WDAY - Earnings call transcript Q3 2021

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Operator

Welcome to Workday's Third Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session towards the end of the call. And with that, I would now hand it over to Justin Furby, Vice President of Investor Relations. Please go ahead sir.

Justin Furby

operator. you Thank third Workday's XXXX conference earnings Welcome quarter call. to fiscal

our we On President and Bogan, Development. Pete have of Chano Vice call, our and Chairman; Executive Schlampp, Fernandez, Tom our Bhusri Product Sisco, Aneel the President and Robynne our CFO; Vice Co-CEO;

remarks, prepared take questions. Following will we

Our market simultaneously is webcast. issued posted call on of was press this being close our is release after and website where

those emphasize most economic Securities are that call, Before our cause COVID-XX to the on impacts file some release ongoing such customer our financial risks, and pandemic actual on documents matters. we want additional set are to other that related get information have this guidance, Exchange risk from forth started, differ results, These and statements and and and results statements subject uncertainties, with we the particularly information risks, to our those Form today Commission, quarterly press include based statements. including the on we and the on may in materially of business applications, we Please of to and regarding uncertainties operations, statements of as demand, forward-looking our assumptions, assumptions and our report factors on recent the XX-Q the for to refer conditions. global including

measures from performance. non-GAAP measures, in believe are not or results. we These which useful GAAP and a be during addition, financial addition substitute measures will call, for today's of supplemental non-GAAP In as considered isolation to Workday's discuss we as in should

selected Relations the for of customers' Also, the includes and Investor of link. be our is will press the a page monthly. replay our this GAAP with non-GAAP these the website. The next our Investor additional results, Relations You XX list website measures, of customers disclosures updated regarding on can in call earnings website page our and reconciliations comparable on release under of company webcast days including find available

be results Our fourth fiscal all January Aneel. it the our to comparable comparisons on Unless quarter let With XXXX. call period hand our in me otherwise XXth, quiet XXXX. for period begins to over stated, will that, financial this of

Aneel Bhusri

XXXX Thank Workday's I We by us you, regarding your good well. of the health call. fiscal encouraged all hope today to year Justin next welcome families joining conference year. are you news are third are earnings early market quarter at to in and recent vaccines coming and Workday doing

these safety challenges ourselves we continue navigate post-pandemic future. proud the know a fact and of persist can't we find this particularly we as pandemic also health that our of customers, who We and lose of important the uncertain that people despite in all our is support the optimistic phase very of sight about very remain most times. and I'm difficult Workday's to team

of our the they event challenges dealing from excellent and share their for customers feedback our on I together Microsoft October, a Serena likes a we a are for the world Changing As our and And today. we community many for Friedman Adena event the and friends to thoughts Witherspoon, of of NASDAQ, Nadella joining and including was takeaways. to in economic, There's That's different collaboration. Conversations of health, on gathered the of whom myriad We of requires a David We Indeed, some in challenges Cameron a why facing Trevor leaders and Cisco, virtual talks my change-makers social simultaneously. CEOs, of called Noah. know, uncertainty right event Reese experiencing lot Robbins and with fellow we inspiring prospects, and leadership received mentioned now. business are excited World. have heard conversation that global Williams, Satya important personally customer how Chuck with we're crisis of

that address as Tecnologias quarter, Bank, of notable cloud and in To view notable market heard strong businesses diversity touched the lean customers to first customers Fortune of simply that of report pressing digital to we Workday, navigate also any not with additions organizations helping underpinning backdrop, in facing our need into that technology solutions power during solutions leaders that a cloud to Workday of a at call in others be company, Novartis, all of society everyone, HCM CTBC And a QX the the including for telecommunications event, our Mexico theme I’m and workforce. conversations that a economy from have using that is ingredient this digital few. that increasingly we organizations to organizations at Companies to for going common there are solid built this most forward was center for end, rescaling view the their results. as advocates since this a part opportunities just Workday customer flexible a these needs this entering jump commitment perspective, we the Workday dynamic the quarter must-have digital our in to is XXX have inclusion a opt of are and With out With we the strong and and for now accelerate of First, suited these win people digitally accelerate the pleased to focus while for to Many new biggest uniquely to change realize had Workday believe that the businesses cannot solutions. moment. and issues serving Rappi, delivered times our on as business our the DraftKings, the acceleration move a that drive global foundation offer times. on to QX earlier natively their solutions the conversations increased and look growing foundation a it’s year. today. forward, in that and environment. creation that to the let’s be force a through to of also transition. with the At the another continue a Indeed, driving our our time to Workday

is HCM with this million including General Electric. cloud strategic quarter million X.X across now include employees. and notable we Also who Walmart, X.X We UPS Workday Other its also believe HCM partner notable what worldwide Accenture went its multi-tenant and HCM go-lives live deployment. several than largest more employees globally now our celebrated the is live is go-lives serving and QX global

We finance. across with Central Fifth Management. pleased the Florida, Turning our CEO, chain include Alex we’ve with again Times many the office of financials saw management is spend including highlight being Fortune saw grocery the customers accounts re-branded Prism Scout University we Bon at have Scout solid Co-Founder reached share York have Amongst demand and portfolio distributor, the and Workday happy Chief Workday Health included quarter XXX,XXX Spend store Sourcing, part Extendicare. Financial a Planning, and have expanding suite Progressive the XXX go-lives core once as I’m several State to would a New our The Adaptive continued like also I’m financial a and and Mercy management Bank, Management, biopharmaceutical of that support CFO that to to in organization to food The RFP large Yakubovich. which big of momentum core and a wins is Workday quarter, Third Insurance. Officer, Strategic for for integrated our Washington, record Analytics a applications over chosen QX into of of pillar I Workday products the that that by say and X,XXX Workday Secours we Procurement now wins and employees. company, had team led fully that

Turning talent we matching relevant enabling Talent which September work to update with growth skills-based delivered availability to our of connect in people product, Workday employers and opportunities. major latest Marketplace included with

continued capabilities, announced diverse also continue availability in despite in closing, our the and workforce two insights drive we extremely push We as inclusion, I employees, VIBE, organizations forward CFO. investments challenging equity more VIBE solutions change VIBE belonging customers, who to milestones In times. on our world. planning these would the to the with intelligent critical of provide Central partners Accounting for positive and a And that’s with thank building Index; Workday as us Office and and to lastly, Center announced both value, or focus the our of like

Workday As ahead look I our ecosystem I’ll friend this for and be Over pandemic, and the couldn’t turn higher. to With that, optimism Co-CEO, Fernandez. my to other to side of my you, Chano. Chano over it

Chano Fernandez

Thank you, Aneel.

broader the once context thank person. with uncertainty. closing again and providing building our customers of do I and performance get field solid anxious of focused it teams progress we our our I’m made way. workmates would I in meantime, this back ongoing safe pleased in on Before year, all are virtual for know have in fully deals, services implementing prospects are that especially front we customers, in to pipeline, QX. maturing so the is in another supporting in like continued update, to the the a and to and my when But successfully a

medium important U.S. role, several in fins we a digital Center HCM Fortune including We and For push our playing the global perspective, and core HCM forward strategic HR their as Bank, a were and teams. the and our regions an XXX The DACH another third geographical Accounting education wins row, saw financials, with conversion had And quarter. second quarter, enterprise the fin, in multiple also quarter strong had from Third exceed Fifth government expectations organizations transformations. with XXXX in once again to and platform rates notable wins a standouts. the win, continued

We the has installed our are into am base. with success now go-to-market very a within producing. I been few it push years our focused pleased

generated core and in planning, strategic by row, products, Prism our financials Analytics, strength growth XX% Workday across sourcing. bookings, driven fins, base quarter learning in installed fourth the including For team plus new and ACV a workforce

including Extend, and performance. And prospects. long-term although are Analytics People Newer Center, their the we early, about products to contributed excited Accounting Workday

going Our see comparisons significant opportunity we to tougher for to QX and we meaningful come. But installed-based from sales winning get team years to growth starting XX%-plus persist forward. a expect don’t a many growth drive still in

head QX, we remain cautiously As we into optimistic.

the We continue new impacts to business, near-term industries. particularly net face to certain in

So, offset are by improvements encouraged we we team partially this store-base have our help in strength and seen a the pipeline. in

over to We do prepare believe on that and time side With CFO, for is I of investment. sales pace investing and now because COVID the are to on other capitalize we next it a meaningful to and Sisco. Robynne. the opportunity that, Over would we As now our you, the we President so marketing turn we to see our increasing are of year, opportunity. Robynne

Robynne Sisco

Chano. Thanks

net end was Subscription revenue basis. billion. $X.XXX was revenue revenue up $XXX helped business noted, partially offset Professional pursue executed growth as million, companies which a and the outperformance than driven transformations $XXX $XXX many and services environment. As of was as and million, outperformance total. we year-over-year. the remained and XX% XX% linearity bookings results of the quarter billion over by million strong Aneel favorable our XX% total outside uncertain of XX% third U.S. year-over-year, to driving strong third strength third the finance well retention net continued quarter The HR driven on revenue basis with was new better team over was the and expected Subscription XXX% in both the Revenue Chano the in backlog at the by strategic in headwinds. quarter, $X.XX on a was gross despite installed-base

do in increase backlog not $X.XX In XX Subscription addition, year-over-year be backlog the XX%. a of contract expect recognized next we within to will QX. duration, revenue billion, persist was months benefited growth that which in from

operating was $XXX operating of operating was quarter XX%. and more margin savings, for hiring of third $XXX growth resulting a non-GAAP million, outperformance income topline margin million a Our flow back-end operating expectations. combination continued versus QX COVID-related in of was loaded non-GAAP driven The overachievement; XX%. by expense the cash

though cash flexible As on require hit exited no and a to it work subscription revenue payment impact near-term We hardest to headwind access which billion the that continue an we unearned revolving and customers flow revenue and subscription have a to has our terms, with reminder, our quarter more remains line credit. of of through our with unused backlog, $X.X $XXX marketable securities or million third long-term economics. revenue, additional customer cash

the the XX,XXX total workforce employees. Our approximately quarter at end of was

growth. primarily in into invest quarter marketing to and hiring areas, up FY future R&D our fourth expect but XXXX and as the all We and across in sales we for pick

challenging pleased ahead execution QX, extremely We’re and in the longer with results and term environment we to given our our see growth significant support aspirations. opportunity particularly

market. the incorporate our continues in to turning Now, we outperformance the guidance, see to in which near-term QX uncertainty despite

XXXX updated Our guidance FY as is follows.

XX% We be $X.XXX billion to a are to subscription growth. billion XXXX raising range our revenue or $X.XXX the FY estimate in of

We be million XX% to QX $XXX expect million, subscription $XXX to our revenue growth.

$XXX expect million QX. professional in to continue services fiscal to $XXX be and We in million XXXX revenue

we QX of non-GAAP be growth from approximately XX% QX, we very hiring For both a investments. to of expect we last QX backlog face strong subscription We to and estimate a and XX% difficult as brand operating pace as revenue XX% marketing year. our to expect margin our comparison increase

year full margin operating the GAAP the points year. and is non-GAAP now quarter both percentage XX%. For we a fourth non-GAAP expected XX full than margin to margin in expect The lower operating by be of approximately the the

unchanged capital at XXXX guidance FY million. investments remains Our $XXX

focused important due provide very the guidance and QX. uncertainty We in particularly that subscription headwinds because some we bookings. to pipeline at near-term. In us am our operator closing, are it the this all long-term demonstrated specifically Operator? will over we And higher expect near-term remains a COVID weighing and have our remains in inherent on to Investing helping that areas, have to be mind, growth. normal, customers through to incredibly turn that of we sales, allowing for revenue With are product on hiring growth however, these than in I’ll our these net targeted priority From to new turbulent investments Keep results get but remained year impacted stability XXXX, FY begin our evident all that, workmates the across of focus still have standpoint, seen model, for our number margin proud marketing underlying all to in the year our pace subscription recent in I plan us after while growth however, scalability remains on the strong who one, our have our a in environment, accelerating deliver planning and next Q&A. increase to we year’s XXXX process the with model. during times. more given FY fully we headwinds in

Operator

we'll of this from a Evercore ISI. Instructions] be question-and-answer Materne comes question Our time, with Kirk session. At the first conducting [Operator line

question. You your may proceed with

Kirk Materne

Chano your and good I mentioned much the bookings very Thanks congratulations you on is you of feel kind about and guys pipeline quarter. better, was of, sort the curious, build, outlook Aneel getting definitely the conversations upbeat, investments. are bit your a people little meaning investments today. still But started decade-long long-term, normal to not more on making when get technology, about just making things are they're

in on needs kind of it front? what up, side that need maybe are think So, happen about to the another I about, get curious meaning blazing like, of sort talking build you what to back people kind just how was hey, guns to to that is months quarter, we know months, confidence to you to in to six just just you full on needs pick curious a net of, what of Thanks. kind think that so you three happen pipeline about do the new And versus the feel ago? starts

Aneel Bhusri

So, customers like, we And of similar few frankly hospitality the a pre-pandemic a normal. that companies, depends is for do getting that hard normal, indeed probably back side, platform figured were seems pandemic, but state just weather There they're I but by but to people very there'll level and impacted really on to is the and being on it work even on we're I at those possible, to the in we industry and on I they're how you're are think the to though really it the to. of sidelines. transportation, are comment back in have are it way to part there's are the whether pandemic. the much some sectors to we the be And then COVID are a a and talking what or in trying future here digital storm normal worst in is the know time back focused or they very get out get who first outliers they're to acceleration that think as which companies still that can them, world tech of retailers, getting number best having look as to of trying to make couple there, conversations

Kirk Materne

I second if Chano maybe a get then And Go -- one ahead, follow-on. sorry.

Aneel Bhusri

I was want you going to Chano, add say to anything?

Chano Fernandez

I that's think No, summarized it well.

relative from it's impact. we're to pandemic. the of having the a think I while see a And improvements continue perspective, we newer to of to starting see early, positive pipeline the some products start

pipeline. the good looking terms quite and with feeling forward. remain of balanced to and things we're at But, maturity positively pipeline and course, the we going it's in what's -- have geographies. products this of happen of of will about wave are QX well, And also COVID second in across we So, what optimistic how moving

Aneel Bhusri

one some in add could share There I view. don't just I about slowdown that the If office; been other have point that back there's though, talked how companies comment, been Kirk. of

legacy were you're are are revenue people for us definitely faster just is planning I pandemic, if being of get I saying, companies like, a and want coming, off celebrated off where on there of us, getting to most so their are that think think people by product legacy for get those actually platforms the I think than off I your really anything got and before. provider, where lines what even they to

Kirk Materne

you're function a just product ask around it's just quick just see maybe Chano, you product any that you having a geographies big there's that anything and comments, could or front? stands come I particular areas more the just one hiring and/or not opportunity lines realize but if either could to and/or two follow-up to geographies that one if -- expand on that sales And out helpful. I of your for any, enough up, bandwidth, everywhere, there where I of That's going surf are was wondering sales

Chano Fernandez

investments, including is Kirk, our were moving areas a and ME then growth well, some around in more as rest government. number the of markets, efforts some push making like We're world with of base of versus vertical countries, and store newer forward the within marketing markets of federal to in enterprise, the help sales areas our other medium the financials

script as we my I bit go-to-market across time So, it's clearly to perspective. so. a the board, but do the right, in now from think, said is the And that

for of on year basically maybe and investments. after, kind strengthen pipeline the our we next year So, capitalize those

Kirk Materne

Thank great. Okay, all. you

Operator

the next from comes Our question Mark line JPMorgan. with of Murphy

proceed may question. your with You

Mark Murphy

remote to planning remotely? thank or Yes, year made, more all my the a it see pandemic, the companies of been financial the think add words, workforces it need I'll been curious congrats. the side? more on you and acute, to that you more because response two, look the finance or Or is you reskilling? because just back tailwind I'm pain and where Aneel, last cycles will think you In other do side to have when close we on side the more adjust do a and the the has larger books HCM for greater you HR do the side on a on compress it in on have business the to comment of

Aneel Bhusri

think I different differently to areas. play going for it's product out the

now. engagement HR, workforces worried everybody right for and employee about is So, remote

pressure we've all think quarter continued world finance, Fortune putting times those pandemic, as got system, plans but say I've we'll planning gone of environments agile, move I to but the a the the selling work get one this don't remotely. know projects area And that side I I continue very costs with not core pandemic flexible on new say their a probably the post-pandemic. when a big that of piece is lot of think come into I fluid, trying area so on are there every challenging is in got a and people until is into planning of see continues planning that HR. under at environment and financial acceptance are think in their because get legacy supply been strong people of seeing are think have and getting And procurement I this would on of driving but I accounting being come we've books since need we're finance so the to XXX through starting pop But new momentum we as lot believe much actually different financials. I've up close to of technology had such pressure kinds they'll because how our with scout environment, and off handle we're to and a for I idea that, a systems rid post-pandemic area want it's do able that some out is a And chains an strong get then started, a basis. that another and are bigger project I on company, And post-pandemic. I cycle, strong we very to regular people so. it's that a be going the to to held many that support excellent think -- to finance, during of

Mark Murphy

we to waterfalls XX% backlog in that'd the year exiting along in could of feel of you of about XXXX a the guidance. right, growth lines? like kind us year. thinking Robynne, that just kind I the just can the is maybe out year bookings from sneak that's reasonable on that level Is high a how QX, at point it I think into growth about would be number, fiscal mean to arithmetically, guidance that there if And understanding say with revenue very starting this subscription off dissuade perhaps big one you're pretty the into for quick given XX% anything those path glide great. I on Okay, holding subscription a

Robynne Sisco

tough the revenue how XXXX particularly to is. considers tough before, and bookings, after mentioned through a accelerated growth talk I we that new QX, QX backlog The obviously, still in just better would see environment new net where say FYA And position a where environment both net subscription guidance, we of business uncertain as that, from given I about last Mark, be compare headwinds. compare face backlog year we Well, we get we'll growth.

on really QX, that So, better to have view next execute you and we'll continuing our through a we'll well in XXXX then. right focused with we're FY call on now share earning

Mark Murphy

Great. Thank you.

Operator

the Our next Canaccord. comes Hynes question from David of line with

You your may proceed question. with

David Hynes

Yes. Hey, thanks, guys.

you think that little look, hit I falls last hearing the kind Aneel, this in we're around, bit and to on culture a of that it employee some So, and question, pandemic suite, from think engagement right, also but challenge HR. C preserving the but the of is today a during I of lot Execs

I'm influence that considerations about how work of curious from permanent? there becomes HCM of opportunities, home kind product kind roadmap, think are as if more are you work that know, you from your So, anywhere or

Aneel Bhusri

many around they telemedicine, there the source trying skills are like from work understand take telemedicine, to where that you us talent those you're and a one Well, are of sudden, have get This I one get the to you if reskilling can before I've for that what that a how company, internal the really employee an mode, cases, a been idea hire base. of downturn, with a in is for work you areas hits beginning first to employees, in in you're low hold learning? external then if a trying done as to of and And add pandemic do done about, need were talked amongst And needs past, existing tend it's trends time, they economic of your marketplace, and skills all to this to being said accelerated. exploding. long they've those get

talent idea idea work, gig this throw well. reskilling I the think, a this is traction of and environment gains So, faster worker of marketplace getting of definitely in, we're that project-based has because as traction into I the

are today, about of we the other we other of remote sense analysis heard how given system, sense work issue our to get have deeper The sense people in employees as understanding how of with and their the doing. do within get questions mental feeling and much the so environment, of a is health Prism can polling the work trying an workforce out get HR all of People sentiment are within that do a a piece we Analytics, our and

our live their see and -- investment investment in get doing inclusion, Vibe in companies a from accelerated the significant to we're helping creating we big making in And better. you'll our engaging be as more in. sharing index, -- Vibe, is can how company-by-company, our doing a on us that environment an definitely we're and they're a work, equity, thing in last we're value, belonging, understand they handle diversity in engagement or been has the by And employees how fairly way I positive employee relative really to I one probably how way. -- how their think doing

quite result So, actually a environment. of changes as few this a

David Hynes

And years maybe Yes, you or percent of HR to when and way product compares ask yes. outside to that Chano, today any relationships frame was know narrower? follow-up I No, new what say ago portfolio two customer that land how if for core maybe makes could one sense. the of quick kind something of

Chano Fernandez

systems is a David, some their today that of well customers to if the as CFO mean, now times. have trend around X,XXX there levers I customers within with of many is really planning many are as we we and And well clearly customers for navigate these or core announced we are those the percentage both is important of there more higher those accounting life were where that customers office most those financial. And customers. accelerating, core unhappy hit more thus had ASEAN slanting anything new and initially and moving installed our financials But within net change even are is I procurement. helping think to that to purely -- base there definitely, penetrate a out

many doing customer-ship been talking experimental about more planners, we've science, ourselves today. So, and how

area that the do certainly interest on closing seeing their is a post-COVID on right increase. than said them systems is things has there having as and before products those pipeline, books well navigate to remain us are customers cautiously we as and these were and remotely broader. we their that office off portfolio our times the clearly, So, moving systems what are And are be that the before then the bigger because is we're of And going and in [Indiscernible] trend now. the significantly help that cloud to I optimistic landing see agile to on on there flexible legacy simple CFO giving more the like there

David Hynes

Yes.

Okay, for my great. questions. taking Thanks

Operator

with comes Our Zukin next the line question RBC. of from Alex

You with may your question. proceed

Alex Zukin

guys next Maybe If easy Aneel start clearly just just then? of growth if for are Hey, of the -- when maybe new does how pumping in you you to something start when the terms is quarters install is asking this or an not do I'm where turn? pandemic, obviously, we much inflecting first impacted of you like predict look beyond know And you one see for in some but Aneel, COVID that longer the headwind room monetization? is term, base it the think is as -- the course as I quite year the before changing ACV achievement, when as thanks we you -- base XX% Chano. I to taking year selling guess install that QX to and the left question. terms we in there and journey

Aneel Bhusri

bet we Workday, stronger continues product install hope there we're the can just our selling the more to idea of customers, things to base to I they're back adding a They made get I'll component. them. we and and for can SKUs more are stronger on more go that do happy. portfolio because address the

market SKUs but so additional Center. marketplace, the see we're it And you Accounting being in bringing recent the one to the most talent Workday also

So, we're SKUS base. our installed offer constantly coming with to to

tons is for still of In Chano. line in how ever and you a think terms of there the of as opportunity think I'll growing, leave of shouldn’t works, modules there's of But the lot you static, motion in because for the product new finance is sales to opportunity is that HR modules. product that line and new should

Chano Fernandez

there learning Aneel, hope market if mean Yes, you're products Prism ratios Planning, days. Extend. mean Sourcing, we've course, or Analytics been far and to of Workday well. lot in products still like some a adding the -- many products like or Workday or these that Health, penetration clearly solutions you payroll think Workforce Analytics with new I or I talking new completely cruising, And many, but of penetrated brought more I we're doing see we've People even even terms are or lately. of Strategic agree away they're that of areas we our Alex, like

great So, there. opportunity forward going we a had

get we the the Certainly, And distress penetrate the year. see -- or and least, have -- levers sales. away, some lockdowns, of HR this certainly of today In but not these HX, terms mostly if finance World. some the some that last we products verticals customers out, we'd happened of heat of more for some us or basically a that with Definitely different of new hopefully do to help a today, as obviously, clearly be in place the that of [Indiscernible]. of how have a better do there the mean, we we hopefully bit into especially even especially outside is will year, next course, a see the will there going comps new more Rest the side? comp easier little will I have new world we way of has where on of it clearly, net better and -- better

of up. opening be will obviously be And like contributing. that new right will then we're some opening, the verticals so and those So, federal, markets

So, in number more and definitely rest more what there of I would levers a the say found we of that's SKUs. world, there are are

they or new new let's hopefully in year. course the the of terms in say industries industries -- play within of be again, being the that terms next be we'll at pandemic, of not but Some much opening during

Alex Zukin

trajectory, given kind it at margins for or But just color you're guiding, the look don't is the the is a we're anything all sense. of talk one much year, flat just of but sense, providing, I that to that kind is things And guess smaller to Make the quick then not think guidance you anybody investing margins, a Robynne, fair margin makes expansion next expansion? that if Chano you which growth for close mentioned, strategy, or dip the this I a assume I clearly, know but year. a in expecting just -- a maybe from of about lot for

Robynne Sisco

of in to for Yes, think about excited up growth to over next QX investing our about how so us point normal this talking unique a have that pick take investments we're Alex, remains XXX a priority But XX% we've been non-GAAP obviously, to very improvement for year. of XXXX almost our about and we have year, has that margin through circumstances years kind two top does the and FY pace would when you been And that it opportunities we're margin year. expansion. lot this guidance of and and under going basis ahead three for

certainly, QX plan before So, to of and year, finalize view. we our pace next better pick hiring FY for need you we in up have through our still But a XXXX. get to can expect

COVID we to And subside, level. that Some year it'd next in events. of reasonable off this this like particularly areas year the of year's margins benefits our given see likely that and to all travel coming be saw

to to consider our then have that You on keep as an expenses, margin an to see last you pace the QX impact those revenue can while are from going starting a you'll our to impact see is take And investments of impact investment, mind immediate the investment the guidance. increase longer. thing that resulting in little we when

Alex Zukin

safe Understood. you Thank and are well. you all much so staying guys and hope

Operator

from Moerdler line the Bernstein comes Mark with Research. of next Our question

your with proceed question. may You

Mark Moerdler

into congratulations and it’s went you work know it. on lot quarter. a of Thank a good I hard

generation? is a a don't about from do two deal point the a if meeting how's of you sales mind. What in-person to fill it more the more model Chano continuing, of do So, conferences? you mean to questions, Do the then how advertising? hiring replace business to I return driving top new and Or worldwide lockdown you just conferences and a traveling funnel? think bodies the And with we follow-up. view see need changing?

Chano Fernandez

this right? at question. we remaining not the it's again, good in a very to look and have same only optimistic, lot job and learnings. is say I I kind managing products We're But support strength, terms good the especially dynamics terms or on we of team at great I we're only and pipeline, forth it year well course will clearly QX doing be I in because front to of if Yes, the you marketing, anxious, anxious especially that I shooting -- virtually I a SKUs again, feet contributing kind and we're look base, more a pipeline right? for clearly, new and QX focus installed in opportunity Again, have around to efforts and cautiously if terms when of, and street customers, new in think we we're get -- into pipeline they're done if planning no, has after, a not do. had ask efficiently. And would great think up around me on pipeline feet a of certainly had generation model trend around of better on and If growth. very of for course, marketing, what QX, the I that of net you were are the we to or execution, net the and to obviously, learning would investments team would creation, that doing that more of look branding, don't you and putting and better point as fighting look on at the that it's that in our on more pipeline be creation, next these they the demand more right? the us investments, sales and I centers, we year and also a and got street, see there I the we But on nicely that so customers, plays so on we're

better pre-COVID be a So, again, world. in to

be less better more than traveled to XX% but go you would of good able ask levels to had going me, a it still environment travel on has back XX% going performance don't is If to remotely, that Mark. doing being this I we're But think people potentially to is creation to be -- before. similar also pipeline be that

Mark Moerdler

change the time a live customers to How we or process complexity the more focused about deals customers ask on the takes Perfect, really go helpful. of to drive often, driving Question, to but lockdown to the it condition? wanted live. is

Chano Fernandez

done McEvilly or would but team going quarter, this shout all Those some Services or live to a accomplishment, no thinks this or live going with over they've you period, period. Accenture, Insurance, financials, have core X.X Emily you during of I and Well, or give live with a out like within to job because with those relevant, you When or are this Walmart right. right? think the customers employees million going UBS fantastic GE, over employees, of big minor Progressive during financials significantly XXX,XXX think XXX -- I think

work doing really testament and remotely technology Services that secondly, XX% our were and possibility live a is them of the the of to technology. a scalability doing I fully is to to the we team and good think and So, performance testament bringing flexible pre-pandemic

So, those honest, all be. happy a that's and be to are great so place to

Mark Moerdler

you. Thank Perfect. Good.

Operator

the Weiss Our comes next from of Keith line Morgan with Stanley. question

may question. You proceed with your

Josh Baer

around how optimism Hi. current results on think of I’m how building pipeline to all This versus guess it compared pre-COVID? conversation how Josh should we about with Keith. Baer is With and the wondering today the there, -- and for I strength pipeline the pipeline in

Chano Fernandez

If we the levels. the not is your question. are not. love Well, you, I think thank at speaking. This Chano to already We pre-COVID question for be are yet levels? we are -- at there, pre-COVID is Josh but We’d

I what let’s creation to for uncertainty of what the more to is think near-term should -- in what it for in us we view other of course, generation is there don’t help which point that us optimism and or from forward. Of to we are think that’s impact but creating QX we our are seeing the on say closer, basically we’re is is you resources of getting be how know pipeline we all But of wave long and on or right. front take looking obviously terms is going going second get then, our in side, starting demand yet growth to us deliver well the that cautiously

So, and than we April where we’re stabilization we that business guess to better least our would going we environment the and is timeframe. in in place I in the like of gradual the seeing are evolving back is were recognizing pandemic beginning at March, deliver improvement, this the now we terms and how much situation certainly well be for as there right to of where a know more at

Josh Baer

difference just you’re into if I’m any curious And in different waves lockdown that Is behavior as responses you different buying different and Great. what government have COVID you’re in internationally insights any seeing Thanks. countries. geographic in there there locations? seeing is

Chano Fernandez

we’re and in of going investments the in again onto [Indiscernible] ahead No, excited in the revenue -- see contribution of it’s been is really why are headwinds higher creation this rest the really Josh. growing course making I still international has terms opportunity not continues around prepared as a pipeline And the of see in and our continuing we’re have right we the ahead a some and medium maybe year is big the to we’re grow to of making it planning lockdown higher installed have end. are and that opportunity. Clearly, that there we terms a still is of us business and it getting leadership impact had mix right. large optimistic countries as some you, and the as of new and And of net our suffering and The world to are now the long-term, as and fantastic big over we Thank international make that and U.S. that’s because base a we part there pandemic. a to yet amazingly market think in driving are we certainly we the of other

terms in journey forward. of markets opening a our significant are being those some to of And growth contributor

Operator

Okay.

Our line next comes the of from Karl UBS. Keirstead question with

proceed may with You your question.

Karl Keirstead

don’t if from to can Robynne a back it’s tougher we Robynne. XX%? But the actually guidance to only one that’s XQ. point So, backlog to for two XQ got point decel a seven XX% you I’ve you. Thank compare. subscription mind nine of go

also, this So made. not that what than saw any XQ reflects Maybe tougher compare front. just maybe on duration if And Workday the whether then on just demand there you comment you could you in XQ feels compression and is ACV that be and the meant elaborate Thanks. perhaps new number incrementally backdrop net might generally impacting that a XQ?

Robynne Sisco

Yes.

not duration metric backlog So, important that in expect you duration, like we QX. an we see impacted certainly a not to forward-looking the in gauge It’s is repeat question know. do precise while did which second QX your to and by now, as I’ll things -- increased maybe go

of around. the renewals Also part impact, move an that’s timing can So, which it. of have

just you’re so, when account looking our that those are keep guide. And into to at things

But has bookings we We guide drive quarters. stability the couple the And backlog the reaccelerate consider when execution over at backlog the strong accelerate tough quarters, in the past of the have growth. this environment we results seen which QX, past with and did the some along some helped does compare. few of net new look in last

very uncertain. very, And in facing so that’s remains environment the an tough compare that we’re that

account a you that is in and And so our quarter executing now But focused next quarter. to we’ve guide more taken big for and be all able us QX obviously against tell we’re that right quarter. on we’ll into

Karl Keirstead

unpacking XQ or And cut commented then any a is collectively the little GE, my Actually, you. Did might in Aneel go-lives. go-lives go-live quarter UPS, on I for very lot that’s numbers Okay. Workday. an have of for that them kind all, question a any milestones Thank Accenture, trigger those just amazing on that if of bit. anyway? Walmart, the Robynne. large of Thanks that they did impacted helpful, second That’s earlier,

Aneel Bhusri

our the live leave well and and -- customers figured That’s And partners triggered during one they really them as Emily to time as perspective terms Chano proud far our in this in go our live as know so large be terrific say and a if who out Robynne. you quarter of the these the four and I those milestones of having all in remarkable very of Again get very from how business know live as happy. and any team going pandemic. services I’d frame. that same I don’t would to I number. appreciative of mentioned just they’re

Robynne Sisco

by of as And services you run know, maybe don’t and I’ll just Workday. professional are to partners add implementations our most result revenue in that our

do to big that driven contracts, some net them. prime while out really quarter can milestones have call fee revenue. And So, on of XX% get about wasn’t we there we of by revenues anything do driving in terms milestone the in fixed

Karl Keirstead

it. Got

very Okay. much. Thanks

Operator

Our line next Brad of the Zelnick question with comes Credit from Suisse.

You question. with your may proceed

Brad Zelnick

so Thank taking for questions. much Excellent. you my

which you positioning Firstly, you competitive it and perhaps been you do about exactly what times more understand mentioned it, and how we’ve Workday is Accounting your us why? what a few Center see field. hearing the recently it is from impacting Can help replacing

Aneel Bhusri

to that want take Chano, you one do on?

Chano Fernandez

Why you one? take that don't

Aneel Bhusri

Yeah, Pete, on take Pete competing. just why that it maybe and one? about Chano take talk where then we’re you don’t

Peter Schlampp

Yes.

Fifth Financials quarter it being us you a the we’ve previous had really services how wins Bank in previous vertical hear So, us up for for especially and few about that has talk in us bank the of able in Center earlier been quarters. important certain did Third to and this win open Accounting like helped the verticals, financial

it. all customers and on in it is GL. bring So, our Center roll and up and accounting to then do to their into for data into have that of what Workday bring is it question accounting their way a your answer Accounting it operational secure

a So, claims, industry happening you and and CFO want and to our the the if instance, to look you of level, that the way it to customers there the finding are right would lot replacing value GL is This but a the Workday. answers you’d policies do do them. by all wanted single for back of were, analysis in its of and to to in to back their go the that in managed able and go and system at insurance a data and right infrastructure of that something otherwise at instance, be having all CIO for take you be individual have being is able front the management inside get

Brad Zelnick

closing bring very But break stages that’s and you now And of Chano, to that. just environment what ask close which forecast pipeline up. your you just I for into to another comments Thank you versus much those little can Cool. at the story competitive maybe tell share appreciate a follow-up more But but that as I are dig very bit confidence? encouraging. a detailed support ultimately analyze field to could you your in that if pushing of in some and question. that takeaways happening in Maybe deeper pipeline the sound scrub the and actually what’s the of and maybe you shrinking are out the opportunities versus changing, size right and look if like consider how sorry it accuracy things down all and time various losses, and still

Chano Fernandez

push new say, the a -- of environment if are impact this with ones all of projects see opportunities which yes, net out environment should let’s On course, balancing be comes are more that And is this On the hardest more hit that, of the customers other the thank uncertainty environment Brad. basically they industries they any kind than most some that we maybe the customers the can for right. are sticky, at some industries especially in thing question, quarters you more that few any of uncertainty not, there basically because is, starting and and and which ahead.

quarters, know highest would into is potential that going than So, potentially push opportunities impact I as there change, the farther right. a few say more you other any

Thank in there. of We for and any more course, seen these But over that, up. lines. other uncertainties that’s is you one of of any on than bringing the it kind changes haven’t environment of terms competitive momentum depending

maturing on clearly this quarters, to is we’ve have efforts when looking pipeline the and be respectful So, of these and QX. two rates how growth, conversion again, in QX, to are remain the the ratios wave to is optimistically this forward, evolving. we great focused and we But on creation be and second and last and on got look uncertainty terms QX we -- going we of had very

Brad Zelnick

Thank for the you so and much taking the color for questions.

Operator

next Brent question comes Our line Instructions] Jefferies. from the of [Operator Thill with

You proceed your question. with may

Brent Thill

dwell midpoint. to but point the ever think XXX a guide, seen QX backlog not Robynne, on at don’t I decel you’ve

the I I backlog was where in So, did some something or think deals I happen asking of got realize think the these was environment, QX I into QX seen in the obviously to in we but And I just reconcile just we from model past. this? think haven’t trying it pulled

Robynne Sisco

Yes.

and So, pre-COVID just year tough large duration I’m QX looks no, well. When combination from at which -- good right sorry, This and seeing nothing happened execute of continue we’re is look we of that QX, view all to the the the uncertainty best now, helped last us where our still in compare days Brent. and the in numbers. pipeline to backlog very, very you the in law QX

year. though A our lot there, things biggest seen still even the And so of uncertainties out it’s stabilize. of quarter obviously have we

is And view quarter. backlog next that so update our This and obviously far on in have of in we the execution. focused we will the we’re terms just so best you

Brent Thill

you. Thank

Operator

Jester line the Daniel from Citi. of comes question next Our with

question. with You may your proceed

Daniel Jester

squeezing Great. Good in. me afternoon. Thanks for

has has Just bigger well maybe a done obviously well; time. Adaptive over done on M&A. Scout picture question

about year? you’ve incorporated how Thanks. the today the you sort activity, next does those how Now inorganic especially in that given ramping change into of call that think comments businesses, about investments

Aneel Bhusri

changes our if know don’t it view. I

technologies harmonize Workday, that’s over companies so and It’s the I competitors company technology if commitment that’s become. find really feel key that effort of the integrate a that can the we and that. into an that something not some to we that from think -- don’t fit very that that Frankenstein our it unified right us now we we view maintain across that driving our complementary growth that comfortable. will can and those is we like Bogan led we with time good a also but We feel have important gives just so really that legacy a that’s it. has applications is comfortable confidence overlapping Tom company innovative culturally, that is of become kind perspective

the are -- to and see technology not It’s see fit going Adaptive be fit think overlapping the going they’re I more So, for wise. but coming the don’t to to also think going that a you’ll from us a is us -- sure they doing I models. Scout big down pipe, acquisition I

-- I actually think that slows that’s down. just us

Daniel Jester

the color Great. and in quarter. the best luck Appreciate fourth of

Operator

thank you gentlemen, third joining again on fiscal quarter Ladies us. for for conclude conference you call. Workday's Thank will This your year earnings and participation XXXX conference. today's

Workday (WDAY) 20 Nov 202021 Q3 Earnings call transcript