- Earnings call transcript Q3 2023

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Operator

Welcome to Workday's Third 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. With that, I will now hand it over to Justin Furby, Vice President of Investor Relations. you. Thank

begin. may you Justin,

Justin Furby

Difficulty] and CFO; Doug Barbara our our our Chano Schlampp, our Fernandez, Pete and co-CEOs; Chief Co-President. Larson, [Technical Strategy Robinson, Officer;

questions. Following will remarks, take prepared we

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

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

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

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

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

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

Aneel Bhusri

you, welcome operating earnings fiscal QX once Workday's that we happy call. a report environment There and across metrics. our we've Thank this Justin, environment key the in solid But to question third XXXX is truly quarter to are conference again cloud finance mission-critical. uncertainty. as had and solutions HR I'm increased well-positioned we type macro because presents of that no before, our we as said are outperformed

our This by repurchase our and share of announce under as We program to help share further can investing undervalued forward for confident while and As ever in the on feel a profitable that leader we we our Barbara them Texas growth highlights capitalize know HCM up and but Health, a program, will where Roadhouse. customers, our million first QX confident trusted partner that is position some from solidified share QX, scale in as notable to quarter. and are prioritize to rate opportunity the the share like given price I'd we today's share including continuing help SGS our details program opportunity shortly, to HR new with will long-term Cloud our going we selecting reach this the remain In Intermountain driven ahead. that, their With long-term more that roll-out reduce belief growth. repurchase is navigate more dilution to $XXX organizations results changing showed, world. Workday and ability our ahead successfully to pleased are authorization.

Corporation and of Tire several had key Oklahoma. we In addition, the go-lives, Buy, State Canadian HCM Best including

have this for of the that solutions, further Workday continue of Hospital event fact leaders, XXX going One provider customers and year's new that of evolve as a wins ever. in us information conference IT see Key and For and and of from HCM, by full us. energy power firsthand included included the in in each XX,XXX customers connected. Rising story that Medical finance This technology Key demand QX quarter financial go-lives evidence strong us Center, Carolina. to customer takeaway to has senior and for attendees get also important is more Medical nearly the XXXX. was Workday note it these open also University. selected the providing growing management the the is innovation QX. big reinforcing of a during Fortune and had with time Management, Children's Financial and percentage virtual large all Jefferson was are of Workday and platform great Cincinnati see be Thomas annual that saw we person community our highlighted It's we Baltimore back to in-person companies experience evolving. We University our momentum City Rising, first is EZCorp for with South our since resonating to attendees and

presents focus IT which the targeted customers CIOs player. top point partners particular, topic where was One to us. is positions Extend. build huge as we true we've the growth us recently CHRO which popular own and While CIO, even a Workday that in of their for for as on unique attendees on emphasis among Workday, their eyes, traditionally Workday and more of of have and platform offices solutions the Extend another lets a increased a in opportunity CFO, solution was placed office

the innovate Extend see to business availability year accelerated organizations several for at over XXXX increases. to Workday announced it last demand the environment we've for we and continued today's need in as in adapt While quickly

moderate with and solid showcasing address deliver focused priority than devices, which on business. they UX number We to also meet and cause delivered and growth CIO continue as we to environment finally, our more the we enhancements macro we Slack, near-term, employee Teams are of personalized engagement. us such constant that of across type next-generation continue we this driving personalized Fernandez. a quarter they insights key more the Microsoft of use securely Workday further flow machine to to again and to closing, ever uncertainty our reinforced over announced believe customers' digital the employee every that as work technology initiatives, is our has why work are to new increased announcement more helps our stronger. data And And co-CEO, emerge customers natural helps full bring will allows we their mobile their to workforce the This intelligence of skills once this navigate the Driving our into experiences. backbone and evolving while leverage key learning skills of machine needs expect that In well-positioned a of gain in focus even to with environment. and power artificial strength be in our over Chano, address that, easily deeper Chano success and innovation customers leadership been out the to I'll in you. in With and more it to of will always Workday. turn another growth learning skills to

Chano Fernandez

workmates my you deliver quarter. today's by more everyone and sincere than want to solid XX,XXX help for Aneel, another the that start to you, thank thanks I joining call. Thank us offering to off

focus hundreds which Rising of and Workday and continues Rising Workday team. and Workday on been opportunity Stockholm Great Your a in in couple I've key the broader including on in up are themes the to community and wrapped customers emerging. months, September. prospects, relentless the customer had job, has time US spend Europe, there with in a back of road to the push few lot I've forward. the us last

macroeconomic will navigate look they one nearly I viewpoints despite systems. to legacy today, modernize speak the HR they constant challenges facing that need companies the First, climate and thing realize executives But ahead. agree present the The the it's with that change have impossible like different increasingly financial all with in on is their what is and are the on systems. year to that

there consolidate spend more clear a organization's vendors. desire across and to Second, strategic technology a is prioritize new

the SGS, outperformed From both a strategic CoreHR data to more enterprise. they has XXX. to of and APA all And backbone with the of large trend solid expansions of as North addition validation across wins our and mentioned, look of business saw America, across digital this geographic HR standpoint, to Aneel Workday finance, as several Fortune more I a direct also with results in power enterprise And sizes. in a FINS number that the the going and across few. their Building, across we of across wins Given the Bank harness medium Pharmaceutical companies led when is wins being Fletcher Queensland, and positioning results Alliance organizations look across with and important seen our solid had to all expansions, a themes and QX EMEA, at Equiniti. of a Medical Ono Trip.com, at and including Group name we of number in these

Pay, renewal once VF team expansions very that Nebraska, QX, us we the are of of companies a again of growth, a n Maryland, at in University state outstanding placing Puma a saw strong closed as sales customers strategy. base reflection drove customer our rates validation and We trust and such strategic Corporation. Our of direct Accenture, in and the Pick of number

driven recent by Analyst customer broad our our at shared being our we portfolio. Day, is base momentum As

Solutions to optimization, employee example, such as for and support talent experience. look as seeing are adoption journeys, help customers strong

and focused Center, optimization customer solutions strength While Accounting payroll contributed products solutions to quarter's the as our this resonating all all across other increasingly and our time and on base. Planning, customers scheduling, Spend labor Management such Extend, as are VNDLY tracking are

supply costs the care leveraging and this focus Our full recurring a and revenue. new two billion where we strong By HCM, of chain materials. nowhere QX, pay to vertical And to help labor in far, where health off. evident spend these largest growth the able our and organizations annual industry care they critical by in ACV more for In optimize areas. than had suite surpassed FINS we was are $X.X continues are across solutions, health

In QX were wins fact, larger and our full including care suite, chain health supply management. all Workday's of

the accessibility. the within also highlighted across healthy a momentum was REIT suite the saw platform, and the win. significant included in Other Global KNOWSCIENCE cloud, we continue Accenture, full developments industry new public We wins as co-innovate cloud to expansion professional at and services [ph], industry, the [ph] in by strategic services professional including skills which quality aforementioned

becoming growth. Workday address platform our an and real-time operations partners partner Examples innovation also which their Accenture's of and seamless customer solutions, revenue solution to companies. enables expanding strategy deep innovation platform, the our with partner-driven faster is to industry even our increases core billing driver capabilities digital across is quote-to-cash leverage of built of allows our functionality in the the revenue include and CPQ Our differentiation increasingly ecosystem differentiate important to challenges market. driving integrates for Workday's the enable insights on which software recent to innovation solution, and technology Key automation, to

which Another the recently Extend, employee document with by we finally, partner great and is storage provides built and a document document access several road have partner Workday These our were our Kainos control just and customers more example are tuned that retention released on by map. management, on ecosystem, generation, few those rules. solutions advanced

environment new scrutiny lengthening sales the As fourth the led move certain uncertain, we to remains increased with opportunities. our of has net which particularly quarter, cycles, the and into

our year, that see Larson. I next it foundation While will Over laying beyond. are With diverse that, are to focused QX Barbara. and will XXXX confident we executing turn persist and in in we CFO, aren’t signs it on for into immune to strong a and FY our Barbara and over you, to pipeline these

Barbara Larson

afternoon, Chano, everyone. and Thanks, good

and As up as was face well Aneel revenue Total company, nature testament and delivered X%. billion, outside and the the and $XX.XX million, solutions. end revenue billion, revenue XX%. result total the in retention XX-month US XX%. respectively. economic of growth Chano at results professional solid uncertainty, net Total to QX in the was backlog new XX% over was strong sales revenue mission-critical $X.XX mentioned, strategic QX QX representing over end of was million, renewals, strong of of at and business up the of up services continued was of execution our we rates $XXX $XXX driven across by third the backlog gross a $X.XX the quarter of revenue. XX% billion, revenue Subscription XXX%, year-over-year, with solid as subscription XX% was and The

across driven of Our by expenses XX.X%. QX quarter timing the non-GAAP for flow operating cost business resulting operating was of $XXX third was operating was million, X%. revenue into income cash in favorable million, the and growth $XXX variances certain overachievement outperformance, margin Margin non-GAAP shifting QX. of the

was a associated with $XX Our this impacted debt payment offering. interest flow our quarter million cash by semiannual QX

billion X million also the cash a resulting off on with principal reduction balance share diluted We in non-GAAP October, of in roughly our convertible to paid shares. our $X.XX count debt

Given reduction reflected count the share non-GAAP weighted will share late QX be timing, in this fully our count in QX. average

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

strongest of a strong expect the focused on we're of as We into across quarter we'll performance business, technology. and moderation in product continue executing year. of QX, the but strong add key go-to-market extremely proud strategic we QX, QX, seasonally notably Overall, of the and to hiring and move in we're growth talent company-wide our areas

both balancing FY reflects year-over-year in environment. our that guidance is revenue macro subscription growth. 'XX the momentum uncertain to With XX% guidance, $X.XXX billion billion, which while turning Now, an business, continued now $X.XXX for also representing our context, to

expect $X.XXX billion project. delay services growth. to We We slight with revenue reduction revenue professional year-over-year subscription the to 'XX, the large to by in QX be billion, a million FY expect driven $XXX be of $X.XXX now XX%

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

approximately We expect XX% in to grow XX-month backlog QX. year-over-year

expect operating QX. out shifted QX XX.X%, of which that includes margin some We of approximately expenses non-GAAP

'XX will our than take trading FY the the open non-GAAP quarter. employees the XX.X%. margin now operating Our full QX in fourth quarter window employee operating that XX points guidance percentage to plan a the year expected includes change provide lower approximately is margins are GAAP to both be for non-GAAP to our effect to margins. stock flexibility more during This each and

non-GAAP from the for million the in to at of will This same Our an $XX stock-based approximately result expense outstanding remains compensation the of FY by dilution. over XX%. stock-based grants, resulting each years XXth few month Xth amount tax QX. reduced vesting our and The move will no change 'XX on acceleration the compensation in date has expense of in next impact all rate

to data our We over $XXX of billion, are outlook future capital to to cash we million $XXX program reducing out reflecting repurchase FY XX-month expenditures timing our as in $X.XX certain And period. pleased pushed maintaining center to the million, flow Aneel being investments periods. with repurchase a announce shares 'XX are for and mentioned, guidance estate operating of approximately share are an authority to up but real

to continue to our organic will towards undervalued. of by program of in a shares, stock employee prioritize but we and given and allocating sheet innovation, reflection future the dilution our followed free We M&A, of cash capital confidence capital portion a targeted business intend are that our This our our strong towards repurchase balance use to view partially programs. from is us shares enabling direct repurchase currently offset flow, the

FY preliminary next While year important cycle view to are for a planning like of provide our in and we'd ahead, XXXX. QX an we early have

Day, As our of levers on to significant XX% have opportunity growth plus goal long-term growth we revenue. that path discussed subscription billion in at a revenue drive our and Financial multiple $XX sustaining our Analyst

sales currently given margin to our lengthening macro of XX% currently operating we're points begin flow expected This to close expect environment. multiyear While cash work. XXX revenue. the operating to on non-GAAP The discipline. margin From firmly based continued we that FY on we'll it's preliminary XX% new billion range margin into standpoint, underlying support cycles ongoing is of And and expense basis or market XX% net a at with subscription uncertainty, With FY for and turn to billion seeing to this the scalability finally, us XXXX by investments of margin a outlook expansion expansion amazing our the impact of provide non-GAAP I'll business the our continued believe our approximately operator placing $XX XXX growth appropriately partners over business. operating employees, continue their target levels, plan thanking margin our of track from XXXX to we goal, prudent growth. model, to $X.X account customers, XX% I'll by to a $X.X takes billion remains year-over-year revenue and FY the that, Q&A. we in hiring, in strong driven the see it of and and operate agility, hard what balance We to moderation XXXX

Operator

Thank be Please Sachs. conducting [Operator with question now you. Rangan with Kash your is question-and-answer We’ll question. Instructions] from Goldman a session. Our first proceed

Kash Rangan

and able fabulous, some some expecting, to quarter wondering how could was everybody next do and given well has And sense, are the been get so that economy some companies recession to if nobody's could actually I tough to headwinds. surprised. year, you macroeconomic considering wondering offer the into be are this much. much quite better software conditions. you does you you facing Thank us the has other even impressive? In you extent so time that a been execute Workday I is we fabulous so was perspective. give your could improve, going a during results Thank relief some if insights if

Aneel Bhusri

Well, but the comment year don't Kash, quite thank I for think yet, we'll kind just comments. next you

in do XXXX, proposition downturn like did value a our the we you does as just other a good think XXXX market want in products every add and it in just to downturn. Chano, anything? I works of

Chano Gomez

are mission-critical as HR And you these our No, they of being spend I Aneel. well, think vendors, really of across is one as consolidation customers solution. finance I there modernized Kash, clearly with are a said and applications days. comments solutions in said, those resonates agree and their in my believe I I with of the our we what as strategic

Kash Rangan

much. Thank you so

Operator

Please your is Kirk from Evercore. question. with proceed with Our next question Materne

Kirk Materne

funnel. a Chano, the guys than guess, little congrats a sort I in others. the COVID talk I extending. deal really what and if a top quarter the environment. you at some seeing you much of bit some about Obviously, recession came I'll little tough of you just cycles very Thanks echo could nice of Yes. talked about on a wondering perhaps later was bit you're out the

that I terms that new your sort current cliff think like this it sounds net feel wave there in there's But about be a your might good of fear pipeline. pipeline get we in billings. of once of some pretty out there deals guys you through

expand you of if wondering on Thanks. just sort was I So could that?

Chano Fernandez

Thank trend, Overall, we said, vendors towards as and pipeline you momentum and customer see ongoing to I enterprise. market as continue maybe, you transformations, and companies can your dynamics overall? important What the in for of and prioritize team. our momentum, in areas a terms There's Doug, HCM base financials consolidation Kirk. add some color clear well deal question, growth like pipeline but of good medium is

Doug Robinson

Yes.

well, of think as which two is you -- streams. I we've diversity got revenue captured described, of I a Kirk, it,

performed is us. motion. expand So mentioned, base as their a wanting got rationalize Chano and footprint large our certainly was And of conference well. with theme at medium customers enterprise that our heard I number to the suppliers customer customer We’ve consolidate that

I that certainly think So helps.

In is year, pipe your building terms our now, that of like sort it's so targets. interesting which largely top we're about internal the of our of next build, the pipeline in core the really met of funnel question, QX

seeing we're time, elongate. formation. some So the we're At seeing project same projects

top have starting complete. to internally. Those of the time, be end, they think projects established that at meeting the large So projects new. to goals enterprise this, extra is net the but we've At Chano mentioned steps tend the I same

Kirk Materne

Thank you all.

Operator

question. Our with proceed JPMorgan. question Murphy Please is from with Mark your next

Mark Murphy

many it's of it's it some the FX, Is environment add when inflation, pent-up just wondering time rates, value that. type volatility your it's that your of navigating have mentioned, in and a I'm much last builds together so whether to with interest way decade, I'm see the Yes. interested increasing I'll than any really Workday as Thank improve? maybe cloud-based, it because the supply maybe and future environment the in you where very Kash my that very well. you're vectors moving issues. possible Maybe in the effect coming environment up rates a you win had if more that chain little demand prop around elevates so planning, sailing we possible this of integrated in starts way smooth some this through you for in that of the congrats.

Aneel Bhusri

wish on in start the I'd Well, across with We see a see the movement definitely Board. some the new see time, get volatile that making -- I cautious that was customers decisions. me help guess, At right other got through -- I are to to environments. case I some in downturn, you you stuff just well, there same the these are to manage

follow-on or other the -- big We're they think I the are tend feel out. on are who big be anything there's think, behind made a others all 'Hey, on a this sure sure there is to a balance like to are I negative making transition. I'm And for each who cautious it's transition. definitely already the add? seeing so that But environment. make not Chano, there not transition And a then same that customers catalyst to purchases. I'm boost for let's us. us maybe

Chano Fernandez

add. to Nothing

Mark Murphy

you. Thank

Operator

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

Josh Baer

the embedded I in guidance expand Baer that a macro FY bit Keith. are could This Josh range. hoping you on is that Thanks. subscription on revenue assumptions was for XXXX

same What new from areas stays existing about wondering Just customers? thinking renewals what business expansion get the or well from as logos new different worse? as Thanks. geographies when and

Barbara Larson

your question. for thanks Josh, Hi,

particularly we balancing enterprise, across range this account net base, medium impact that our guidance but opportunities. that areas important our we're the So is best the growth also takes momentum our that lengthening as view such at business, new It sales provided with into cycles time. seeing continued customer

impact the estimated low-end an that a than seeing assuming we're sales range provided today. we of subscription environment, So to with revenue range, given currently cycles uncertain larger the

Josh Baer

Thank That’s helpful. really you.

Barbara Larson

welcome. You're

Operator

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

Justin Furby

question next the please. to go we can Operator,

Operator

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

Alex Zukin

prescriptiveness I'll on in question. only on environment. for line my top both guide, and the extend bottom Thanks the a my tenuous the of what quarter, clearly congratulations uncertain Hey, on very is but taking and not guys.

patterns maybe compare guess look if into and what contrast from can Chano, emerging XQ, I in guess, Aneel I we with perspective the -- cycles the this in sales So just you at the guys the business, going a one, pipeline first or impact your the where that, biggest HCM be expecting contrast on to growth in compare on I versus you quarter bookings better and super FINS feel helpful. on bit you would ACV are think a specifically -- be new or and maybe little

Aneel Bhusri

Well, let me world spent lot XXXX, just time to and like not is that No offer sees did I an a high-level of this XXXX. at commentary. one CEOs coming time. other a with the they end

quite a right world we're now, where but don't feel happen, sure bad. what's think I one's no things of caution, really to going in

can and same. And sometimes caution look -- but the so stopping

And potential Every is and CEO hard the the still of their about relatively so now. talked of business, right Fed to kind what I feeling doing underpinnings it's is the predict to recession. economic worried but about positive

that back think, so, in And scenario, coming not an least how think -- cautious. to XXXX, everybody quarters, how in like you that it's don't Chano, And the I is not is I -- do the this and that pipeline is know QX at but keep end-of-the-world reflects other yet, word I XXXX.

Chano Fernandez

to HCM first, Alex, between difference the when would you, FINS, I say, it don't for significant see other. Thank Yes. any comes or one we question. your or

it on to When would quarter. the environment. say So we QX, to I the they're execute the comes macro impacted had given pipeline proportionally

said right? prioritized, as a commented because the have on happen will but scrutinized those they're prioritization manifest usually next that for net we of those, some not and course, pipeline opportunities And that been already it before, lengthening as Of particularly growth sales cycles may on on projects new Doug year. more deals already

Alex Zukin

it Perfect. And what into renewals around that assume there how base? in little I it selling and a net well be how base think And is the should could into specifically, about you're new that predictable on customers? year, of the bit is bookings from bit if well doing more commentary I fair sell dynamic to easier, existing important I near little guess, coming how of think more some that a term, be for and be -- a it given bit your concentration next informs margin then, the you're saying to kind should

Chano Fernandez

said Yes, there these is and will focus hence, we enterprise, that before. And sales more environments will environment more on base yield concentration potentially be Alex, assume and it fair we'll like on to provide that both put areas times. on customer into of areas, then medium as go-to-market marketing course, the those higher

Alex Zukin

Perfect. again. Congrats, guys. Thanks,

Operator

question is question. Canaccord. Hynes your proceed Please with with from next Our DJ

DJ Hynes

Workday last you might with versus guys. Maybe lots in level or thanks like draw Hi, about the the curious line I script. or there. an what where own working maybe industry accelerators. on bit about Alex's building they're build directly the let there's to what And partners off interesting assuming you question have visibility on go what there, with mean you partners? of Extend partner could you collaboration I'm commentary a talk on of have you

Aneel Bhusri

first? side. to want talk partner the about you talk do Chano side Pete, And product about can the then

Pete Schlampp

that Sure. question. Thanks again for

momentum the that financials. lot, partners well. beginning that Extend applications where recently with a this on well as customers in that Orlando HCM us our seen as with that and from, in been coming net As now year, new great. as We to connect to has in is When about you about at talked and Stockholm user over talk it conferences production. we've XXX heard applications Extend applications Workday Extend platform and is Partners the comes and are build it it momentum build is both

what what value those. The between question both So the line over of through is been have far, I'll of we hand our customers where partners, draw Chano. our the is to getting -- ours do and

Chano Fernandez

important. partners platform think, driving mean my the Yes, across on as is we co-innovation some prepared critically with I I our very remarks, of commented clearly

others there's revenue different with we say, of specific our we're technology you course, some let's the employee value-add like as again, where more let's more, line is would on. a mile particular see see some would we industry industries advantage of say, it's terms in kind adding to that take be where is understanding across Extend from content-driven in software last and draw of say, of But the You we of partner, I that companies. solutions partners when provided customers. industries, are value partners. just need or solution. opportunity the a that document something that add don't collaborate that building or -- resonating I management would bit of to our with the that maturity honestly, industry bring value us define like document to with -- that that define There the is in and that a these the management there a critical with mentioned customers of very building But value solution, I to core, add that for an our operation would

So, differentiate we're as our can pleased, really and that imagine, bring to additional customer can partners you offering customers.

DJ Hynes

the Yes, year? see the were not is, always there? sense. then, great balance of buyback could Barbara, more aggressive I us Why sheet, to for where in cash follow-up the ask generation is next stock makes be for Like And sneak what The you. analysts a considerations expected the maybe strength more. given

Aneel Bhusri

more. I'll Barbara answer to I think do because probably wanted that one

You just into environment don't know king. cash what and a going economic you're tough is

definitely a there's of nine environment six next And could good risk. And conservative. we more, you the be so months, wanted if see market out balance just in come to we a to in but

DJ Hynes

perfect. Yes,

guys. Okay. you Thank Congrats.

Operator

Raimo with Please is proceed with question Lenschow Barclays. next from question. your Our

Raimo Lenschow

moment of interest we're like money do seems me of over great well. et from that Congrats and you the strategically you customers you HCM Thank reshuffle, in a kind that's And are post-pandemic part position a HR you. we're cetera. are? Could with a thank of of at do seeing the think pockets in short-term one more -- the there in that trend, to thing HR is is enterprise? new you. more or the the terms think industry that as thing having back Chano, that at that in be seeing Hey,

Chano Gomez

Thank you, question. Raimo for your

I of clearly, good now see are in the of out we out I ones of market, we they say as that into. macro speak. think tailwind and be are of course, environment nets out place the living taking But some the transformations balance both to But financial with would them that we those the pandemic. has

for time finance not a tough simple of lot of just or their that not whole in those many to closing you we're things and the value all advantage machine their a see skills to to books could companies of of HCM platforms a as engagement just AI to the like HCM, office. employee proposition Clearly, processes obviously tailwind in bringing online want navigate modernization a were continue the be and of the the learning through happen great a processes that As once doing companies are whole. a dynamic honestly value-add area, having in to and in terms terms take manual to and legacy as

Raimo Lenschow

kind maybe talk in follow-up about if selling to one out deals execution think kind journey days? this in thinking older can coverage the market. you then we recession cetera. sales pipeline make to these that are I'm time you of terms steps the selling we on of in in of Like handbook tougher of used kind continue a bit higher And slightly implementing of sure taking take of about et making you little that kind more the to kind Yes. -- deliver you kind sure where you about of is environment, policies of kind you're this of better,

Chano Fernandez

the there some color to in Yeah. the add strategy Doug, do you sales market? want on

Doug Robinson

Yeah, sure.

we Aneel TCO-based engage way Chano, think with and you, have pivoted might after I our at ROI-based customers right but to QX. to QX, it or mentioned

with it entering environments, tougher comes out, customers. take dollars Of hard to cases can But down you that system our course, a TCO, business always done productivity. we've rationalization

So it's I focusing think customers with showing on really HR side. up the our

labor doubt, tight no there's So markets.

it had by relates And think, side really driving, of it was so it. We QX earlier as TCO to I touched the that on on financials. a that's And Aneel. good

older in and as agility those sure, environment. And companies start are they that business an quickly -- it execute, plan, And are us those with to well. ROI-driven FINS pivots when pretty offering engage an performed uncertain more analyze well. systems, up might looking aging it for retiring with but So plus

of a go-to-market, the lot a on the from that we're time with So things a those spending are resources field deployed case. customers from standpoint business

Raimo Lenschow

Perfect. Well Thank you. done.

Operator

you. Thank

of Please from your with Securities. is with Brad question Bank America proceed next question. Sills Our

Brad Sills

around you I question so year. ask next Great. Thank a much. to wanted backlog for

what comments feel moving next is about really In your There's made you that kind mind you pretty lot budgets you into QX. growth saying HR, into Chano, year? as And well? a next of pipelines parts. think, feel sustain next office year. are that of they regard office Do of some I heading good about with can QX question you to what of everyone's the on CFO, for with year confident conversations this

Chano Fernandez

we're question. your going ROI-based, we're really where the scenarios we're momentum exactly them guidance, our commented. might it Doug cycles sales right those we the the the having cycles, is clearly, that, medium fall even on a new given clearly, are be right, what's are their they going here of we're some on environment. and question engaging as and year and on through are And and of with on some our or those companies pipeline maybe our pushing for of those just right of conversations we might the the momentum our was in different And that of local the you and Right that of discussions. prioritization good on has on monitoring customer budgeting see right? commenting that outside feel particularly where diversity thank now, business, now, So clearly, most Brad, be build next that though lengthening. cautiously base, new and enterprise planning Well, discussions discussions, forward. strength But what now, we But having TCO put you happens the Overall, may some of have on some building given depending projects. of

Brad Sills

may, then And I Chano. one more, please. Thanks, if

Just verticals. on the

a to the have exposure guys that sector strength more made Is perhaps you some public by education out perhaps particular affected those less there of kind to in macro? healthcare. be case called in You financials, more resilient with verticals

Aneel Bhusri

better of tech tech pretty Silicon held newer they but of at got the across in companies, exposure a industries When companies. huge to where we what's all to not a have and Valley, be look have exposed I company amount happening way might bunch we're We're diversified than maybe others. some a the definitely up tech just

So, to tech company. -- companies tend be mature our the and large

there's financial of The have is is rising think sector up. they interest there. grow, don't and services sector financial held that's any I though. to we say strong the very one I So, strong, continue services beneficiary a rates us would particular and presence

Brad Sills

Aneel. Thanks

Operator

question. Our is Brent next Thill with question with from proceed Jefferies. Please your

Brent Thill

I'm follow-up now number to the Thanks. of and ed. in government right been state have of and partners a just higher A in us those if on drill sense you could about sectors. Aneel, verticals. talking those strength local both the you're on two, what seeing in curious give

Aneel Bhusri

Doug turn may that you talk are I over to one about. Doug, to there?

Doug Robinson

was mute. was Yes, that sorry Is government. around about that. I on question correct? education, The

Brent Thill

local and ed. higher and State

Doug Robinson

Yes.

down on student took showed higher students a a number quarter in in we a number student So deals ed both while QX. we some had performed were but doing We for financials, side, which of growth nice or the really HCM the deals, well and in of the quarter. there,

about feel both we verticals good those now. of so And right

Brent Thill

real Barbara, an the compare in was kind follow-up contrast what out the just anything hearing, US, quarters. It Can you're just is international? and in there anything can Europe versus we've classic or seeing? quick lowest been you I execution? specific on growth five on what over point there the still Is just to of,

Chano Gomez

an of signs I the going is world, on we where more see, energy environment have would increase cycles that more else cautious a we segments. general, Europe. relative near And challenge. in Europe. say, clearly, in uncertain Obviously, top other on in everything say, there the would as big terms we say, I happen in And things to and are and deals going other sell than in of the what's in overall markets let's lengthening

Brent Thill

Great. Thanks.

Operator

one with your have question. Needham. Scott from for We with final Berg time question proceed Please

Scott Berg

Can that out the or questions relative change, we baked within of guidance, everyone. you to I guess then Hi of sort interesting relatively potential have enterprise will that's of mid-market a macro think couple in into mid-market, uncertainty untouched. relatively straightforward the And an understand for not slowness of being, any you the guidance? we're what called talked end mid-market be help kind Thanks taking today? maybe as all different the this kind in conservatism us impacting slowdown really one guess, and slowness Thank at any you. to I the as We think seeing of about the a the my I maybe times. some mid-market least that's weakness going what's about in on see there. also impacting additional the you low the guidance out do is segment,

Chano Gomez

the enterprise that Yes, we I is we customer the is the strength course, guess said we've in impacted. not What and had in said mid-market overall not base. medium more that, of

those at it look we either to approvals. additional case are we that more. or -- usually more happen business tend to it you see scrutiny larger what Clearly, If tends around companies deals on the the and larger

strong HCM brings as to a whole, terms and finance ROI, resonates very mid-market, value on same of total brings cost implementations, the value good that fixed is they faster that as of cost transformation ownership of time and is the and assisting across and proposition clip main predictive value and platforms. in a Our they're the quicker ones in is a are their and financials proposition on mid-market taking modernizing good

Operator

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

Workday (WDAY) 29 Nov 222023 Q3 Earnings call transcript