect of exchange rate changes | (920) | 50 | (1,750) | (85) | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (909,388) | 210,322 | 46,910 | (84,670) | |||
Cash, cash equivalents, and restricted cash at the beginning of period | 2,497,043 | 1,092,929 | 1,540,745 | 1,387,921 | |||
Cash, cash equivalents, and restricted cash at the end of period | $ 1,587,655 | $ 1,303,251 | $ 1,587,655 | $ 1,303,251 |
Workday, Inc. Reconciliation of GAAP to Non-GAAP Data Three Months Ended October 31, 2022 (in thousands, except percentages and per share data) (unaudited) | |||||||||
GAAP | Share-Based | Other | Income Tax | Non-GAAP | |||||
Costs and expenses: | |||||||||
Costs of subscription services | $ 259,397 | $ (25,598) | $ (14,100) | $ — | $ 219,699 | ||||
Costs of professional services | 176,396 | (26,577) | (623) | — | 149,196 | ||||
Product development | 565,727 | (149,279) | (1,899) | — | 414,549 | ||||
Sales and marketing | 470,196 | (61,186) | (9,206) | — | 399,804 | ||||
General and administrative | 153,708 | (51,556) | (531) | — | 101,621 | ||||
Operating income (loss) | (26,321) | 314,196 | 26,359 | — | 314,234 | ||||
Operating margin | (1.6) % | 19.6 % | 1.7 % | — % | 19.7 % | ||||
Other income (expense), net | 4,163 | — | — | — | 4,163 | ||||
Income (loss) before provision for (benefit from) income taxes | (22,158) | 314,196 | 26,359 | — | 318,397 | ||||
Provision for (benefit from) income taxes | 52,563 | — | — | 7,933 | 60,496 | ||||
Net income (loss) | $ (74,721) | $ 314,196 | $ 26,359 | $ (7,933) | $ 257,901 | ||||
Net income (loss) per share, basic (1) | $ (0.29) | $ 1.23 | $ 0.10 | $ (0.03) | $ 1.01 | ||||
Net income (loss) per share, diluted (1) | $ (0.29) | $ 1.23 | $ 0.10 | $ (0.05) | $ 0.99 |
(1) | GAAP net loss per share is calculated based upon 255,753 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 255,753 basic and 261,777 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $0.9 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 $21.2 million and employer payroll tax-related items on employee stock transactions of $5.2 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 is 19%. Included in the per share amount is a dilution impact of $0.02 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 Three Months Ended October 31, 2021 (in thousands, except percentages and per share data) (unaudited) | |||||||||
GAAP | Share-Based | Other | Income Tax | Non-GAAP | |||||
Costs and expenses: | |||||||||
Costs of subscription services | $ 200,700 | $ (21,340) | $ (12,859) | $ — | $ 166,501 | ||||
Costs of professional services | 159,024 | (29,105) | (1,043) | — | 128,876 | ||||
Product development | 455,615 | (135,591) | (2,870) | — | 317,154 | ||||
Sales and marketing | 366,323 | (55,645) | (9,642) | — | 301,036 | ||||
General and administrative | 121,656 | (39,437) | (772) | — | 81,447 | ||||
Operating income (loss) | 23,945 | 281,118 | 27,186 | — | 332,249 | ||||
Operating margin | 1.8 % | 21.2 % | 2.0 % | — % | 25.0 % | ||||
Other income (expense), net | 21,557 | — | — | — | 21,557 | ||||
Income (loss) before provision for (benefit from) income taxes | 45,502 | 281,118 | 27,186 | — | 353,806 | ||||
Provision for (benefit from) income taxes | 2,090 | — | — | 65,133 | 67,223 | ||||
Net income (loss) | $ 43,412 | $ 281,118 | $ 27,186 | $ (65,133) | $ 286,583 | ||||
Net income (loss) per share, basic (1) | $ 0.17 | $ 1.13 | $ 0.11 | $ (0.26) | $ 1.15 | ||||
Net income (loss) per share, diluted (1) | $ 0.17 | $ 1.10 | $ 0.11 | $ (0.28) | $ 1.10 |
(1) | GAAP net income per share is calculated based upon 248,468 basic and 254,760 diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 248,468 basic and 262,577 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 $19.7 million and employer payroll tax-related items on employee stock transactions of $7.5 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 projected tax rate was 19%. Included in the per share amount is a dilution impact of $0.02 from the conversion of GAAP diluted net income per share to non-GAAP diluted net income per share. |
Workday, Inc. Reconciliation of GAAP to Non-GAAP Data Nine Months Ended October 31, 2022 (in thousands, except percentages and per share data) (unaudited) | |||||||||
GAAP | Share-Based | Other | Income Tax | Non-GAAP | |||||
Costs and expenses: | |||||||||
Costs of subscription services | $ 737,301 | $ (76,918) | $ (45,022) | $ — | $ 615,361 | ||||
Costs of professional services | 524,398 | (79,999) | (5,297) | — | 439,102 | ||||
Product development | 1,655,071 | (449,764) | (17,146) | — | 1,188,161 | ||||
Sales and marketing | 1,358,198 | (180,233) | (32,640) | — | 1,145,325 | ||||
General and administrative | 427,832 | (146,795) | (3,772) | — | 277,265 | ||||
Operating income (loss) | (133,242) | 933,709 | 103,877 | — | 904,344 | ||||
Operating margin | (2.9) % | 20.4 % | 2.3 % | — % | 19.8 % | ||||
Other income (expense), net | (48,789) | — | — | — | (48,789) | ||||
Income (loss) before provision for (benefit from) income taxes | (182,031) | 933,709 | 103,877 | — | 855,555 | ||||
Provision for (benefit from) income taxes | 59,021 | — | — | 103,534 | 162,555 | ||||
Net income (loss) | $ (241,052) | $ 933,709 | $ 103,877 | $ (103,534) | $ 693,000 | ||||
Net income (loss) per share, basic (1) | $ (0.95) | $ 3.68 | $ 0.41 | $ (0.41) | $ 2.73 | ||||
Net income (loss) per share, diluted (1) | $ (0.95) | $ 3.68 | $ 0.41 | $ (0.49) | $ 2.65 |
(1) | GAAP net loss per share is calculated based upon 253,975 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 253,975 basic and 262,742 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 $64.3 million and employer payroll tax-related items on employee stock transactions of $39.5 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 2023, the non-GAAP tax rate is 19%. Included in the per share amount is a dilution impact of $0.08 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 Nine Months Ended October 31, 2021 (in thousands, except percentages and per share data) (unaudited) | |||||||||
GAAP | Share-Based | Other | Income Tax | Non-GAAP | |||||
Costs and expenses: | |||||||||
Costs of subscription services | $ 575,646 | $ (62,478) | $ (40,195) | $ — | $ 472,973 | ||||
Costs of professional services | 462,652 | (83,331) | (9,211) | — | 370,110 | ||||
Product development | 1,341,482 | (395,345) | (25,573) | — | 920,564 | ||||
Sales and marketing | 1,050,974 | (158,121) | (36,512) | — | 856,341 | ||||
General and administrative | 347,391 | (111,197) | (6,091) | — | 230,103 | ||||
Operating income (loss) | (15,488) | 810,472 | 117,582 | — | 912,566 | ||||
Operating margin | (0.4) % | 21.5 % | 3.2 % | — % | 24.3 % | ||||
Other income (expense), net | 115,491 | — | — | — | 115,491 | ||||
Income (loss) before provision for (benefit from) income taxes | 100,003 | 810,472 | 117,582 | — | 1,028,057 | ||||
Provision for (benefit from) income taxes | (2,623) | — | — | 197,954 | 195,331 | ||||
Net income (loss) | $ 102,626 | $ 810,472 | $ 117,582 | $ (197,954) | $ 832,726 | ||||
Net income (loss) per share, basic (1) | $ 0.42 | $ 3.29 | $ 0.48 | $ (0.81) | $ 3.38 | ||||
Net income (loss) per share, diluted (1) | $ 0.40 | $ 3.19 | $ 0.46 | $ (0.85) | $ 3.20 |
(1) | GAAP net income per share is calculated based upon 246,348 basic and 253,917 diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 246,348 basic and 261,734 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $3.9 million for after-tax interest expense on our convertible senior notes in accordance with the if-converted method. |
(2) | Other operating expenses include employer payroll tax-related items on employee stock transactions of $60.1 million and amortization of acquisition-related intangible assets of $57.5 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 $0.07 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:
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 income and 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.