WDAY - Earnings call transcript Q1 2025

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Operator

Welcome to Workday's Fiscal 2025 First Quarter Earnings Call. [Operator Instructions] I will now hand it over to Justin Furby, Vice President of Investor Relations. Thank you.

You may begin.

Justin Furby

Welcome to Workday's First Quarter Fiscal 2025 Earnings Conference Call.

have Robinson, our Somers, our Product we our Zane our call, Officer. Doug CFO; Co-President; the Carl CEO; Eschenbach, Rowe, Chief On and David

questions. remarks, will prepared take Following we

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

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

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

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

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

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

Carl Eschenbach

Thank XX% backlog today. I'm you, including of growth, solid joining Justin, pleased XX% subscription quarter, financial for to and our for revenue XX%. all performance non-GAAP the operating XX-month you and report growth, margin us thank

Over total made the including for quarters, market. including the important past to federal changes we the addressable of set important we've foundation closed to changes on that quarter, will a further business go-to-market key several several well the continued X growth durable across margin continued investments And strategic in Intelligence growth expand Agency. win number organizational initiatives, as help and QX, deals, we the build expansion. In Defense at our us landmark a as

organic to maps positive and company. We are our also event We the industry future where we innovation of Workday. feedback Innovation annual be industry from our held the analysts and the hosted on already of strengths seeing analyst with engine, key showcased which one continues the lots XX Summit, product coverage of road of our tremendous

continued We When sector deals large closed financials customers prior slowest. to outperformance, purchase last areas levels compared renewals headcount are decisions deal increased are seasonally rates as had public seeing we being the scrutiny we Our including made, notably than our we committing had first experienced quarter clear in quarters, But quarter, QX, health lower also and fewer strength our platform is to full care, remain and we but to always EMEA. of wins, and expected. strong. win within what compared in on

revised guidance. is FY We reflected 'XX subscription in to in revenue expect near the which dynamics persist these our term,

remain confident partner margin with macro, control, that and ecosystem build scaling and customer balanced the our doing and business things our While in is what's we innovation, expansion. we're we value. We focusing growth right durable go-to-market can't the are a control and to on long-term delivering

talent AI, landscape, to in their of work. several elevate turning humans made the operational share that trusted realize emergence are and QX the Workday highlights. and platform With and our geographies efficiencies, pressure to to supercharge as shifting position, I'll and key a We few organizations industries developments strengthen across

Let's with customers. start

quarters. only United expertise Our intelligent customers partnership they'll and identify, will Defense are the States. and but example Workday, A win, problems of emerging needed. Not mission it the new incredible unlocks the agency DIA significant on they support an intelligence for power over workforce. in coming government, most truly federal importantly, onboarding we our to and expect agile is its bring and be for more to integrate, and is opportunity trusted, Workday this With market diverse, to and life. pipeline able Agency. rapidly create a the direct Workday national new DIA when efforts recruitment key our to in is Intelligence the a great solve The defense increase to with where the the skills accelerate and Workday it

DIA discussing the at government. Federal transformation Washington, Forum digital was our in on in In fact, the event stage D.C. yesterday

U.S. take world as its of forum the year, the HCM Milwaukee, This in In is our from here QX, go-to-market across of QX people Health, XXX% customers than the nearly our and Baptist FINS we last HCM government value year, single compelling over year. is last money. a XX% over second of decision-makers drew our in Forum more continue Systems, we to in than agencies of a QX, Owning proposition customers building leveraging XX% investments share manage with now platform largest customers, power exciting. And the your of added of by Covenant XX platform the held Health Now X,XXX of than platform speaking the and from privately momentum platform to our more And staffing up platform full new company secure Group, both and full of increased several and FINS City more having bolstered momentum, including and crowd record are financials, XXX customers Federal and combined Financial Management both well. In the are policy. and our we

a within including We John number Bernstein, Sisters also Alliance System of the Muir Hospital Health. expansions of and CFO, the Health had office

several Services. in footprint the Sandvik also and QX, HCM, new with relationships the our HCM expanded we largest renewals, HCM. And core its ALS financials which to and including During we of leadership ING adding one in expanded expansions Valeo Management AB, Carhartt, organizations, USA, P&C including insurers and add Bank, had strategic Group world,

us our our clean, our delivering so of and huge They than generating went trusted million per LVHN of AI ultimate data on Apex Workday been ecosystem platform, for We've and advantage. with unmatched. and to XXX navigate now We help them did nearly Electrolux, Workday. Customers AI can our to live and which on capabilities truly our help trust year more decade. AI to transformations. the of transactions natively features the them Group, AI productivity, for they're customers core leverage responsibly a than all Richland, celebrate cost live savings. is the applications. And Workday functionality county Beyond of when means our leverage AI them efficiency, on platform, billion turning QX, cloud, Asda, more volume we fill users successfully that to drive XX into and the customers Workday all go in wins, embedded our platform. the Topgolf, to with gives In are

articles. cases productive. In several that meaningful to early use trusted efficiencies, new continue our on access content in decisions XX innovations the and people live put further drive information their growth and including automate leadership tasks AI than in responsible These hands plans, repetitive We use more generation job to confident cases capabilities AI area business right and and QX, customers, map make innovations to people for went customers now our investments more make and We deliver the our make significant enhance descriptions, with faster. of road have AI-powered and in faster, help generative increase live knowledge-based AI production this XX results.

to to HiredScore closed talent the and to as pleased is help SKU This which AI-first detect attach well. a we our back faster have deals half base seen has rates share I'm where AI We giving Perhaps over leverages strong new professionals us on internal Workday map, in our payroll acquisition making money example an risk. and which here anomalies that AI-powered reduce customer fastest-growing mobility road talent solution, customer Cloud. this also and more Payroll licensed and offering. it one the of product, our have we accelerate our our acquisition best core to accurately comprehensive released significant selling AI-enabled is of save base now QX, Skills Insights, optimization of momentum ever. Continuing

to excited increase reasons realizing quarter so We are pipeline, than our rapidly and purpose-built a been foundational for example, a flexibility ton deepening key services, We've services. and including our This recruiter the this base one and of offerings particularly on this us customers building shared sector, focusing verticals, fuel for major Our deal customers. The in with key of a about financial XX% capacity a industries. more Workday care, recruiting growth, power our of across platform, closed and in our is combination. gives in we're many is that element AI, differentiator X,XXX of health public us. professional first joint we're

configure with $X streamline well CRM its on from this in with care and process. released once ACV well billion quarter, natively-built services quoting which growth in see solution a At platforms is quote already exceeding businesses, vertical performed can logos revenue. In As way business services to recurring for QX. new time, you annual the again to very in integrates XX% QX, the health eclipsing our we professional same the price

customers, their quoting highlight is for significantly in going QX. sector still that XX% to this efficiencies. Public in shows of research so Our increase happening today our was spreadsheets is another

so customers Iowa product and we in number on taken levels and excel DIA, and and We're University to for QX this to new full enhancements. the now continues In University. Global key to year, growth the of driver and Palm we continued businesses System, had with record Workday. in at cities leadership, to all University, local our expansion Las focused live a Forest local north investing State platform Milwaukee, Workday And be of closing regional including and build Monroe addition of with Arkansas government, Wake XX have Washington wins go-to-market, far state a education, Student and Vegas, counties. Bay in go-lives

available. quarter, extend native generally for platform strategic For payroll for available customers we early ADP, like payroll more. our Australia in power with as the solution instance, of Workday became and And our partners adopters global Alight, this now is

new APAC, throughout over together existing pipeline and began and events U.K. the QX XXX in Workday side, EMEA and continue than we thousands we On our X generating the million years. bring and go-to-market of GBP week, will prospects in announced last holding These next Japan, our plans events just deepening our operations Elevate more to customers, relationships. And across QX. invest

We U.K. for Cloud in we core the that only data in able the XXXX, customers also HCM enabling boosting the planning we're future. announced on solutions AWS compliance residency will our performance our locally adapt financials and access early and also with helping to scale be are requirements, the Not businesses

OCP So of as our the it our we'll quarter organizations challenging continuing you Aman for power included how I'm we're see, Netherlands, Group, to and energized we empower to and in able international saw while and a more be our Key growth, international wins of U.K. by can France, platform. And strength invest the with Resorts. more Frank, Knight was Japan. in QX markets, in some

our a sourcing through increasing is and board, our Our than co-selling which the Across with FY it in and partner efforts, growth, and our success, more key powerful sales referral we're both This ACV seeing grow continues of partner ecosystem-led points customer is and more breadth a continued of priority. in in driver 'XX growth depth. QX program. closing ecosystem pipeline all to to

We that and XXX to have expand helping partnerships co-sell market. are over referral our routes

products Workday Cloud about and QX partnership, signed excited is month. transaction expect will a Under the One access Marketplace. customers to via of that we in I'm start our particularly first fast that the new through have Google. to GCP We're have the Marketplace off our we Google to partners this

our Workday complexity, enables our ACV banking over should partnership with we reseller of $XX network expanded with with requirements. Partners include Kyriba formed to across expanded banks. integrate X,XXX new welcome developer a XX% weeks, agreement changing grown a global since that our is distribute, helping industries announcing to Vegas with recently to This the we're active in ways new and Las over platform. and enhance and In AWS go-to-market footprint. that. investments. And reduces needed partners broaden We X last critical DevCon, integrate DevCon, a Developer the QX, dramatically partners accelerate bill customers for also event, customers more the than co-innovation and as their the to we'll us costs At platform. testament annual momentum We for adapt are and ecosystem, the of monetize pipeline which to only Conference. million X,XXX our building applications with well AWS and time, has relationship our year, to and on build, to innovation be as accelerate by we'll Workday across

now to an apps QX from than ACV significant Marketplace, we More from value appetite partners of together ways just Gateway gives Pro, of apps which that X the of solutions AI innovation Copilot enabling and our as us few the of platform. clearly as of more but and partners never place. our Workday customers And We partner year, and our of the components SKUs. of the are going Workday. our program our is done in XX% well leverage to Workday and These Pro, and We Extend well. power our partners one are XXX our ecosystem top Workday on we've platform later and live build partners. delivering within to Workday are of to than next breadth AI apps which Extend this third-party cloud-native a X,XXX Extend, the AI-first is making other enables includes AI-first platform. There build of Developer another also access it fastest-growing from across customers have enable customers as Extend Extend launching examples AI latest innovation launching our reach just of to customers month, of AI Workday customers our several best before. With our not embed in the was our solutions in

Workday deep partners, as and business excite market With is to remains long-term challenges drive organizations' said investment relationships This with customers have our positioned AI, levers have durable our our Now I've ability drew and to we our to close, most leadership. the exactly and times, unique address many a critical to well Workday me. what we me extend what to multiple with leadership and in to continues growth.

we're business includes serving incredible more than We now across strategic of the also XXX, the XX% our nature which to XX,XXX have a customers diverse milestone than organizations Fortune more of industries, customer an and a yet, testament our just with started, a than expand And addressable more deliver more platform. value footprint our and opportunity base. even continued to our getting existing within in XX,XXX and market

around put like the world drive QX, the Workday to to With the who their it trust into near we forward. Workmates partners, continuing positioned and customers Moving us, term. hand I'll objectives helping XX,XXX especially achieve over while well in term to in build are Zane. our for my that, I'd thank long our our to for

Zane Rowe

thank call. and you joining to Carl, for today's Thanks, everyone

QX and international revenue Our year. including quarter our $X.XX the in with growing our point a the $XXX million revenue to total QX benefit Professional XX%. revenue the revenue up expectations revenue of QX was in $X.X across billion, line renewals, key million, Total up net strong quarter, in and Subscription revenue U.S. in growth from Renewal billion, $XXX QX, performance in including XX%, first growing services XX% leap retention quarter, line revenue billion, XX%. financial volume was at with $X.XXX the $X.XX was totaled end billion metrics. the over leading both in totaled was representing revenue of end or our CRPO, subscription over XX%. XX-month respectively. at backlog, $XX.XX in at the of the subscription was of rates was XXX%, quarter XX%. expectations. and billion, backlog remained Gross early X

a $XXX expenses. QX growth strength revenue resulting XX.X%. outperformance and non-GAAP driven operating was Our million, moderate quarter non-GAAP was first by XX%. the million, income in margin of flow cash operating operating of was $XXX for lower Margin

our at average of million $XXX During QX, shares an repurchased share. price $XXX.XX per we of

due dilution This In marketable addition, reduced quarter starting our relative April, million cash by net We fund taxes in quarter to equity employee and by the QX. the ended securities. impacted our withholding on withholding. from we $X.X our X sell-to-cover prior in million flow to began awards method cash in shares share financing $XXX by and in billion with

Workmates continue revenue key around through in which globe. cycle, including our customer our experienced account, XX% our pleased continued growth XX%. compared coming support has momentum $X.X of versus full our stood which $X.XXX of to wins are and time, At EMEA. guidance these year to customer across in subscription 'XX XX, at Within We slowed in to progress see the primarily updating in particularly base, were into same we to FY years. As XX,XXX growth our to expansion, over we product to expectations. Taking headcount initiatives, to billion previous ramping add-ons our range our relative sales approximately XX% partner representing the full factors of we see of headcount guided to expect ecosystem, billion, growth, growth the elevated continued platform scrutiny we April the

representing XX% our reflecting of million, QX to of revenue We subscription expect with growth. strategy approximately expect and FY to along leveraging our professional $X.XXX revenue expectations QX QX ecosystem. $XXX further FY our million 'XX $XXX We be the billion, 'XX services outperformance partner now

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

to backlog. Turning

we in activity aggregate revenue growth early to QX, growth growth in and is caused CRPO 'XX, throughout XX%. influenced bookings. CRPO year. QX, renewal growth growth last impacted expect cumulative new we in backlog the FY CRPO This effect year. strong outpace business QX, quarter-to-quarter as renewal volume overall saw and renewal strength our headwind increase previously, variability to highlighted In subscription we've our we renewals, in subscription this revenue by growth to As The last be activity. In below is from including XX% expect year's CRPO between by impacting

now continue XX%. for company. continuing We invest increased across 'XX across our non-GAAP of to driving to are growth margins efficiencies FY see while approximately core We future the growth momentum areas operating and expect

to full For margins, quarter tax non-GAAP the The QX, XX our which reflects remains for we the seasonality. than are points year non-GAAP expected respectively. of margin percentage GAAP and 'XX XX%. operating approximately XX.X%, expect lower margins FY XX operating typical second at and rate be non-GAAP

expect to $X.XX continue to We of to expenditures and approximately reiterate closing, our investing I FY operating growth billion while flow of commitment 'XX to support long-term cash margins. want expanding $XXX capital million. In

continue demand that, initiatives. targets our turn drive growth We supporting the helping it our I'll customer strategic over across platform, to Q&A. operator engagement and to and see begin With strong our financial back to

Operator

comes the Kash question [Operator of line with from Instructions] Goldman first Our Sachs. Rangan

Kasthuri Rangan

I clarification. little just a more bit wanted to get

about back fiscal getting You you we to restricted would the too? track? follow-up, if seems EMEA talked if have the other which have extended year And progresses? growth, that I of outstripped back on could as at momentum U.S., get you all factors to cycles do to compelled on consider customer 'XX, of that a you smaller the did of this be sales words, of that the track see or play as partner other generation primarily business, in In enough the in guidance headcount continues, that and growth. some also Was new could, if

Carl Eschenbach

Kash, thanks for the question.

Kash, the your for seen partners scrutiny specifically, way a we to a but dynamics change any in it And you was of Workmates, can year. as for before mentioned world one solid we've about start just, seen additional quarter And question, one, or off thank get QX, to see we we moment to answer any X, I haven't Number the a X solid them. you haven't to take other. did X.X I talked macro, last material quick by years, think change. our helping meaning around the customers, few our the the results and a me see, to Let --

deal we talking I was talking platform around In deals. we the that new world been that. did. in large we telling did sell it market, makes platform, and customers a full we're multiple to it's particularly CFO, little saw deals. some HCM sell CHRO, We be and fact, selling deals to about to the U.S. enterprise It wasn't our when more and more complex bit them specifically the clearly buyers. of scrutiny, the a these may quarter, to which that truly the of see full bit longer. That a some decisions, in into are CIO we're which customers We're consistent. But the for rather say a this And because both large just on bit selling deals. we're full when net our would We're of HCM, us, said, fair just make being we deals. of And makes cycles about no also do that Financials platform sales winning longer something share

about the in that fruition, us evidence of forward. last ecosystem partners And versus in partners. on lean we're some more have my a In prepared investments coming more super seen year. And the out can headcount was of the to making past. last impact our year. we other. And less the highlights, scrutiny QX couple around of we definitely investment the we're including we across trends, in did called just the we something that QX, just in was we've point, closed renewals of thing at continue that potential business out we region our it going partner is partners, making We that we than something the than to all That to we're specifically expansion remarks, did into on the saw is So second more partners, wasn't in your time all and called built world. the on headcount excited yes, in pipeline the the is globally. This we to X than

Zane Rowe

we would it ramp that to alluded I and expect as think about see as Carl to, partners, growth year, through just the in progress add, we great Kash, there. would we

bulk to probably would partner the next subscription fiscal more it progress front. we're year. the than we're fiscal about of year into on this so As excited that the But the relates obviously, making revenue, then enter

Operator

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

Mark Murphy

from the see we Just payrolls with customer growth, that other a that And fallen words, it were aligns ago. points' seeing renewing side. would the be and at can pronounced headcount of could that entire on of following employee the perhaps ago base on recently. type HCM you nonfarm contracts growing X a Kash's curious it's you're just seeing lower touch question, wondering years I'm has of then just than X In the HCM headcount a worth? slower I'm FINS headwind X% about because couple the It to growth few X.X% if if roughly aspect years to more across the base. secondarily,

Zane Rowe

come generally, give Mark, see I'd color. say increase then what baseline maybe to down. the that Carl over I'm that we start is has have happy more and our

fortunate see a candidly just increase are our still But we've is year-over-year what expectations. and growth slowdown on a we in below seen So to basis. net headcount

with of So with base what nonfarm increase probably a the how impacted being just in. over the our they're we're customer seeing I is the does seeing. cohort it our part and and referenced And earlier other think some just subset of you align pools amount on coming baseline what

Carl Eschenbach

Doug. Yes. Go ahead,

color? some have You

Doug Robinson

on Mark, we of as both but sort know, see in basis. that, an shows that renewals have a to add you annual just true-up also, that mechanism that up, we that I'd Yes. happens

adding QX. doing So they're and customers, we more it anticipated had employees headcount while to in the at moderated are system, still rate a than

Carl Eschenbach

about even of Doug in year, Zane as lower thought alluded that in that expect QX, our Yes. But Mark, both rest necessarily throughout we think account year. the forecast. to headcount growth don't we the to, as and changing full compared slowdown the of into last guidance. do than as took did And year see we we I a was kind and it

Mark Murphy

than more does And impact FINS? that HCM

Zane Rowe

equally. Equally,

Carl Eschenbach

be It's both base. equally. think our it's installed of not HCM have think around But other. I versus have a the it because so FINS I HCM across both more X deployed. much we and consistent customer HCM base Obviously, would pronounced customers of it's when we larger

Operator

And ISI. line comes our with of the Materne from Kirk next question Evercore

S. Kirk Materne

quarter. guess maybe just is that understand continue that questions I or guide I is on which to you bit up of the what, I headwind have coming business. rates we year want have confidence guys have just over macro changed in of of you so of to little on or we guidance sort -- have done that be, put the think guess, in the I some of give a front last Mark a a full some more sure pipeline process the have you out make conversion we've buffers us this we of have us asking, bit. appropriate, given of come the I rates headwinds the into question one But guide? the was you color can thought will close realize your that the around moves little little what

Zane Rowe

how We've been for on thoughtful and the the fact year as than touched so and dynamics. on companies the out And the this Zane. actually Kirk, the then slowing finish looked I'll out. part been and answer. that each impact projecting as more necessarily far Carl effect the we've pipeline, It's us these of just Carl deals. losing Yes, impacted let is that's start these haven't that's a at moved

seen where come them have win aligned we've historically. with in rates nicely In our fact,

adjustments making account, mentioned see that believe we what we are updated accounts the feel accordingly guidance we've year. we million guide forecast methodology we've for down full And changed. for that good out, and But We forecast. into the that given elements our the our we $XX of factors X about hasn't obviously I'll the for So point factored these midpoint moved the the today, here. year.

Carl Eschenbach

the we us. of think Yes. really looked number And front as X of out, the can a opportunities, into that we chance I'd X guidance. in cases, and I them any do it's year. to a some at while Workday really our them in pipeline, Financials, you we moved sometimes out a on going it, go pull none have remain a confidence have if of taken add, that they're account these throughout there solid of larger we going to given it's important the of know pushed do in big what opportunities a close pipeline. for as of in We've out we rest not to when that of is think And scrutiny, pushed These all decision just be large which year, And the our pipeline is in know, Kirk, opportunities guide platform makes what's to QX more of it. they're When or our our larger to customer us the transactions in remainder didn't close And these HCM is gives or transformation in. But good the going like quarter, quarters. forward. to a

Operator

the Brent with question next comes our Jefferies. from line of And Thill

Brent Thill

an external? last execution you're do an with you've external having changes a of focused year? has to where the some over I Or of you about versus you you've I that made think your in changes player players. when are of you more lot lower know the implemented may be short term wins, that of this more on this talk is in just guess maybe EMEA, force swap-out the internal some some nothing Carl, a Do

Carl Eschenbach

don't anything Thanks it has I question, absolutely do doing for we're to internally. think the with Yes. Brent.

last to In highlighted quarters, the of out number we've fact, the we've probably things that if recall, X seen EMEA. last highlighted the for X of the we've one quarters, execution you for of

differently to pricing with lot over going We've differently going and added We're a of capacity. leaders. to packaging. there. market new market have with We're partners We

because we're and of compare So rate rest was everything this large just specifically, a so we're matter, the doing don't didn't QX This about. we're of a QX, or we bit do I all closed in number that world, executing. Europe, positive of of execution don't it think U.S., We year-over-year anything But talked a that issue tougher. softness to bigger for the in with are this EMEA, and I we outside pocket the is same the And close things. I saw we all. what was have of doing how the an think factors has this deals. last at is think,

how the really to and I'm changes made and market fact, team U.S. In we've outside we're leadership on the the going bullish

Operator

And our with next Brad question comes from the Sills of America. line of Bank

Bradley Sills

to something Maybe those of impacts where to seeing attribute this seeing I How to push a largely deals? more the that quarter. renewals and if would much renewal this this And of move? newer some in deals limited quarter? platform to understand the How you've We're to involved these hearing of increasingly. you channel those over question to EMEA did like that It you're HCM We as if FINS during was from is, seems some the platform deals. that of bigger more take related opposed the of deals finish there's track that some ask just certainly I could on certainly longer line. are going both X seen you're guess

Carl Eschenbach

Thanks my for -- the answer. I question, of question actually is actually your part Yes. Brad.

HCM that we just scrutiny the see when transformational both HCM, more some scrutiny. we are said that don't large there or see more it's it's being absolutely when platform very but is full selling a deal, platform renewals. as platform. HCM additional we're take of place, new selling net deals are if getting deals, much them it, does not FINS. scrutiny When are That selling most seeing a we're full of So it's and And we're we lot

on The the are Financials in find has a can the a company accelerating. of that deals we The are decision thing that decision medium other maker would one and is at make side buyer for enterprise reason full platform HCM who and then same other once. that the both and I is around say a and

is greater more is lot the about scrutiny. business the talked platform in full than being there A enterprise. that we But large our XX% and business So year-over-year. Financials enterprise, in up of medium

Zane Rowe

Zane, just add. is I'll this Brad,

the we've As that just alluded look that then the Carl that impact headcount we'd half at the to of to attribute and million, seen. the you that year, $XX deal for roughly to the half other forecast scrutiny

if So it's the about it mix. XX-XX out net year, through you net --

Doug Robinson

Doug. this -- to wanted Just is

there's pockets add On X that. actually too. to Carl describing, Just I'd of large enterprise was as net nuance new, strength,

is this. So there an industry element to

our to segment continued sector, they are public and seeing So market well to we in as strong as health continue that move within our QX. really care and perform

care I think was health in growth the ACV fact, In up XX% another in quarter.

global So industries saw deals we on it's It's dearth, that most there's basis, a not just particularly an a absence for getting Europe. to tougher done. say large there's a environment of

Carl Eschenbach

you the not state local. sector, and talk it's when about Doug, just public

Intelligent seeing Department Intelligence like with we're Now of wins (sic) federal we big Agency in Agency ]. saw some [ Defense the

Operator

Scott Your next the Needham. from line comes of question with Berg

Scott Berg

how you're the the sales pressure Touched in clarity briefly helpful. would on ago, fine, but bit Any mid-market? scrutiny you what platform moment the cycles, are additional color around little seeing same in it like be there some some a are terms there? but Sounds seeing full about a deals of just regional some of of

Carl Eschenbach

sure. Yes,

of So where in our specifically into out Workday were We're customers rapid the selling value hard business our Europe. quicker in go-to-market changed the Financials, to we've did quite allows consume. Europe. to with and we side some lot for the the we reason the with full which than opportunity in that medium is that for that that some And a impact out in enterprise. Also, medium the market a pushing it's easier enterprise, customers, U.S., market gives we was capabilities The been us were services pricing performance, to seeing now building as our medium that engine backed that really on and with on are an pleased on Financials it's enterprise now we that the sell, But we up serve get or Accelerate, U.S., solid. we've the absolutely have we in built in packaging a sell platform bundle sales to quicker. suite, actually delivery and easier and now

large what's of very lot enterprise. excited board, are medium that to in we enterprise. I'd the partners in about medium came A our the we're really happening impactful the build partner about the across while So on also talked comes pipeline pipeline yes, say enterprise, into QX. our build partners, it when

emerging further. address we've medium perform the to sell well. to deployment, go can What And and actually, than down to continues the market it's us further packaging overall, we in enterprise accelerated served past. even market down a now because the now even able and that's enterprise call So we're of where quite even allowed we the pricing

Operator

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

Karl Keirstead

margins Maybe direct Typically, so this cut. I'll at alongside a a you, Zane. to pivot raise margin get don't I'll you revenue

running a a So upside? find secondly, on And maybe then leadership on that Would that team Where cranking those and the question. more you create you X-parter. growth leaning, for Is maybe effectively a and just bigger did outcome? just picture the Workday table? efficiencies to the mid-teens margin consider

Zane Rowe

Karl, yes.

said, it quarters. as and obviously, how just and think being First business. people, in a off, quarters been we've areas. growth areas the been spend for doing out we systems a growth. as balance really revenue line we'll the also judiciously. And we across scale I've been company point our where And I'll number our top that the now, where these with about across to also we've doing number we processes of we've continue said very that we've number invest and we've and and been our on focused see to but for And mindful about investment with we outperformance margin thoughtfully of And of fortunate invest a

say TAM would around focused to got growing of this line I tremendous We're still no adjustment globe. the we've on thinking. business. So opportunities very We tremendous that and think

how and pleased top to be with scale more to as leaning and continue efficient this performance the over been business. that the in productive to Workmates we're how our On have with line, we XX,XXX be more

I I'm pleased the but we'll there. excited both about to balance on come continue there's that. think fronts to opportunity So Candidly, more and

Operator

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

Aleksandr Zukin

and concentrated reading vertical in couple some get I guess, for I'm in concentrated Just a sounds us QX deals of deals this comments the were the it pulled competitive cycle elongation. some is from quarter? renewal sound dynamic the sales was where If the some sense are Or how give where kind actually developed of into pushed expecting came and into early maybe that you doesn't more you right, It geography linearity of QX that on there Europe. activity? to of that this it out. a in got late

Carl Eschenbach

Thanks for Yes, sure. the question, Alex.

it's anything competitors our do our with win think first, to So or competitive rates. don't we

rates to do you our remains And the some nothing make pull or good. all deals same deals. At year. big were do nature. come guidance we customers QX, are as in quite stable. come given said, any a we when quarter, some know, move they've In at That forward, deals of decision competitive can win rest out solid. QX, remained we and with extremely in our Has able the and pipeline our had the quarter, into above But the to push a in in decide delivered in fact, QX saw very time, of In deals to solid out. being

pushing pushing for opportunity our more current to migrate it up And to happens, we think are and helping say competitors when In I them customers their off by would that platforms, the fact, cloud. opens us us. existing

solid, big discount So win And a on I decision have coming platform customers they're are make think rates transformation, rates consistent. remained our to our when ultimately a Workday.

Aleksandr Zukin

renewals. how there of thinking the Perfect. think for renewal reflected much thinking headwind or cohorts lower that way in here? follow-up if to dynamic base? the Zane, either a half that a a these as least we And are in or headcount, kind there's back persistent year? employee we of the persists? quantify revenue Is of your a the What how renewal Have your backlog guide headwind headcount guess, element maybe across then at persistent you about should just that your on on I renewal

Zane Rowe

as a good point your which assuming the for headcount the We're to, didn't revenue seeing we look forecast current in where the the year. year attributable no half And on that change customers. subscription it why it year. of expect throughout the of from to you're with QX. was we side But to the revenue think mentioned is call year, we're our it's we're Yes, in to the impact dynamic at persist we made through assuming the out. much remainder and our as I consistent But environment this I change actually it us alluding remains that

Operator

line question comes Wells from our Securities. the And with of Fargo Michael next Turrin

Michael Turrin

Workday, QX but generally seasonal. the suggests lighter just than call seasonally you're more for is throughout seeing commentary the

efforts you if set how I And longer, speak of is maybe you So consolidation, prior any that. whether persistent. it's help are headcount to offset just playbook we question, your on for level assess maybe could in product hoping on in seasonal have how you to was side, Alex's the AI-related see or you just something to of potentially else world working some versus you're product offsets the of much a lower some

Carl Eschenbach

dynamics Yes. were challenged Thanks, around for more in scrutiny. the seasonally mentioned That Michael. we quarter and always a being obviously the changed said, Yes, of is that a us. QX those factors quarter couple deal

our EMEA. adjusting year. headcount had lower coming that we to for mentioned, lower And those and the in full then forecast, led As trends specifically of us we guidance internationally, performance all than our in

that thin AI, really encouraged SKUs leading fastest-growing closed are by including things see our to they of you solution are around always relates leverage we the Extend AI?" an spend of go quarter. asking around customer couple lastly, specifically what there early AI-driven quickly, both talent would is optimization. base in now that On seeing really other excited building set -- they AI. your I And some for in for talking are ever. And and that some to to growing on couple veneer AI? HiredScore, we quickly, one broader my talent another remarks, and our us, our to are which can and then the we SKUs a of talked we Gateway us we're seeing acquisition not leverage products we're prepared as very AI. market. there's indicators Extend And or a We it, and that also out they're Because pipeline nicely. part The with data platform dynamics of massive Pro, the money talked looking AI acquisition AI have talent AI it the platform growing customers, about has there we're doing we "What how as we're As you of that quite spend say time about says guys around the When

it within quite our of see leveraging are focused where have. on articulated. base, AI customer and activity we like a seeing bit the they're And examples monetizing We capabilities we we're fit, I all the just

Michael Turrin

All helpful. very

Carl Eschenbach

And it our the who my launching I Marketplace starting actually, launched Marketplace be in Rising be going the of about spoke Michael, AI this year. will and part partners in at up quarter. prepared We're to think we monetize It's will one thing and able be we'll was AI this actually remarks. and last other quarter, production, running and and

Operator

line the Jaluria Rishi comes question next from with Our of RBC.

Rishi Jaluria

on to wanted philosophical on margin growth. versus I debate double maybe to back the

have maybe yourself and it product, on starts to on of at right? raising I'd kind guess, you're when in pieces. position this subscription does accelerator all me growth guide. to you're the Help especially is the eventually initiatives execution, innovating sales are some with why investments, using kind of the macro guiding not and how sense partner the half with imagine look, time, kind about that to philosophy. to and faster. I I'd going kind AI, your macro to maybe turn these AI that would of better, to underinvested? macro this that it comes not At opportunities the caught understand get understand not given is better of channel, all That around year. point, wonder going better, margin make when for foot workloads the grow expensive XX.X% back you're have not I to the to same So market keep of turn is competition,

Doug Robinson

And that the we being we investments. time. encouraged, those out the we're of Yes, investments on Rishi, returns you've those as obviously, I build we're as of getting number over in. thoughtful by those invest up on areas to pace and investments pointed mentioned, continue a We're also

the we're It's feel continue more can scale more all we where using line, then whether we also position become AI having around be to from where being it's business, around a great productive top internally, grow we areas in workforce as internally. So the this internally, as the and globe international benefit ourselves. just like can we just thoughtful a we

to don't thoughtful line. foot just number put we we can areas, off leverage -- of top those. very to in our are make on candidly, investments and a then the we those we want how be want the where there let accelerator So And and

that do progress like made feel advantage of we're positioned turn with we've things we previously. take areas all highlighted and around number we've a the the So well key to when in

Carl Eschenbach

Yes. efficiencies operating finding I expanding listen, company we're like been Financials. would has across consistent. to add, a strategy key that. long-term while lean philosophy and build areas margins, investment the that to We just And want and has our company while continuing durable growth into doing exactly We're operational our

we business, this Financials Our solid as has articulated, again quarter. been really

We're up our partner we year-over-year into are the not going full it's partners. We're talked the our back on through XX% leaning all goodness about that's pull ecosystem, Our with sales. partner units and to pulling happening platform and investment.

that we TAM lean greater with than forget let's deeper from in pocket it. Internationally, anything, outside air an bookings market I a is In had the not of if our to perspective, associated the total want into U.S. fact, while QX XX%

lean continue international to the to going we're opportunity. into So

product the invest in we On quite continued business side, to deeply.

Innovation whole our recently a bunch we at Summit. showcased have things that of We

different with year. out this later more have AI We XX solutions coming market XX in the

we're margin So And slightly sustained we're investing on operating those internally we're where growth simultaneously. is investing in doing the and dollars. business. long-term expanding better paying is we're What off in prudent that more

Operator

Next of Cowen. TD Derrick Wood with question the line comes from

James Wood

flag Carl, certain are I out seeing that investors this Are you leading as this the headcount you delta what as you slower-than-expected care versus productivity Or headcount going year? growth? AI health slower But entering causing verticals kind that's call called think verticals. what to would thought gains out of guys do on guys you'd in strong know you poke related public that's are topic. and And there about that growth? anything to and

Carl Eschenbach

Yes, thanks for the question.

Specifically it and headcount anticipated growth. from specific, Media you've and I out growth, is past. see bit growth do on technology, there headcount think there some slower to are be industries, seen definitely than lower where we we headcount a the

James Wood

just the And what you'd beginning think were there the Is of of it delta what do just the that in terms versus guys you you macro-related? on caused Okay. the year? thinking call at AI-related -- Is anything out?

Carl Eschenbach

Yes.

headcount as growth. And had under So over came forecast last what and in we year did we down our for year forecasted. full we it indicated, it on was actually the reset

seeing I relation we're we're that we a think time to AI? yet. we which coming not think I in big I headcount that they've to think actually comes some that numbers. see just of it's Is in position general, you've reset seen don't in us, like have our macro from their layoffs. macro-related. people And expand is it renewal, high-tech And cases, for the when to growth. a in vertical say market, had

Operator

question of final line our And will the with Oppenheimer. from come Schwartz Brian

Brian Schwartz

Is business deals that just I all slowing, and the question X Doug, optimization of could larger be products a you in of budgets? that less you replacing reducing guess, deals you're that at any out the the of had first priority that Carl scrutinizing reflecting in you're quarter? I that want in changes are on that cycle in vendors number seeing cost seeing. there is

Carl Eschenbach

Do start you that, with want to Doug?

Doug Robinson

counter a we are And base. where customer don't large vendors with in in with meaning uniquely what optimization transformational of approvals our this is more that what standardizing our guess business I where business Yes. I more platform on roundtrips, customer that -- there's mean, do that to the and we're projects base, saw us any we There's more they comes seeing still cautiousness. This that is that. seeing X that was is large today. There's there's rationalization transformation.

our what of that I era within because prepared we're seeing say I'm that specifically know don't over base. to customer that, is So

Carl Eschenbach

if a no And other for than is I have up. we're Yes. extensibility Doug, global applications that footprint add to doubt. have the us. our consolidate the and we HR seeing customer their know on top new on the more more to much looking do think enterprise platform net really I around It's new pick can the basis we of don't IT, Workday to because that scrutiny we and specifically deals, base large bring in

Operator

Eschenbach you thank over today's gentlemen, and it turn Ladies final I'll for on participation for conference. Mr. your to comments. now

Carl Eschenbach

operator. you, thank minutes few everyone. I say something to to want and the Thank a take audience, just to broader

First, I thank today. send all to And fuel to to to analysts the continue the joining partners and Workmates, like customers, us for thanks like help globe out I'd our Workday's who a success. would also special around

partner optimize As like you, smart I'd summer. today's With a We and continue of close can good growth areas, to at business to hand what delivering to balance you it we're back much day, the over great our building, efficiencies wins, we want full being are I for time. industry we about and same more across we're internally, and And everyone margin a to heard we we're make from momentum and great Financials by investments the And excited the prepared lean wins and that, a I'm growth our platform the wish into my of committed to Operator ecosystem. call. to remarks, including growth by key evening, driving expansion. the doing and Ms.

Operator

concludes teleconference. This today's

this your You at participation. you may your Thank for lines time. disconnect

Workday (WDAY) 23 May 242025 Q1 Earnings call transcript