Enterprise software company Workday (NASDAQ: WDAY) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 12.6% year on year to $2.35 billion. Its non-GAAP profit of $2.21 per share was 4.5% above analysts’ consensus estimates.

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"Workday delivered another solid quarter, driven by our AI and platform innovation, international momentum, and an ecosystem that continues to grow alongside us," said Carl Eschenbach, CEO, Workday.

Company Overview

Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Workday grew its sales at a 16.4% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.

This quarter, Workday’s year-on-year revenue growth was 12.6%, and its $2.35 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 12.9% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and indicates the market sees some success for its newer products and services.

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Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Workday’s billings punched in at $2.39 billion in Q2, and over the last four quarters, its growth slightly outpaced the sector as it averaged 13.7% year-on-year increases. This performance aligned with its total sales growth and shows the company is successfully converting sales into cash. Its growth also enhances liquidity and provides a solid foundation for future investments.

Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Workday does a decent job acquiring new customers, and its CAC payback period checked in at 47.3 months this quarter. The company’s relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments.

Key Takeaways from Workday’s Q2 Results

We struggled to find many positives in these results. While earnings came in ahead of expectations, revenue was roughly in line. Overall, this quarter could have been better. The stock remained flat at $225.87 immediately following the results.

Is Workday an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.