Workday, Inc. stock research
FY2024 Q3
Workday (WDAY) Gross Margin — Quarter Ended Oct 31, 2023
Revenue and gross profit increased while cost of revenue decreased, resulting in a higher gross margin compared to both the prior quarter and the same quarter last year. The relationship indicates that cost of revenue grew at a slower pace than revenue, allowing gross profit to expand more than proportionally.
Gross margin takeaway
Quarter ended Oct 31, 2023 · FY2024 Q3
Revenue and gross profit increased while cost of revenue decreased, resulting in a higher gross margin compared to both the prior quarter and the same quarter last year. The relationship indicates that cost of revenue grew at a slower pace than revenue, allowing gross profit to expand more than proportionally.
- The most observable driver of margin improvement is the absolute decrease in cost of revenue from the prior quarter, even as revenue rose. This shift in the cost structure directly boosted the gross margin percentage.
- Compared to the prior quarter, revenue was higher, gross profit was higher, cost of revenue was lower, and gross margin improved. Relative to the same quarter one year earlier, all metrics were higher except cost of revenue, which was slightly lower, leading to a stronger gross margin.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
77.0%
Gross profit
$1.4B
Revenue
$1.9B
Cost of revenue
$429.0M
Quarter-over-quarter change
+2.1 pts
Year-over-year change
+4.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jan 31, 2023 | $1.6B | $1.2B | $488.3M | 70.3% |
| Apr 30, 2023 | $1.7B | $1.3B | $417.0M | 75.2% |
| Jul 31, 2023 | $1.8B | $1.3B | $448.0M | 74.9% |
| Oct 31, 2023 | $1.9B | $1.4B | $429.0M | 77.0% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jul 31, 2023
+2.1 pts
Year-over-year change
Oct 31, 2022
+4.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most observable driver of margin improvement is the absolute decrease in cost of revenue from the prior quarter, even as revenue rose. This shift in the cost structure directly boosted the gross margin percentage.
Compared to the prior quarter, revenue was higher, gross profit was higher, cost of revenue was lower, and gross margin improved. Relative to the same quarter one year earlier, all metrics were higher except cost of revenue, which was slightly lower, leading to a stronger gross margin.
Monitor the trajectory of cost of revenue, as its absolute level and trend relative to revenue will determine whether gross margin can sustain its current level.