Workday ((WDAY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Workday’s recent earnings call reveals a positive sentiment, underscored by strong growth in subscription revenue, core financial wins, AI advancements, and international expansion. Despite challenges such as restructuring needs and macroeconomic headwinds in EMEA, the company’s strategic progress in AI and partnerships suggests a promising future.
Strong Q4 Performance
Workday reported a robust performance in Q4, with a 16% growth in subscription revenue and a 26% non-GAAP operating margin. The total revenue for the quarter reached $2.21 billion, marking a 15% increase. For the full fiscal year 2025, subscription revenue was $7.718 billion, reflecting a 17% growth.
Record Number of Core Financial Wins
The company achieved a record number of core financial wins in Q4, particularly in the financial services and healthcare sectors, which significantly contributed to its momentum.
AI Monetization and Growth
AI played a crucial role in Workday’s growth, with AI SKUs involved in over 30% of customer expansions. Notably, Extend Pro and Recruiting Agent saw their ACV double from Q3 to Q4. The introduction of the Agent System of Record and new role-based agents marks a significant advancement in AI.
International Expansion
Despite facing macroeconomic challenges, Workday’s international revenue grew by 16% in Q4. The UK and Germany showed strong performance, and there were notable new wins in the APAC region.
Successful Partner Ecosystem Growth
Workday’s partner ecosystem continues to thrive, with more than 15% of net new ACV in Q4 sourced through partners, up from over 10% in the previous quarter.
Future Outlook and Guidance
Looking ahead, Workday projects fiscal 2026 subscription revenue to reach approximately $8.8 billion, a 14% increase. The company expects a non-GAAP operating margin of around 28% and aims for mid-teens subscription revenue growth in the medium term.
Restructuring and Associated Costs
Workday announced a restructuring plan that will reduce its workforce by about 8%, with an anticipated restructuring expense of approximately $180 million in Q1 FY ’26.
Macro Challenges in EMEA
The company continues to face macroeconomic headwinds in EMEA, which have impacted growth despite strong performances in individual countries.
In summary, Workday’s earnings call highlights a strong performance and a positive outlook, driven by strategic advancements in AI, international expansion, and partnerships. While challenges remain, particularly in EMEA, the company’s forward-looking guidance suggests continued growth and resilience.