WDAY - Earnings call transcript Q2 2023

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Operator

Welcome to Workday's Second Quarter Fiscal Year 2023 Earnings 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.

During the Q&A please limit your questions to one. And with that, I will now hand it over to Justin Furby, Vice President of Investor Relations. proceed. Please

Justin Furby

Welcome Quarter operator. Conference XXXX Workday's Call. to you, Fiscal Second Earnings Thank

we and our Aneel co-CEOs; the have On call, Bhusri our and Officer. Barbara CFO; Chano Pete Strategy Schlampp, Chief Larson, our Fernandez,

prepared we take questions. Following remarks, will

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

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

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

of presentation link. in GAAP on call release, our will page days Relations available in earnings including the find our Investor Investor webcast additional can for be disclosures You the on under press measures, replay the XX these The non-GAAP website. our company and next of our Relations this reconciliations website comparable with results regarding investor

list on posted updated following presentation the and will of call. Additionally, Also, page quarterly our selected be customers' this a website is Investor our investor of includes customers Relations website monthly. our

fiscal comparable XX, stated, quiet this the be quarter results to XXXX. all the our With Aneel. of for in over I'll fiscal third to our XXXX hand call begins Our Unless period XXXX. will on financial otherwise that, period comparisons call October

Aneel Bhusri

second Thank you, to delivered that Justin, geographies. Workday to thanks XXXX all conference and areas strong quarter, and across pleased second welcome call. fiscal Workday's I'm earnings quarter healthy a demand product to report

quarter's which on the deals on referenced Additionally, last two we from we of call. larger QX, closed had that pushed

results, outperformed digital the even partner and mission-critical operating across key with track customers And confident remain growth Workday finance proven underscore a to in record of because prospects uncertainty our serve long-term our Our as we continues which this our with metrics continued transformation in of a the environment, to HR. importance for success.

quarter Overseas Enterprises, customer success customer QX, additions, Bank. as and for had it and Workday. remains share who highlights. Student, Cox I'd a continues differentiator Raymond Chano, our turn go-to-market and Airlines where strong more cloud In to for will including HCM Southwest the Air financial and outlook, will share I to some over Before like James, First on several specifics Workday We notable Korean had Adeo, Barbara migration always, our who QX and HCM, the including to go-lives, quarter provide with second another results key Groupe Electrolux, on we success, United

Adaptive customer Already Financial expanded we of Workday includes second very and those excited Planning, Management now Fortune along quarter accounting core CRM. Turning to financial Workday to growth Workday longtime customers, added as a strong more. and one share in Financial the with Management. Salesforce's Workday management in very HCM We leader and was center, Workday two partner, XXX saw use Prism global I'm the Analytics Salesforce, of that

customers in of QX Comerica With the expand the Other Company; reinforces in wins; from the the state to relationship, we while both University go-lives Electric XXX support Power, LLC; HCM & Workday financial Apex this QX HCM our help more Virginia. increasing financial QX to Fortune partnership growing and to American customers have was of Fund Vermont, and opportunity of included Our Salesforce new management broad management. of customers RSM Bank, key which included an Express becomes the number Dave cloud. Busters, second in high-profile of and

saw portfolio to finance In share celebrated addition momentum as and to solutions. serve for customers the four-year over with and and with that broader QX was up XX% already than to its across including of embrace strategy. Fortune Adaptive XXX. suite also notable as quarter HCM of Workday, our Workday, a happy we're of workforce customers, recently now also anniversary us Workday planning our solid we part X,XXX applications, of more growth strong I'm expand full to who our core opportunities of part more from our the It Bentley holistic relationship results as opening second new Planning want it's seeing

with their to other strong custom and to today's of With which organizations, the world. ability Extend, cases, apps that adoption use We Workday providing see the unique can are build Prism including the for of Extend tailored solutions need office both the changing eliminate to are development tools. continue Analytics also as customers CIO, adapt for

than we now XXX is customers These have than And business Over and And level community, community, the core Analytics, have into a operational customer been doubled to X,XXX the enabling now than bring data of year, Workday developed number more community more customers, platform. that of always not are solutions one have with on Workday of organizations real-time applications service as with to our insights. but our last more the values. Prism only enabling customer new partner drive speaking are customer critical our to our of engagement been has well.

the employees XX%, to testament our X,XXX of to maintain the our work the we decade. community innovation, a and second amazing strong commitment and we satisfaction We opportunity of direct forward and with first XXXX together thousands in-person, Conference. Orlando XXXX, our As This what to special more had In that of in helping achievement is and I'm the to virtually Workday to hold pleased we are time customer for look year. half announce September than product over event. as to a we get our in again we're this rating rating at result, than strive to surpassed for success customer and a a a Workday about customers in thrive. market This closing, more so members will sharing their Annual more since Rising, able the Customer attending a is always mark Rising of Workday first we excited quarter that have

in continue over uncertainty. the of driving expectation, that environment of believe of the of manage mindset moderate And stronger economic that, during will second years Chano. business for strong growth come. the you, the and current year, that recognize likely the we firmly with periods enduring With pace all to will many we to to we While growth half that the gets in support

Chano Fernandez

XX,XXX incredible you, thanks be in result, our begin want my entire our of team. Aneel, Every workmates expressing today's call. nearly really and to this to and by for QX. execution. for I sincere one the prouder Great global Thank drove everyone of I and thank an leaned to joining you organization job, couldn't

long-term office Our the base, strong QX the of results international, and testament our that our opportunity several ahead. a were momentum including initiatives, have of medium across strategy to enterprise the customer driven we significant by key and growth CFO,

closed are core International In the Australia. outperformance resulting in ongoing we a highlight, Kingdom. market agility their with remains not In addition, the growth. regions and the and backbone we Aneel to APA, And or continue Germany key immune finally, enterprise, across flexibility. France, deals and a we in incredibly was two including strategic investment their countries, the to investments In in as out five the journey approach QX. enterprise, cloud wins. and we that resonate, to we global standpoint, growth see quarter to in driving significant mentioned, had suite United US, medium another And our solid of HCM it, largest performance geographic increased saw across including the market. FINS to of Fortune of continue our healthy as the in EMEA, executed again Workday results. like large key uncertain while continues performance well strong and From XXX a and transformation digital are Japan in very sizes we prioritizing our the drive organizations very all near-term environment we number And slipped of had markets

Aneel market growth we many of QX. customers know, were land-and-expand drove both of things you to wins, As new go motions, FINS already mentioned to sales core Workday. our with healthy which several and HCM and in

closed at in win employee at also motions, a deals organization across XXX,XXX-plus bank become first first-led and our strategic Europe. We wins including ExxonMobil land planning and emerging [ph] several have global headquarter major

core and $X core their our sales core to new first of expanded number also our momentum that adding industry renewals results, first HCM acceleration payroll and and another great am again strengthening QX. and example planning within seeing started including annual and recurring optimization. this. strong drove including expanding area relationship learning, first I and of to are footprint Extend, financials. addition pleased as our In in solid very meaningful to a by in their customer who revenue. footprint talent FINS investment, in our a services to is of ACV land a Health across broad-based share is Industry Carle billion exceed financial in strength base with motion, Peakon, teams opportunity planning is customers, FINS, significant They once include QX solutions, We're built

government education and and to including several such James Pass. and QX gaining media, and go-lives Comerica. saw including lanes our and beyond. of technology our referenced hospitality included Aneel continued Salesforce, Avalara billion established financial on and services verticals at go-lives Gold Bank transactions we most and Montreal and to Cushman other strategic have are that came deals and Needless and new Raymond retail, path of United say, at stand, we & where are team, momentum out industries of steam industries, Wakefield at that the in as healthcare expansion Overseas Other Some $X also wins and APEC in Bank

industry ecosystem full becoming and important solutions we're annual expanding specific an but look and use front successful in Accenture, driver on customers' of an PwC we're engine serving also Strategic event. more ensuring excitement such in lot is weeks. our of this recently targeting our was deployment, display Deloitte, increasingly accelerators only Together, as a partner at innovation our Altitude, a growth integrators as few success, and partner us needs. sharing the system and not Our opportunity KPMG, on with We also to cases. at Rising are forward industry addressing Workday seeing

through in certain to that As and potentially year, second there the sales we we opportunities, deal more cycles, increased of move half longer of remain cycles. our we scrutiny strategic expect uncertain, the some is signs and environment see the particularly

uncertain cost As these The go their extra total come solutions during out diligence, we buyers and do when through companies that return news given on reduce work top, ownership due our decisions on the good is provide. compelling that investment typically before making of investment times.

the customers who it Barbara. scale our Larson. Over of of our delivers. of over business can Barbara deployments value I to meaningful record and that will that, of successful turn track reference Our to Workday CFO, you, thousands speak With to base

Barbara Larson

Thanks afternoon, and good Chano, everyone.

sizes ACV mentioned, Professional uncertain was and increasingly million, strong XX% delivered need $XXX and change a finance HR Chano expand of for driven the XX%. end to in at of and the was sales second renewals of $X.XX The by and quarter backlog net XXX%, both over new and of modern $X.XX realize was we and revenue all QX respectively. solid Total with their billion, motion was XX-month the as representing and land up was over along outside Subscription end businesses our with billion, across growth Aneel revenue $XX.XX these XX% retention the up times. solutions Total US a growth As strong revenue. total million, subscription billion, XX%. revenue the navigate up flexible, rates during revenue drive revenue year-over-year, $XXX XX%. QX QX of was outperformance Services XX% at backlog enterprises of

expense of Our second variances. million, some seasonality was QX in was certain non-GAAP annual topline $XXX resulting million, of from XX.X%. and cycle was favorable by projects, merit operating a reflects the flow our operating timing quarter increase. non-GAAP income for overperformance, $XXX Margin margin operating combination the of driven typical which overachievement cash

falling weekend, of early days impact we flow. final million the addition, our $XX will cash saw over quarter In the roughly QX a out collections positive of two third which into quarter with have shipped on of a QX,

attracting Our largest our people investments top in continue talent to and to be Workday.

added the of X,XXX During ending a new global successfully approximately QX quarter, we employees, workforce XX,XXX. more than with net

focused on notably revenue product the areas QX innovation in revenue. business, position sustainable growth leveraging execution adding on drive leadership strategic on the subscription resources proud path of to billion growth of hiring plus was $XX company-wide Our we're and talent to key our roles. focused in go-to-market Overall, extremely strong and remain our across XX%

Chano critical mission uncertain $X.XXX our billion, guidance growth. we and to to nature year-over-year our now our With the while that macro maintaining reflects and balancing environment, for XXXX an of solutions, the subscription in of XX% Aneel guidance, $X.XXX Turning which representing described. FY revenue context, which are also momentum billion business

We and revenue align billion subscription levels have FY we expect billion, tightly growing business XXXX to highest ecosystem year-over-year our XX% satisfaction customers ensure revenue that million with to still partner QX expect customer value. services $XXX to growth. help as professional be be support in to to We of $X.XXX continue the implementations successful our $X.XXX

services For QX, professional of we million. expect revenue $XXX

half reflecting year-over-year expense year in to Investing measured of remains the for approximately We expect more non-GAAP second long-term as grow to expect environment. of of margin operating the QX. ongoing XX-month We we monitor hiring XXXX now our FY backlog priority. growth the pace continue alongside XX% in macroeconomic XX%, a discipline

and business XX% margin to non-GAAP We achieving continue billion XX% operating $XX cash our model of margin operating the have confidence revenue. in at in strength flow in and

tax lower, full of margin XXXX We're rate margin. than million business support We are FY expansion. third year the capital now we remains cash billion. For margins XX operating to for our XX raising and customer for flow our at points growth be operating non-GAAP $X.XX XX%. respectively, expect this non-GAAP GAAP expected the quarter $XXX and non-GAAP the of XXXX FY year QX, XX%. to and expect guidance approximately percentage to The continued expenditures

will customers Q&A. Orlando, to that, late product shares. to Florida, Rising billion the more As Workday count finally, will the With look employees, in count this convertible held third our hard million pay diluted not being timing, XXth, either part broader for fully our September a off where strategic opportunity. in eight program I'll close you on operator principal it continued plan cash. support non-GAAP When reminder, market begin to of share to work. our over quarter, debt roughly and QX and share the our I'll the their we'll insights to occurs, for and we long-term by during in be turn of our virtually, forward initiatives non-GAAP share Analyst our thanking Financial balance $X.XX or reduction on Due average reflected the partners this seeing weighted share And until We amazing by QX. decrease Day, in-person

Operator

Thank you.

We will a question proceed. Goldman Instructions] [Operator from now session. Our Rangan Kash comes Sachs. question-and-answer conduct Please first with

Kash Rangan

strategy, were new of question enter et calendar quarter, the of product quarter? Hi. pandemic, a that customer the to conference in-person behaviors and what have afternoon, we earnings did Thank the first acceleration, previous the the you doing XXXX as delightful And your month July? Aneel user couldn't July you is, rate first result a the you adoption saw a as of philosophically, and What for we you all your deal One of in activities up open companies things Workday Chano this through what end about that and up also, to listening certain are were mind. couple talk one call. were cetera. to the how as be team, slippage, What not. rest all way years, afforded much. in to my a growth in-person conference in do Thursday you it few working opportunities of spend are very a And as this that

again. your Thanks congratulations, Just and thoughts. curious to get

Aneel Bhusri

So then did slowdown see part to a it the I'll deals few Chano. Kash. in did answer first and to Robinson have We not over those hand team July, from QX Doug We a but slipped and the QX, deals. closed

we do we a year, into July. It the are second so for. a that any We a a a customer the motion sure But as reconnected of are have as was the month product heading to slowdown macro stance simple. strong it’s just better taking thrive. hoped a portfolio We great importantly, and cautious make us. some didn't newer chance when very equally good could opportunity we're always is to Rising grown, that in-person. for continue doing but to customers, It’s products base of on about chance cognizant and in as environment of with we’re we hiring, for job them. showcase It’s see have half get the has

So Chano, to anything you want add?

Chano Fernandez

thank Kash. you, Thank Aneel. Hey, you,

we Aneel seeing quarter end, saw to whole forward. beginning across clearly strength more excluding pipeline uncertainty but the we're going commented, the from and As

part a And very very well After relationship we it's years, as to for with is some build and more three and opportunity to certainly, great are you great good Regarding that business a community about, with of and larger becomes excited. base the as customer our know, Rising, customer clearly, us pipeline. ensuring opportunity Workday. bodes a

Kash Rangan

Fabulous. Congrats. Thank you.

Operator

question from Please, JPMorgan. proceed. Murphy Mark next with comes Our

Mark Murphy

core pipeline the little clearing change that a XXX up And year? all on might curious you perhaps, wins. the or Fortune if the get the released these sailing might finance COVID the sense to pace for lockjam the of to have financial many there's rest see despite very for get you any at And teams then, Thank headlines, case. point, do extra of FINS recession a that's up contemplating there, that smooth just the still do magnitude you kind big cloud migration? somehow of Barbara, the that lacking if core the building sense you would some hiring much. need they impressive you're It's is see two Do

Aneel Bhusri

but definitely was sure I'll ask financial Pete to on -- side. answer want the demand, question to first do there pent-up some you I'm Pete,

Pete Schlampp

Hey, now, demand we're you. HCM will difference those in we we're seeing, our is, here any the on uncertain good Right from situations, from not deals those in financial what go bit say saw that's tend as to to financials to side seeing Mark, the are we've And seeing and what more delay environments, news then in past. talk as into obviously good in for happening; been which management QX. typically we we longer. a But likely economic little buyers what

that's going being our this expecting based So forward. that's just to we're upon a for have in market experience what happen while, and

Barbara Larson

On expect I'm we half. than hey, Mark, on target hires fewer providing to Barbara. say, question your hires, the other it's specific then, not in a first half And second the compared the to

flexible the continue we'll environment in be half. second we see on and to the So based disciplined

Mark Murphy

much. Thank Understood. very you

Barbara Larson

you. Thank

Operator

Evercore Kirk Our with ISI. next question comes Please proceed. from Materne

Kirk Materne

may much. the modular there Thanks. so what is any point stuck control now deals But the kind anything was end when funnel? seeing you pipeline And a at is more echo talking I without of sort of, is of question. cycle the Yeah. deal having Doug's funnel? to they the make in? do pause, look through if Mark's one the about sales build within curious you But process the what's guys Thanks. in the of this impact at I you Thanks echoes at I you end? macro it I'll can happens necessarily. -- the was it taking front-end can the curious, the the companies that be products congrats right same relative of on to When at just, can't come quarter. your Actually, nature, at just the still continue And guess, maybe getting Are number one, very

Aneel Bhusri

Chano

Chano Fernandez

pipeline some and about customer still create because Thank feel can focused good with second Kirk. we to in and saw satisfied macro, particularly we our opportunities, any and pipeline them We base our land the good meaningful motions, we new never we the sales new faster you, within we and felt across changes continuing build about across solutions motions on first the fiscal. pipeline, build the the certainly that we are are have barring the in of geographies half. for quarter close motion Certainly, like and can the we

Kirk Materne

you. Thank

Operator

proceed. Sills next Bank Our of America. question with Please from comes Brad

Brad Sills

see FINS a a Thank that of you. around come ask could being additions? for FINS of question as I Great. planning modules just more set you. base Aneel, that made also installed upgrades brewing that first there other that's another customers. any a here a Thank to first we planning the pipeline some about wins could And wanted Is on leading commentary on indicator then of from? FINS potentially comment earlier, you the couple

Aneel Bhusri

but that and do X,XXX world it's we more probably have Yeah. that's And of can more. to planning, that now opportunity way, way up and of and we in. one lead product those And that's land go financials. it probably finance sell in into we're it's continue to planning get one played we financial it is the and into more The the plays more financial great to core and workforce in app out way planning, the the that meaningful. customers, we out a me planning be our products. the financial an But core first is one each with our Well, over

Brad Sills

Aneel. Thanks

Operator

comes Wells with proceed. Turrin next Fargo. Michael Our Please from question

Michael Turrin

as and results me on the Hi well. there. Thanks congrats from here

It as question, you you're half you buying the across seeing provide back as needed? an not others comments ahead How as uncertainty. much if investment of a wondering the some to? in you. the part second point Thank back a moderate. control I'm toggle to you demand slow, signals favorable cycle maybe start still sounds have of And shift software able pointing You could anything to able a towards just see and of behavior you'd are to you're do is did that like bit started there's growth all to offset. somewhat of of as quickly if suggesting expense dial second finding

Aneel Bhusri

What in different to say play still as and know installed some and knows first question, the I always think -- very high base. I'd lightly look drive, is on we our it's good about times. who during penetrated as the the that's peers revenue how the is so that of how But a economic to cloud part Workday of When at one companies our future place not tough much going that's sell thing out. in we some I of the other we're cloud,

you a to TCO, but very about about have Chano, do toggling anything? or had Your want you order and more we're expenses, customers what Workday. even it's to would strategy. Pete to about the about talk sales game. transformation, And ago the out get about Do is, say, XXXX analysis expenses, happy, want well. collapse prove years used in TCO not as off different has add compelling the already market think TCO XXXX, They're to where also This committed are a then already less we that TCO to we story our toggling about so doing we many Barbara? and to to we're dusting do been invited the there I -- been I during digital Barbara, we're

Barbara Larson

as half, we second being moderating going to the continue cautious add At Yes, I pace we're in in we're we said, the flexible second time, the the half. to environment half be but -- going the think on going same to the into see resources. of on expenses, second based the hiring we're

So to second that need that. half if some we of toggle in hiring feel that confident, the we we can do down

Michael Turrin

Thank you.

Operator

comes Morgan Please next Our from Keith Weiss Stanley. proceed. question with

Keith Weiss

Can penetrated this? time lightly why really of peers up. you a upsell see guys by more could to And give customers. trying in of pull to and this in because that bit of other us are there's off a at give guys are definitely us guys base. What Thank more I put the having think you such struggling? like a in Things do more probably little likely and you being -- It's so expand to of presence presence particularly lot bit great Europe. wondering if for questions -- think in a your you're And at a you a you how talking the and out maybe you're figure your on the US, of that question just lot lot quarter days? and was think are little you taking a penetrated good trying a to all I a guys Excellent. the as a that in big our while product and you kind lot really advantage like into to less HCM, it the about is you, get come. lot do an on I could of mean

Aneel Bhusri

would customer new answer. easier echo with that happy an always have A I a you. doesn't the net in is previous customer than just I said experience Well, working what sale

don't have more terms that It's In motion, and opportunity. and land it we I where -- had expand want Doug then other We really versus, a our we companies are. have more few turn still years that us. back of over and expanded to Chano new where of think, only we penetration, I'll modules. land old to about add drivers the to were it's the and talk relatively really for to Chano base

Chano Fernandez

first played quarter, pretty both all say different that Keith. customer and international the and would across CFO, across I behave geographies media correct, that's out Yes, well the key drivers enterprise, they during base, office, our well solutions. growth

and know, as And focusing we've paying you a adding investments been we've been because that the time, very and innovating a terms more also the customer we've heavily In there base of been clearly, doing on solutions. penetration, been number of we've long are new off. significant during net

more focusing And on that focused and is all saying, and value saying, clearly as more are a Having see period. will with go larger customer the that, more we're where of But deal more tend buy and bit peers the to compare implementation better is potentially what are Aneel both penetration a financials. we've investment cycles been logos reassurance we never showing bit on cycles net is So lower inventing of longer new very on transformational are across to exactly customers full business They larger as base that the some and we transactional customer of there, I would done particularly a seeing our the likely for little base starting say, other each customers behaves said will this approval happy on strong on solutions. to scrutiny, whatever or around sales or you deals return that happening quarter. to when those the another have segments. heavily when customers cycle of is or on and most a the the projects

Keith Weiss

for a it. I could Barbara. if And last Got just in one sneak

QX, that now? the conservatism in back of of raise back kind of and didn't XX-month guidance. a the like that You some normally sense the assuming half the have conservatism talked backlog, into you Can you translated more that you of the in half particularly us guidance saw give guidance. outperformance in magnitude the raise in guys have I'm would And about guys

Barbara Larson

increased while in have say, Yeah. the as certain as see evidence just have we would and business outlook the we resilient, been off year. strong of we also able QX, a full coming quarter our for to sales scrutiny cycle. raise liked remains to outperformed But I'll

assumes second this of our half. continuation So in outlook a the

Keith Weiss

That’s Thank very you. it. helpful. Got

Operator

Zukin proceed. next Wolfe with Alex Our from comes question Please Research.

Alex Zukin

of Hey you're your feels guys. was to question there's both at that Since assuming going consolidate, how the in it a the conversations? way. going saying on an how that particularly lot you left go resonating a after Keith the us do kind that based customers you that of through playbook at have of, run away. also the there's opportunity just I'm with dynamics, I'll long is what your of to a go is But many could? asked basically you're point surface in type suite realize, analysis, before client TCO financials base. of your lot inside of area And exact it, side to like, to those I I different platform, obviously, HCM a the Aneel, And can to full solutions a if try message on right ask, walk for level? be from It

Aneel Bhusri

we just also together. mean, we've I have, to a are most inclined happy like happy are what they're that in high-level that from are Well, I'll planning up solutions don't if have view right? buy especially customer, thing the important offer you And a decisions, seen, customers separate you. HR these and enterprises, typically they decision tie financials There separate lot and decisions. the large a of just

But especially bit we've as to every in customers that see these X,XXX we think, happy, that for an customers quite can base as I and we go either also is. that customers it's got HR come the opportunity to back do of area, long that's new a we solutions, where when an something just time surface gap with we So acquisition, a finance out HR or X,XXX over, keep have base. that you base, module, where look built new so

Pete Schlampp

things and you add everybody that from value been can available It's is years, that have been for a that What on yet. -- talking fact that it focusing perspective is, more into give to we've working happy, last you've delivering Aneel, just I'd penetrated do we said, thing us. the we've give you in of made them there, been customers we've generally years, got to on what on talked delivering not percentage some four them SKUs of want some what base One into large Chano SKUs that in we've repeat our Aneel XX to that. makes perspective and making to our to which about and HCM read on are the got just about again is the XX just buy portfolio, them,

that's that And part a so of strategy. key

Alex Zukin

is on seeing you're good, to clarify cetera? conservatism in you what in But, that follow-up. are Perfect. assumptions really I scrutiny a on pipeline There's want I just there the what making in preparing more saying that, a I close then guess, are sales is Aneel, been rates sounds but generation, et in July is or actually I you're conservatism it of cycles. adding maybe then because you're guide. has something more and as and that is see the drill Barbara And heightened to Chano kind around this. saying like to want from think level of

Aneel Bhusri

best I one. to think that answer is Chano

Chano Fernandez

of Yes. July some larger But seeing grading cycles. terms ones has been the forward, and or June, in sales in those scrutiny strong. we Alex, HCM in around some of I cycle particularly the sales more FINS, are moving reassure will very

can imagine, are you those cycles long. As of some

move things the And So one those us of on as deals it's lengthening that sale we some potentially some for that moving. And we get definitely pace see, clearly you check to can they that the or kind are have easy from milestones. on another, different cycle. can and stages lengthening to are

Alex Zukin

it. guys. you, Thank Perfect. Got

Operator

the Berg from Needham. And comes next Scott question Please with proceed.

Scott Berg

we everyone. later. just you smaller and new the in something is at question had throughout leave know macro FedRAMP change can questions as or some is How it kind whole but in meaningful domestic I'll level. a those quarter, guys during status, on angle United incremental I particular on I maybe of the it quarter a success had about a really the moment, Congrats Fed? that that your a about time, from the States, impact security for the the opportunity? over in good think government opportunity Thanks. a at Hi, general moderate that should be up the announcement

Aneel Bhusri

over but cycles sales longer time, It to always are commercial They very meaningful time can Those be than cycles. sales it for take it's have to going develop. been. some

begin have XX, we can certification, month sales XX be as XX, gotten that cycles. FedRAMP they sales and now now cycles so, the And

a it's customers but still -- PeopleSoft So meaningful opportunity. there. There's a ex-PeopleSoft of lot running

the opportunity, So anything? do that, Pete, because see takes invested in pipeline add patient in, to but be it one to for develop. a we we want it's you while also as going a it that big

Pete Schlampp

been but very said we've over It it I billion -- It's see a opportunity while. well. -- we as to think, and investing for will something $X a time see that you for -- great that take in the business, just it us because of for sales us, we that a cycles. than another we're over the more HCM into be things off, can government customer time. sell these pay should I also And core customer is -- think some longer

Operator

comes Sandler. proceed. Brent Our next Please, question from Piper Bracelin with

Brent Bracelin

here with some focus large With hear to some there. HCM But to Good of to I taking larger the larger deals, US broader if savings, afternoon. enterprise. HCM appetite to savings customers. FINS. customers, Thanks Love around some specifically seeing across the scrutiny to cost tightening consolidate and for appreciate your cost cross-sell, narrative and a starting get wins question. an bundle with question bundle perspective your what's higher-profile Fortune the vendors high belt we're FINS, XXX around that. there's also vendor increased with you're further Obviously, around from consolidation My

Aneel Bhusri

underestimate and whole same of the with they I wins happening, definitely the saw to business. tightening buy happen second financial we belt but business, the series of is don't it and medium platform. tend the And big strength enterprise wouldn't a enterprise trend in the that quarter, see in I Well, our medium

anything market tend It's they and of rate to our to all add? business, want for don't on as want possible fewer the to So vendors run money because to it's they spend Chano, a us. want best-of-breed kind integration. pretty you have and healthy

Chano Fernandez

double-digit Very the retire said, say would do just Aneel. customers, systems. that number I well of they some larger of legacy

right that to the ownership already that total return customers mentioning the solutions contact well getting very understand now, cost And in have and benefits intangible. they with really before, of of trying we're become we're that those will and is provide was Aneel the as what do implemented investments. other on So and ensuring our course, seen

So are We've before that's of these the cycles. some play. in we gone putting downturn playbook

as but old, And of an times. that seen Some management is Aneel the that working advantage whole are before, us mentioned. of there unfortunately team, and we've at

that playing we're playbook. So

Brent Bracelin

Thanks for the color. you. Thank

Operator

Our next proceed. from question with comes Please Brad Deutsche Zelnick Bank.

Brad Zelnick

so taking of happy but and little of you Alex's questioning results. much up also maybe bit I different to on angle. from about question Thank congrats Keith for Great. a on of great line a want follow customers, and my a set

factoring we model in the impeding backlog upon would of appears the the just any expect conservative large so, to that way last And in presumably environment about otherwise for still you Thanks. renewal guide that into year, you As talked have the QX, flowing cohort given the through renewal? that understandably what a is expansion fact environment. current magnitude be

Aneel Bhusri

Barbara?

Barbara Larson

we account have So full of our it from the and the for normalized takes backlog be did of backlog for the the see of return the to that of QX, to in business that's quarter-to-quarter the more beginning our timing mind, a XX-month the which discuss rate and can an growth. if growth for continues on year, base you guide our guidance renewals the Keep at fluctuate year, view. view guide impact to recall renewal in And expectation for that QX. in reflected best our into today we backlog

Brad Zelnick

though, on color, renewal? expansion you're that seeing Any rate Great. upon just the

Aneel Bhusri

Chano?

Chano Fernandez

very strong, remains It Brad.

I customer is it board. testament ratios the the healthy the a think the and satisfaction mission-critical our and renewal very to very of very, applications remain and good across

Brad Zelnick

Excellent. Fantastic to hear. you. Thank

Operator

with from comes question Cleveland next Our Ari Research. proceed. Please Terjanian

Ari Terjanian

and the question. afternoon the results. thanks Congrats Good for taking on

I'm -- wins? these those? for there And more you're could goal asking, a think And go-lives more Just the profile the to reason finally effect some wanted when think in up follow those just on drove the quarter. the over go of Thanks. XXX if you the higher for line? halo of what's and you when wondering about to Fortune do from thinking timeline some broadly, of be wins What

Aneel Bhusri

at going because HR side, us on XX% to we're the And of on I'm we've well XXX a assume always of Fortune finance the for XXX running I HCM. point, had over over that the -- Fortune XX% this side stream wins. you think of mean

combination a mature, aging. accounting of think It's of a and products systems combination are finance side, On Analytics. product center the our strategic like becoming new customers it's that I really more Prism the

we've months to this moment going fantastic just is a regional projects modules, depends think it's don't these to mean -- point of a are is and big time don't XX reasonable. get us. I these Most great But XX do, They pretty bank it's it can a live can modernize. past is implementation, a in on If the XX A to full to through XX data really trying now live, smaller going a not reference implementation, go it's are. just live months and it core it's accounting, Coamerica to got that's have reasonable So, this for of be I have projects of live. as core accounting, for that -- it's they're this be people we just rate I don't obviously, so done suite, the was to business have months. opposed to where us. quarter. -- us timeframe run I scale points or healthy than better roof going But all scope a -- pretty to XX of the done choosing the business. That of what data customers went the more It kind we choice.

Ari Terjanian

Thanks.

Operator

question, more come one final from David Canaccord. time and proceed. for with Hynes will have Please We our question

David Hynes

Congrats that companies scrutiny we've on you of from a on deals, talk quarter. the guys. heard Hey when now. lot Chano, about

Is For it Workday, me. would what mean, exactly more does implementation Like and Any reference is on color that processes? Is there? interesting I checks? what's price? involved haggling to be mean? it timelines it about

Chano Fernandez

of It are against depending that your It of can you question, side level happens, on times side up level the because It their are scrutiny on the which of It's think also the prioritization approvals on and additional competing and or TCO, implementation many on top just approval. side two also usually around timeframe means because means we and projects typically Thank the our of it we about Board, project. but partner can on or sometimes. the you have an approval going or for DJ. and additional readiness resources. ROI come in you on but Yes. more the they of levels missing-critical the vary, the again, terms on to

those projects, implementations management success other some the or on of of around typically approvals, business investments cost or of reinsurance are and and case, around of opportunities, around and So, in of resources potentially means managing impact prioritization that considering. it around availability they terms things and opportunities are

David Hynes

Yes.

the sense. for Thanks color. Makes Okay.

Chano Fernandez

Thank question you. Thank DJ. you for the

Operator

over to back call management the turn will closing I for comments.

Aneel Bhusri

Everybody, have a good night.

Operator

will and Ladies quarter and year full have today you again on joining a for Workday's thank today's XXXX This conference. gentlemen, us second conclude day. your you earnings for participation call. great Thank

Workday (WDAY) 25 Aug 222023 Q2 Earnings call transcript