WDAY - Earnings call transcript Q2 2025

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Operator

Welcome to Workday's Fiscal 2025 Second Quarter Earnings Call.

[Operator Instructions]

I will now hand it over to Justin Furby, Vice President of Investor Relations.

Justin Furby

Thank you, operator. Welcome to Workday's Second 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

regarding Before include have our financial some based guidance, matters. our our we on want forward-looking as on demand, statements the other that started, emphasize we we of are and today this statements get information customer and applications, to of call, results, particularly operations

These report could we and on documents statements are actual additional XX-K statements. annual subject Exchange from the Please to differ on differ release risks, Form risks, and uncertainties factors file and such and cause with may Commission set information including results cause assumptions results that refer that to those risk assumptions materially for press fiscal the actual to Securities in the uncertainties our materially. to and forth XXXX

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

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

Investor will this investor be call this of Relations Additionally, the transcript quarterly our call. presentation posted following our website on and

and of monthly. of selected customers' is our list a website includes page updated the Also, customers

period comparisons period begins comparable Our third XXXX. results our financial Unless will October on otherwise fiscal this fiscal for call be the all our of XXXX. stated, XXXX to in XX, quarter quiet

Carl. I'll With over call hand to the that,

Carl Eschenbach

today. joining thank all and Thank you, you for us Justin,

be solid that partners non-GAAP and Workday growth, scrutiny report highlighted workmates win very our for help customer to on QX. high XX% XX% the their continue pleased subscription solid XX-month growth focus moderated a our margin. Right and are investments I quarter, productivity value driving their and couldn't our to still areas operations. delivered operating within focusing by will prouder we delivered and remain on continued I'm of improve and rates another base, and teams our XX% Though that our growth now, headcount companies them increase their success. revenue customer backlog experience

gives on the elements their their their help our ultimate incredible we total products money, and empowers ownership. cost all Workday productivity business, built platform, manage businesses greater on finance to increase can advantage, Workday deliver platform. them efficiencies unified because them are X and foundation and unlock of our a fundamental all of AI-powered our people most faster value customers of employee across experience drive the and their reduce

expansions. It's to prouder wins of many increasingly Research, with Target City companies partner. with Hopkins, and formed in customers. Nissan, customer We Hunt, of Lam expanded others. with In their contributing be our turn the amongst helped new Johns Businesses industries than in we list new to Workday evident seeing also the is University all us Trinity XX% healthy Health, QX, being QX. sizes, trusted Cleveland, debut Workday Colorado full the State them the relationships of we're most of couldn't geographies and System This more as and and and relationships among we prestigious growth J.B. which our Fortune U.S. in influential in to largest, be momentum balance net the suite XXX and in in

Venova, First And Senior drive our financials GE HCM the in helping across notable Living, in We and with momentum leadership several along strengthened in our Bus, platform. is wins investment wins the APAC. globally Sunrise continued including market us key EMEA with

was institutions, In market the an leader Gartner QX, Financial we ERP share in perspective, in quarter. worldwide for industry in banner longest-standing officially crossed added SaaS by a A&M, revenue the had higher Workday including full University, customer Management Mississippi and milestone Adaptive XXXX in in X,XXX started ranked our quarter a Workday's Research. customer vertical, Workday education, From we and the as HCM of financial selected leading management University Workday Florida [indiscernible] [indiscernible] Planning all the suite and in QX.

for We Health The partnership and health experiences modernize suite with in again Center. systems with Health Children's students. faculty, care represents strong Workday a and and Grady Read to in Medical full had National wins significant once their improve System, journey staff at transformation milestone momentum

Our state as and continued and well with at San Delaware local wins County success in QX County, in County. Santa government Joaquin Cruz of

call management QX. solution, want out deliver freelance our hourly, truck, in contingent, employees to expansion Ryder with complete workers. Banley added & the a workforce Cushman also and salaried spanning Wakefield I seeing in ability to outsourced Vinli all momentum Lowe's to we're and

celebrate Cross Mazars customers Roadhouse Texas all and live Mortgage, AutoNation, on successfully deployed Country we go QX. platform. the Workday Forbis Beyond when wins, on our our Barclays, in CDW,

in with had regions Workday strong In and wins opportunities strategic Global APAC to along agencies. a growth the for new Japan transformation Australia, software ERP, government's several be federal we to performance Workday, massive opportunity accepted continues QX, opening marketplace for with digital EMEA. agency a was in and in

which business formed had business ministry [indiscernible] with well a in Corporation and very our business relationships with strong new We Energy a a Ltd. expanded Group Electron. suite also and in with Tokyo Terumo full Japan, QX. Shizen for We're setting expanded at and win We Zealand performed New our in foundation our

large experienced Europe, the Atlantic including was MAEs, in but synergy. Gobain QX, we last discussed in and able In scrutiny deals deal St. same more team I to deliver the quarter, Group

key building across Elevate our is our QX outperformed the across EMEA. partner in Additionally, markets events our and expectations momentum in region pipeline

innovation. partners. drive customer of to closed deals two our fact, success region sourced we from true deliver innovate why customers and that's to Workday were value and AI the In largest business We coming for the are in

us to the they're to in customers' processes. and to before. the XXX right and hire This talent, the In AI company no innovations of on to have more behind annually. AI way finance QX, it better into productivity Workday future. billion can. Workday looking we contract, ever partner a and faster under gives context announced fueled than million Workday's transactions platform HR them and other set and quality the data our the They ability now understanding We want our more conducting quantity data in customers unlock our by the new users of is help to XX lead us than than

and our new strategies. simplify HCM profile accelerate instance, product skills-based talent emerging job identify our in For skills management to AI capabilities

to new continuing And X Just talent available one pipeline for under than as we're validation standards the our for AI purchase recruiting HiredScore our HiredScore off better talent acquisition, this contract. that's customer game called from closing build management. start, what team in quarter customers. Southwest we after HiredScore HiredScore changer mobility setting great quote across to HiredScore, is and who and a Airlines The recruiting made for unified AI a

we but and our of Workday, AI platform, from launched power at APIs as customers AI well. from our gateway. partners not our the new we're innovation only developer QX, our Through In in enabling conference, annual

help to faster Workday remains custom of our on introduced AI than Developer Extend also fastest-growing CoPilot, leveraging ever Gen developers build one applications to our before. We platform Xtend SKUs.

Many our New the taps from which ACV of power of Workday XX% in into customers by QX, AI. more realizing already value AI. driven increased than incredible Xtend Pro, are Workday

customer mobility a HiredScore a XX% rates. example, talent internal for increase application in saw For

the For is customer, talent helped one customers, invoice capabilities. of reduce one product, of which by surface. but just and is we're list our increase driving processing goes XX% our fastest-growing entertainment in for And turnover optimization XX%, automation on, another the our plus SKUs scratching

AI. Rising, AI industry value now, Workday of end-to-end into introduce has on fitting generation our the of power should of At look future illuminate will by see to processes customers we through finance We been work increase an The exponentially to what work next to the the we HR how like on opportunity next. work. reimagining not AI the and focusing

building attendees platform years, this how transform our expecting innovations how Rising addition virtual year, vision in-person and AI work experience. at across that also been customers event accelerate yet, not our For in ultimately more to showcase due but will We're towards than their run to done, and the user only XX,XXX we're gets biggest showcase and unveiling our will innovations applications, vision Workday XX excited this past we've businesses.

partners to new I both ACV quarter of and doubled breadth powerful grow QX, and a partner build last of monetize Workday for and quarter Workday from on just is we it that more continues the contributions depth. their quarter, In platform. and mentioned than and record the our another had ecosystem customer distribute to started. in pipeline make to success generation, getting partners before our it we're partner easy applications driver launched In to build, on

early Our first new to with this lean program several among long-standing into already partners partner, was adopters. Kainos, the more active

our a us new QX, will and open we in innovation. partnerships We to continue announced And that of partners the deliver aperture greater help value. as even to driver sales both

success the together a most together data for in we enabling and and financial employment bringing partnership Our And onboarding, our making and are deals it's example, important faster, for new or easier data transmit it the partnership made employees Salesforce perfect today, requests. whether Equifax, for employment by AI sets all bringing employee is to planning with is closing accelerating connector announcing continuous verification possible enterprise. humans it's customers, drive for a verification customers to

see, forward this we quarter growth. and can looking to for it was you partner-led ecosystem, momentum big continuing As in our a are

like it medium to term. you Zane, turn the how Before over I for I'd on planning to we're update

durable the since nearly ago. expansion, years build saying continue been balanced business I X growth to a joined something and Workday We as I've with margin company

footprint paying creating opportunity our off and Our for areas to customers. momentum future. our key existing to amplify are our in and growth bring customers expand new They with already

selling to areas identified subscription the year, of drive adjustments moderated making growth efficiencies the opportunities the how balanced some accelerated see our across been pace margin developing to we've and our revenue growth this, In a we've slightly Over we're are in light business. particularly plans past expansion. able of including current medium-term with environment, to

partners. energized Zane. profitable I while continuing innovate over operating to have growth on that, outlook I'll and ahead, thrilled you have strong continuing we medium-term opportunity it and our focused to HR turn With income and scale. the gain Our confidence durable, are drive on revised to more growth the at to of our core us. to and markets share excited and ride We're customers with couldn't for be the delivering in we about reflects finance,

Zane Rowe

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

of international backlog, year's revenue our and $X.XXX services metrics. respectively. Subscription up total was QX end over $XXX growing ahead slightly rates and or second of Gross strong in revenue representing last billion, $XXX XX%. the XX% XXX%, was subscription up in at expectations across quarter impacted growth XX%. revenue billion, XX% Our growth billion early also revenue remained was of and leading the over to net was all the million of growth performance in QX XX-month totaled including the $X.XX at was The XX%. in QX a $X.XXX key retention billion, CRPO, revenue Professional revenue rate U.S. quarter, QX, of in revenue totaled renewal year-over-year activity, renewals. million, by $X.X strength XX%.

quarter backlog was XX%. revenue the billion, at of subscription the Total $XX.XX end up

million a for by operating strong collections. of flow Our billion program. income non-GAAP cash our repurchase resulting has our of QX, XX.X%. growing $XXX $XXX authorization operating new in shares quarter our $X million a We existing of price million, in share. was per completion, of non-GAAP operating nearing authorized an accelerated our second XX% buyback $XXX $XXX.XX million, $XXX QX repurchasing margin average the pace With buyback driven at the Board was share

cash via and while to the excess investing $X.X We We M&A share with growth, organic ended to capital dilution managing marketable and shareholders securities. billion remain returning in quarter repurchases. opportunities committed in pursuing strategic

XX, stood the XX,XXX globe. headcount As around of at July workmates over

to guidance. turning Now

we continue we environment quarter, macro as indicated, continue. trends And see to last Carl within these quarter discussed customer including moderated to As headcount expect consistent with our the we growth last our base.

revenue to XX%. $X.X FY our are billion, 'XX of $X.XXX We of approximately full subscription guidance year growth billion reiterating

subscription 'XX billion, growth $X.XXX FY to QX expect be XX%. We of revenue

to million FY expect We approximately driven customer demand. revenue services by professional 'XX $XXX of $XXX million,

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

to backlog. expect growth early to QX, Turning last In year's by we CRPO renewal activity. be also strong impacted

percentage X growth CRPO was a between gap subscription roughly As last revenue growth in QX. the points reminder, and year,

As for XX% CRPO we expect from lap the strong last QX. year, XX% renewal of we activity to growth

of the supports timing impacted growth the growth our of rate level XX% the of second aggregate for CRP year. revenue is the approximately half view of renewals, the While by subscription

key balance of to end-to-end XX.XX%. We increased both with operating margin expect continue now We company-wide targeted efficiencies on focus and growth non-GAAP investments FY in transformation. areas 'XX

For approximately XX.XX%. respectively. for of points than QX, the XX non-GAAP GAAP we percentage be also operating margin year lower quarter non-GAAP expect and the operating third to are XX margins, expected full and margin

FY The at tax expenditures to expectations billion, flow our 'XX capital 'XX increasing non-GAAP $X.XXX remains of FY million. expect $XXX cash We're approximately rate continue XX%. and to we operating

areas. good our key the made across Over past growth year, progress we've

products future for our they geographies. as a already initiatives While as number and these early supporting scale development, of they are in still 'XX across FY as in growth well years their are

past focus our Our core how growth trajectories insight better providing into ramping year, the have business. us over augment areas their been

partner this incorporate in full we the in both bolt-on 'XX our with and current now we growth into our and in which federal suite strengthen seeing revenue environment, Workday, along FY mid-teens the We're reinforce the subscription market emerging enduring ERP. As expect for conviction ecosystem planning, success leadership areas as across our FY we and markets, cloud opportunities, 'XX. along like international with helped growth

globally. now a scale as previously we same at focus driving than to growth to In the we've greater expect time, addition, durable to margin efficiencies support and business planned. continue deliver progress expansion the made we Investing core remains

opportunities all initiatives. this, are relentlessly scaling With our assuming go-to-market annual resources. history, processes growth With on focused targeted to portfolio, period. expectations in recent of more subscription to investments, levels are continue product context consistent ROI revenue FY on driving enhance our of our developments in growth also as of review to FY and M&A becoming execute across product operating We're XX%, we business. updated over company our while 'XX and and we same XX% the increasingly for growth while non-GAAP expanding to we drive with across balancing approximately with that 'XX the margin go-to-market We our the our

cash expected 'XX flow. also framework our updated This increases FY

to With to over Our to Day it sharing deliver focus top forward remains leveraging power I'll the look at Financial turn bottom Analyst platform Q&A. on long-term of September to upcoming durable, We growth. more the begin XX. that, line operator and back our the

Operator

Instructions] [Operator

with Our Evercore. is first question Kirk Materne from

S. Kirk Materne

Carl, appreciate the of about midterm I continue stop green I international. just you're these seeing the this we through now? curious because in little talk that Day. at go some like right a early to weeks. efficiency kind seeing not are know some efficiency you're additional scale of where Vegas update get that still in in I outlook bit think want the was as guys investing in And forward at a places places you can on you to where just Analyst can you look investing to But get But you while guys going that sure obviously to some you you I'm out shoots can few

Carl Eschenbach

you have prepared Kirk, the preview for Yes. actually time think remarks. the long-term at around way, as a about continuing thanks core and it our your about And well at to want your spoke of And as I think question. opportunity in ahead about just additional in we'll what for in part and you operating our really highlighted We just HR very the share profitable to preview Workday. by is I of take note, by thought note. drive can the continue written. you growth things innovate it at reinforcing thesis was lot start we we see, finance, efficiencies Thanks, And the broader scale and markets while we the our remain same excited to for we market. asked.

basis by few and talking X.X basis saying, As me by we're next think our and remind margin it points far start XXX about now over last years, moving people we've another operating points up we we as can the get let XXX efficiencies, years. expanded over the where

So we finding efficiencies. are

workforce some as Some examples well online of last in we'll and our current in global we is includes which of brought like as our strategy, workforce Rica. find India the to X new Costa the efficiencies leveraging XX where offices global months,

We're software product our also development hiring being the side we're what of smart and we're prudent And in focusing technology well and about carrying to invest going on specifically, quota forward. continuing as business. as on capacity

our We're in We also systems like copilots our finance And using and AI centers our development also and are organization, drive AI we're and technology. across in internally finding to AI using support call operating efficiencies organization. our efficiencies. software our we're using

to years thing to number of combine areas scale drive the the And efficiencies starting last Kirk, for is: we've operating leaned are investment here questions say, into kind some the I'd over us. one, of your and X actually last

For we what continue lot We've Xx portion responsible partners our in today a new we're a to again time in in force. highlighted build-out from actually, They're our participated of starting they forward. better spent talking productivity we're all example, financial drive seeing And growth partners. once ACV about of going We're to the now a or big scale starting did for drove with significant pipeline. sales and we ramp, to see our QX. actually

and areas the also next are over operational it's different there we're years, helping it's investing not So actually but growth maintain durable of us at the in, us same time. only giving that a number this X efficiencies

Zane Rowe

number to expectation. increase and drive of in, We leaned add, operating over margin Kirk, been bottom of an years growth line Zane. you've and and our versus our able mentality with even where investments we've look last is ROI at really just outperformed all we've these this the I'll seen as

to expect this should like we're never more in a business. a hear we're weeks done of have to in We work do. X.X Vegas, the up coming with with but So the efficiencies progress, feel in across area more just pleased little lot on

Operator

with Kash Sachs. is Our next question Goldman from Rangan

Kasthuri Rangan

approach see more surprising the then lower Carl? on balanced and Short that you short-term QX happened activity could. taken growth playing Good upside. see I do as but potentially if term, I years ago, out, to in of know the guys famously renewal ended how elections impact margin. this long activity to you term, a have and and rates, you one up the One here not contract warned back about on X that and volatility the were Aneel upcoming upside us question,

So your short take is what term? the on

then it's And do that we Zane. margin, you the one ability expense can to opportunity for open comfortable term, spending see you, not the the if up better a get how reinvigorate Longer in coming growth at that get we if expansion of to environment.

Carl Eschenbach

the Kash. current all I'll do we I what predict way election But I Listen, hasn't of Thanks, impact other. QX. from first what Yes. and is the changed know macro into one. at selling the in we're the take environment future one saw or can't the the

the environment provide because in because continue couple elections, great forward. quarters. the grow proposition both We're regardless We and think proposition with to over it's current here business We new we're long we're of tremendous IT we prepared value we we're selling the have. macro something a prospects. have norm that our of powerful in been we a short or fact, of of environment the and to to that's product. the the going what customers value going term And dealing last In term spending just the isn't into think

Zane Rowe

it's question investing term, we'll And job done upon where mean from, depending to agile investments opportunity level comes innovation But the add both longer we're top make be growth accordingly. increase business grow across quick those just investment and your that Yes. and we've that and measuring that for company. growth and line us good to that on investing I continue we a or Kash, when it this adjust in good sure feel the line can to we sufficiently the bottom to and

a like got balance feel we good So here. we've

Operator

with Murphy Mark from is JPMorgan. question next Our

Mark Murphy

software how The the currency I moment. you the wealth ask of characterize the sitting of landscape is Carl, at in this cross on itself AI data. Workday would you're on reason of

sole You to it. have ability unlock the

in others just adoption you radar. infrastructure for do digest side overcharging I'm landscape and midterm as do GPU you wondering growth the to trying like as the on AI some the AI landscape, then But advantage the of of You're that at target, the services layer. application to are, usage retweak and giving ledger, not product other actual the any the type the is you margin, somehow broadly, pausing AI if the customers sense in understand they're under purchases

Carl Eschenbach

Yes.

two in So I Mark. there, think questions there was

answer to So I'll both of them. try

monetization. First, about approach to our I'll talk

to multipronged monetize we've first, AI. So said we're a we to measured take going very approach how

win foremost, monetizing once it up quarter. our and First we're again that this to rates are competitive

renewal customer rates high remain very our satisfaction very remains Our and strong.

the We to rushing on uplift platform. entitled we same in example, our are think time, market at than customers, AI they're pricing we're not for more now that innovation. XX, cases also, and the an have our had to use have to going to just We saying because

will, incremental we market justify see to to Mark, from we customers where AI We will when on help new Workday. dollars do SKUs our can bring spending so, we opportunity though,

and SKUs, is is us. Gateway talent platform associated. a build Xtend an optimization allows optimization, For There's Xtend to develop people example, one and of extend top applications AI of on Pro AI that fastest-growing API our new now power Pro. new

develop trying are recruiting early because in when HiredScore API. of quarter reduce to the going seeing build as something we're excited people they spends leveraging comes have talked the it's also, spend market, have their is into it their today biggest the know, faster, software last across about. copilot very we're We're help days this We we as one to the a HiredScore. the platform a And of recruiting. you pipeline rapid to people of but AI very about

example, investing we spend, we AI the Mark, customers with our question seeing AI all because just let see me case, address from we not for reason we're you customers, as new asked see Workday. time, they them, this and and hear we prospects our what in are is in on invest Workday. with people what they and opposite. that We said. for are and because of believe partner the now our What seeing when on we get spend engage The And

drive I think customers the to and AI as now of is value are huge highly can't have curated most recognizing more value the around AI everyone, good data as our for the using innovation share September. we train the of and and clean, data today for only at sets and in customers, differentiator we world to you're the to Rising one forward, Gen entire finance both that's HR in us and think a going wait with including we of AI

Operator

is Brent with Jefferies. question from next Our Thill

Brent Thill

is down, that mid-teens many which of Carl, have that growth. to versus to you bit. you number is rate that be in market giving the continuing is place? ratchet What lowered confidence have that your market there that, giving still in is asked What growth underpinning still you still that the confidence going a

Carl Eschenbach

the lean tremendous made, seen still of just opportunity Well, one, them XX% Europe. of we of at Workday talent there's us, believe We past. the to we've us, for top they're investments off. here And reselling and reasons, scale opportunity example, they Number in across we I community think, a rate not co-selling the beyond in They're the into our billion. the for are partner internationally. foreseeable with than $XX that's continuing They're see innovating that hired growth but more platform. confident work, the as we paying we've on We've a ecosystem number myself, amazing are in all pipeline, some future. us have with ever they're and building

that to last the about XX% attack. continue X leadership here the highlighted and In U.S. our go in quarter months, new and I success of can believe that the outside we we this opportunity of some than and market is had APAC more addressable Japan, talked we in we

continue also believe financials. opportunity We the in to around

and financials It's heavily if, you As of cloud. leaned couple than for workloads to still the not all know, last opportunity we've we on-premises And in of the greater of the moving to see because XX% when. it's years, they're

us move And cloud, competitive gives or they full suite on Workday HCM and platform the see run financial the with when confidence to platform last rates is innovation. our and thing full rise. financial continuing we solutions to that

are the platform, innovation leveraging so Gen Workday much AI on and AI. We driving

believe I'd the We will leveraging platform are top finally, Xtend. And to we're also -- that innovate continue ecosystem a on we of then inquisitive. called say us powerful M&A,

to believe our or help to about smart that out and at can we there look there's but as continue continue we We assets maintain us think going growth, prudent we're to be it.

profitable that the So able that's this scale to reason at confidence the years. drive be gives to growth us for next few

Operator

Our next question is from Brad Sills with Bank of America.

Bradley Sills

outlook. like backing on the you look -- ones determine growth at made that or rather and hard a of initiatives comments some upside which which are ones perhaps earlier. that XX% you took I ask be the some sources of sounds mid-teens now It well Carl, growth question, sorry, a wanted of the to to could going they're

of for that initiatives could some were color, after you are the What takes? more ones of you sources those future. review process, having that gone incremental felt what growth on and were puts of perhaps some curious will, through potential bullish which growth Just about be the if X-year some

Carl Eschenbach

Yes. Thanks We we for looked all initiatives. at our Brad. and the of pause growth did question,

and that's financials, the We community opportunity in opportunity. at them into the The I admit, Brent. we as partner think I the from as we international clearly today, the very sat articulated the and investment we've looked financials, of and we made hard are thought here question And off. sit lean right prior Some around ones, paying just the the right answering them we must one. we is growth about initiatives think

opportunities, we I conviction it we this at don't this thinking that's and any how I going But So pulled have look and moderating growth attack go right have forward. time think investments about think those would the we when have to big in growth we market confidence we're on gives us initiatives, We're at the opportunity globally. them. what back of

I wouldn't of right more this So to forward. any lean investments. them go as to be again, They've them last pull dividends and into throughout pay year already started able back the on even we we and think we'll year,

becoming things we're go-to-market that to expansion important the that's durable It margin across back to us by years. really over we and and it invest acquisitions. of technology in the growth through think One efficient, this doing business next potential mapping operating continue allows both as driving about few together the so all out more comes

Zane Rowe

Brad, Carl the component. I M&A year, updated in But side haven't just outlook. talked our curious you about the would incremental seen you either last the significant as M&A remain market. growth any the driving for We contemplate add, on

So well. that's it of component as a

Operator

next is Our from Turrin Michael Fargo. with question Wells

Michael Turrin

to margin go towards more town to hoping was I back here. in drove what the change

I margin thought sure hoping giving confidence what in bit here, still the the positioned think process making investors a there any and you you but well trade-offs more it's rebound. to for, could managing speak maybe you're been but for and have

Carl Eschenbach

IT the conviction is think does we not How be the selling the environment back think growth this is we about, normalized couple seeing next to what just quarter of into. talked a there's now one compare of or going some compare that going every XX% That year that's a norm going on I this new environment profile It's think year-over-year. and the something and that this growth to confidence how things. in current spend. We think us initiatives forward. quarter of gives IT of quarter? to spend We forward. we're that say, normal we'll it we're actually The last does it

We as well. these to also more operating driving initiatives in invest think it margin, us key OpEx by gives more growth dollars

you the So look long we growth we the know came take take a while a a we're of us business. together We look look think opportunity. period at at in at of growth We initiatives market. what, profitably for can to all drive we the a the over can investing do business, and really durable time, about, how all our driving it and this take

Zane Rowe

a And and about we multiyear come some we've period. what the efficiencies, in looking there's as cost, cost, around add, focus able number a just systems, recognize business. some to how company. we need require those ramp heavily think mentioned and as We each to just upfront those Carl of discipline involved of we as investments increased scale all to actually Yes, returns of those we're the understanding they across period. these over initial of spend this and then focus on better areas we're growth, but at process people far I multiyear a would that over

still excited future. number So we of invest and can years. over margin improvement, believe us the you've innovate we're and drive it the last truly yet about do seen We and

momentum. continue to want just that we So

Operator

Our with next Raimo from Lenschow is question Barclays.

Raimo Lenschow

you're what kind think Thank times at the what the current the the we the in the in way, -- we've about point seen you could assumption me I spending Or to, of continue foreseeable that what as assumptions there. and you future. well. you in what kind that of this behaviors work Carl, this see for growth is some the for for is in let's planning future, it get something past a long also compare what the think like your if long-term the now will [indiscernible] outlook market bubbles you be assuming is of is terms kind better this? market, of kind with take that and term, and like there planning if the of you happen

when, know don't but at We point. some

growth Just like see what the trying just in like market trajectory? changed of understand different at is it the economy has we the Or moment? a kind to towards

Carl Eschenbach

Yes.

reaccelerate. We taken think current what headcount when their their we're when earlier, pause new existing things they moderated opportunities the environment it don't it employment quarter they chooses a do a times, finance sweat and We've said, that's approach the As could and just transformations and headcount. push could systems all. and who at large longer. get Workday get is and by HR in of and that Things at our being we think leave We we our and people And norm, bit their doing way, pipeline lot at asset on. a like a And That tailwinds outlook are X. out could they or think today, could medium-term growth. customer fact, look they so, or they those said the we of one about the oh, basing the times other. in I change direction

as So more update next think in we'll right our consistent can. now, get change tailwind, we the see if the is about forward. model And we think things in do we'll it potentially But current years. and is few a future. going think new environment norm. can Do They what we we so, the we think

Raimo Lenschow

for Zane. a And Perfect. then question

indexing If you been little of a probably marketing. Workday historically on over-indexing think bit sales about probably R&D has and like and

the et about X how about think do think cetera, drivers. we you forward, major that going between mix those efficiencies As

Zane Rowe

and building got always can say those is at both Sure. I a We've it lot there's and a And terrific Yes. R&D of how a opportunity. innovation, the team. of Broadly, lot of help lot a would growing. out mix, AI actually we've looked spend a product doing and efforts. innovating, We're

as say, as I a Even grow innovate, really to the G&A only side, globe areas. think better all across growth be on about efficient workforce look, balance balanced would more and all not how around can we that's we the represented believe So the globe, with but continue that we well. it's we around

we the sides, are those the as all We're investments speaking, that future maps say, both we're and making for making. excited but generally I'd road investments leveraging So about also well. opportunities on we're

Operator

Our next question Keirstead UBS. is Karl with from

Karl Keirstead

XX%, your cash right margin flow top target. your you of on margin well set was at non-GAAP which target So pretty free operating midterm

to XX%, up want know different be So bps Day. why people just free what solid. ago? there raising correlation latter you than might cash XXX this is two that flow maybe some to on given metrics call imagine on that punt I margin whether the year call, to to raise that those the can or But you're to any will between relationship don't I reason the Investor the comment on that by you just keep a were XX thinking

Carl Eschenbach

payments where are where we've initially seen now. still ramping growth the industries These want out I weeks. the also want industries taxpayer the to Yes, that revenue. all good a you Investor see like don't to because number Day give Edge would but Sure, mean correlate at answers like don't the you We're yes, of with Karl. broadly we're I and speaking, still a in I industries U.S. in I'd I point X.X there. federal, would say, other

disclose stay myself, in want of to So we'll don't what weeks. for material some X.X I tuned get at then. least ahead for

Operator

is question from Alex next Wolfe with Research. Our Zukin

Aleksandr Zukin

conducted. be vertical, M&A we that implying should that the of I midterm back-end change about setting. we that linear? from you half? more be sure the guess I saw strength want there's sounds guys like expect maybe the kind vertical drive and to the target to Should pipeline have you're the the to of what midterm for expect little seeing margins, me, on M&A you in you're no to context, perspective? Should expect the kind talked in particularly strategy second be that it loaded in we the that's to just a bit the in first half what we then about, targets, same bookings on And a strength

Carl Eschenbach

Zane, to last I'll jump you why start don't take question in. and the

Zane Rowe

But balanced, to to give on you number we bit weeks. a say, a detail this more generally speaking, towards we're little growth, similar that got Sure. little balanced, year. a 'XX. think pleased of evenly to But see what we've growth obviously, the that seen initiatives, that will skewed as even we've Yes, maybe I'd X.X FY about and Carl evenly in I mentioned more

I'll for... So over more to come to on that Carl front. it hand

James Wood

I'd script, little the we're seeing give on what color verticals, to there. Doug we industry the on And a more Yes. ask bit highlighted some but in

Doug Robinson

here. perked Alex, about when asked you ears pipeline. My Doug up

So seeing at us industry, we're where pipeline know as to the you be and growth strength. is strong in continued

health multiyear So for of both education care, we Workday health higher are suite. full but care course, that for and higher and think includes also education opportunities

progresses. to news you the and as it federal In the the second and business more Fed state local, and to around with business of hope increasingly, good addition share half year that, the in

Aleksandr Zukin

if -- it that actually sneak the versus then in growth the the And one would financials if large question market we If balance? think it? of maybe going curve we're the your Perfect. recast I success end of do used the the think we to seeing over I ask you couple the how when would of end about to market, We we trends think enterprise. down -- construction that more But some of HCM. What in. How market? versus years higher of next just about how characterize about more of versus lower the about percentage

Carl Eschenbach

Yes.

let So that me answer question.

had enterprise and what medium and we've know, like and in a verticals industries historically you enterprise aggressively. or we down As lot mentioned, had of quite the the emerging success into pushing Doug in we've large been call enterprise just

a is of which combination reasons selling success that having we're is as doing both One a of full deals, platform because or HCM. suite full we're lot the as of financials well

strength pricing markets. We've as accelerate going modified now see for have forward. those an our also capabilities to that We've continue for and our we of to area And deployment. us delivery packaging new

partners the helping leaning value also enterprise our better So and market. in faster as are drive that from medium us well. and customers adoption market faster And get in

playbook We've the U.K., So the media U.S. the the U.S. in globally. enterprise, both here Europe, we'll from in spreading in pushing taken APAC. it it's We're same throughout the and doing It's the be and

So as we'll side think it's product as go-to-market lean the well about into we pricing area packaging. an of strength. something it's side an of area continue as and It's to and on the opportunity

Operator

questions. taking more be now will We two

Wood Derek next with question TD from is Our Cowen.

James Wood

I Zane, headcount QX. slower during know called renewals growth out guess in I pockets you of for

and called are I'd you able more the curious: be you b, aside and what And And what new verticals change tech quarter broaden of outlook? retail; you the adjust did growth from out a, is? normal the the ones in average quantify So this in was historically? Like are out growth headcount your what in think you degree new seeing assumptions is? to for medium-term you last to these do

Zane Rowe

seen assumptions our what first adjustment in there. consistency the look were we have very for that is yes, Derek, similar the been the year. quarter-to-quarter, If we for they the extrapolated year. Zane. made to We this We've quarter

million time, I you think the of it approximately If extent year. over $XX was the I recall, last mentioned

significant no same. So about believe has baseline the anything, on change a level, we been the there, if quarter-to-quarter

our So or revenue the it it's about it consistent. both been We guide. FY contemplated new as bookings impact in on well we midterm It's norm. It's guide significant as not as our today. consider a 'XX think

Operator

Bank. with Zelnick question is from Brad last Deutsche Our

Brad Zelnick

keep just within what customers things My particularly in for and if still Carl question Curious But about exciting about center, verticals market. particularly out across excited adopt you're would accounting that drive is services you call to that or ahead. fins but upside maybe areas as down not there great even we and specific perhaps financial compel hearing Doug. because are can even

Carl Eschenbach

Yes, Doug, take to you that. do want

Doug Robinson

Yes, nice I'll hear Brad, first. go you. to from

by solution industry, center interesting across teams You industry. to vertical hit with of accounting organizations center. which is cases and come dedicated consulting as we've the first have hit, for use one, them accounting innovative vertical up I'd increasingly, selling and And really with each

X center X FSI or now so, years, accounting support vertical, to across industry, back was for it years go is and out. as that plus point the original while you selling So thesis of

in game opportunities, The the but consider ERP would suite industry. particular just sort higher in you that, operational changes is student, of pull second one student I'd drive point not full through and out can what and that ed so

growth, I opportunity strong get around as industries I where both higher care two mentioned pipeline So that question and multiyear are excited. see a education. answered Those the me earlier and health we for

Carl Eschenbach

that momentum, product and a planning be we to is there's Another think ago. planning. which our got a platform correlation tight might years see something HCM workforce adaptive an one, continue few We and is we Doug, financials between workforce

Operator

over closing comments. session. you. Eschenbach Thank Mr. Ladies gentlemen, concludes the our to call for now and this question-and-answer turn I'll

Carl Eschenbach

the thank and operator, again you to everyone you, today. Thank on call

seeing and and at support sizes, our our lead Before give road thanks on who and close workmates, growth to second assets. we been fiscal the for and can heading to forward Operator, geographies again into growth you the customer at all to we turning And never a AI-powered fuel innovation we're Workday's their people on in like with our new value everyone us money, important the Organizations the partners continue are believe, strategy of of their We're now to around and future. platform. precious most has map, half exciting That's and workmates never most industries proposition, innovations we scale. them and of to into Workday's at a all weeks. with special momentum I attending. positioned I'd their and been better manage an and to all we've it's Rising, look Financial Day our clearly year call, Rising I couple and go, and Analyst durable believe, to to thank you customers of my success. launching stronger. the strong have world a

Operator

This concludes conference. today's

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

Workday (WDAY) 22 Aug 242025 Q2 Earnings call transcript