Workday Inc. (NASDAQ:WDAY) announced stronger-than-expected fiscal first-quarter 2019 results late last week, including continued broad-based sales momentum for its finance and human resources platforms. As such, the human capital management (HCM) solutions leader also modestly increased its full-year guidance. 

But shares also fell around 3.6% on Friday in response -- though they're still up nearly 25% over the past year. Let's dig in to get a better idea of how Workday kicked off the new fiscal year, and what investors should be watching in the quarters ahead.

Workday software running on multiple devices including a laptop, smartphones, and tablet computer.


Workday results: The raw numbers


Fiscal Q1 2019*

Fiscal Q1 2018

Year-Over-Year Growth


$618.6 million

$479.9 million


GAAP net income (loss)

($74.4 million)

($64.0 million)


GAAP earnings (loss) per share





What happened with Workday this quarter?

  • The top line was well above the guidance provided last quarter, which called for revenue of $607 million to $609 million.
  • Subscription revenue grew 30.6% to $522.1 million, also above guidance for roughly 29% growth.
  • Professional services revenue increased 20.4% to $96.5 million.
  • On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation, Workday's net income was $78.9 million, or $0.33 per share, up from $0.29 per share in the same year-ago period.
  • Workday generated cash flow from operations of $184.2 million and free cash flow of $135.4 million.
  • Workday HCM now has over 2,200 enterprise customers (up from 2,100 last quarter), with notable new customers including Inter IKEA Services, Unisys, and a Fortune 100 pharmaceutical company.
  • New Workday Financial Management customers include Sprouts Farmers Markets, Rivera, and Race Truck Petroleum. 
  • Workday maintained its 98% customer satisfaction rate.

What management had to say

Workday co-founder and CEO Aneel Bhusri said:

We had a great first quarter driven by strong adoption and notable deployments of our finance and HR applications across customer sizes, geographies, and industries. As we look toward the rest of FY19 and beyond, we expect continued momentum for our growing suite of products, as we stay relentlessly focused on innovation, customer satisfaction, and our commitment to culture as we further our position as a great place to work globally.

Looking forward

For the current second quarter of fiscal 2019, Workday anticipates revenue in the range of $661 million to $663 million -- above consensus estimates for $654.4 million -- including subscription revenue of $557 million to $559 million.

As such, Workday now expects full fiscal-year 2019 revenue of $2.680 billion to $2.695 billion (an increase of $10 million from both ends of its previous guidance), assuming subscription revenue of $2.275 billion to $2.290 billion.

Of course, that's a relatively modest boost that essentially adjusts for Workday's relative outperformance in the first quarter. But there was little not to like about this beat and raise to start its new fiscal year. And I maintain that investors should be more than pleased with Workday's performance.