Workday delivered strong Q1 results with subscription revenue growing 23% YoY to $1.27B, demonstrating resilience in enterprise spending. Operating margins expanded 450bps to 21.6% through improved sales efficiency and operating leverage. The company maintained 95%+ retention rates while adding 80+ core HCM customers, including notable enterprise wins. Management raised FY23 subscription revenue guidance to $5.537-5.557B, reflecting confidence in pipeline despite macro uncertainty.
Key Risks
Elongating sales cycles in certain verticals due to macro uncertainty
Currency headwinds impacting reported growth by ~200bps
Increasing competition in financial management solutions
Investment requirements for international expansion
Key Opportunities
International market expansion (currently 25% of revenue)
Medium enterprise segment growth acceleration
Financial management solution adoption
Industry-specific solutions and ML capabilities
Bottom Line
Workday's Q1 results demonstrate the company's ability to execute in a challenging environment while maintaining strong growth and improving profitability. The successful expansion beyond core HCM into financial management, combined with international growth and operational efficiency gains, positions the company well for sustained growth. Key metrics to watch include financial management adoption rates, international expansion progress, and operating margin trajectory. The company's platform strategy and focus on intelligent automation provide meaningful differentiation in an increasingly competitive market.