Workday, Inc.

Welcome to Workday's fourth quarter and fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of the call. During the Q&A, please limit your questions to one. With that, I will now hand it over to Justin Furby, Vice President of Investment Relations.

Thank you, Operator. Welcome to Workday's fourth quarter fiscal 2023 earnings conference call. On the call, we have Anil Bushri and Carl Eschenbach, our co-CEOs, Barbara Larson, our CFO, and Doug Robinson, our co-president. Following prepared remarks, we will take questions. Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast. Before we get started, we want to emphasize that some of our statements on this call, particularly our guidance, are based on the information we have as of today and include forward-looking statements regarding our financial results, applications, customer demand, operations, and other matters. These statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. Please refer to the press release and the risk factors in documents we file with the Securities and Exchange Commission including our fiscal 2023 annual report on Form 10-K for additional information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Workday's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release, in our investor presentation, and on the investor relations page of our website. The webcast replay of this call will be available for the next 90 days on our company website under the investor relations link. Additionally, our quarterly investor presentation will be posted on our investor relations website following this call. Also, the customers page of our website includes a list of selected customers and is updated monthly. Our first quarter fiscal 2024 quiet period begins on April 15, 2023. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2022. With that, I'll hand the call over to Anil.

Thank you, Justin, and welcome to Workday's fiscal 2023 fourth quarter and full year financial results earnings call. I'm pleased to share that we delivered solid Q4 results and once again outperformed against our key operating metrics, which included subscription revenue growth of 22% for the quarter and for full year fiscal year 23. While the macro environment continues to be unpredictable, Workday's value proposition is only getting stronger as more organizations turn to us to help them adapt and manage their two most important resources, their people and their finances. As a result, our thriving customer community continues to grow and feel our path to $10 billion in revenue and beyond. In fact, we achieved a significant milestone in Q4 as we surpassed the 10,000 customer mark with more than 4,750 of those being our core HCM and finance customers, a true testament to the power of the Workday platform and our ability to address the needs for the offices of the CHRO and CFO. Additionally, approximately 629 billion transactions were processed with Workday in fiscal year 23, an increase of 42% year-over-year, and further proof of the scale that we had reached. Before we share some Q4 highlights, I want to touch on several recent leadership moves and one organizational announcement that we made, all of which will help set us up for our next phase of growth. The first is the appointment of Carl Eschenbach as co-CEO, which we announced in December. Carl has been a Workday board member since 2018, and for the past 35 years has been one of the finest sales and operational leaders in enterprise technology. With his experience and commitment to our values and culture, Carl is a perfect fit to help Workday scale and lead us forward. At the end of our fiscal year 24, Carl is expected to assume sole CEO responsibilities, while I will stay involved with our product and technology teams and all of our employees as a full-time executive chair and chair of the board. Carl's transition into the co-CEO role has been seamless, and I'm excited to work alongside him going forward as we continue to grow Workday and strengthen our position as a leader in cloud HR while building on our momentum in finance. I also want to acknowledge the great work Shano Fernandez did during his nine years with Workday, and for the last two years as co-CEO. He played a significant role in helping to shape the company into who we are today, and I want to thank him for his contributions. Additionally, Cheyenne Chakraborty, our EVP of product and technology, has been elevated to co-president alongside Doug Robinson. Since joining Workday more than seven years ago, Cheyenne has been a driving force behind our evolving and expanding innovation strategy, led our efforts to scale the Workday platform to support and enable some of the world's largest organizations, and is one of the foremost experts in artificial intelligence and machine learning as it relates to the world of enterprise offerings. Cheyenne will continue to lead our product and technology organization, and we are pleased to recognize his leadership role across the organization now as co-president. With Cheyenne stepping into a co-president role, Robin Sisco, who was previously co-president and before that CFO, will now assume the role of vice chair. In this role, Robin will work closely with our global sales team to help us build on our momentum with the Office of the CFO and further cement Workday as a leader in cloud finance. The last leadership update is related to our board of directors. I'm pleased to share that we announced today that Mark Hawkins has been elected as the newest member of our board. With more than 35 years of finance leadership experience at global software and technology companies, most recently at Salesforce, Mark will bring invaluable experience and perspective to Workday. Final announcement I want to highlight, which we made at the end of January, was a restructuring and realignment of some teams across Workday that led to the elimination of roles impacting about 3% of our global workforce. While it's always difficult to see employees leave under those circumstances, we made this decision to align our resources and people against the most strategic areas of the business to help ensure that Workday is set up for continued growth for many years to come. Throughout this process, we did our absolute best to treat the affected employees with compassion and offer them generous severance packages. This restructuring move was not a cost-cutting effort, and we will continue to hire in fiscal year 24 for roles that support our strategic initiatives. With that, I'd like to share some product and technology highlights from the quarter. From an innovation perspective, our continued focus on uniquely embedding AI and ML into the core of our platform is enabling us to drive the future of work for our HR and finance customers and there are more than 60 million employees around the world. On the HR front, the combination of our Workday Skills Cloud, which is powered by AI and ML, and Workday Talent Optimization is supporting customers in their transition to a skills-first mindset. To date, nearly 50% of all live Workday HCM customers are leveraging Workday Skills Cloud, while Talent Optimization is Workday's fastest-growing SKU with an attach rate on new deals of more than 85% in fiscal year 23. For planning, we introduced new demand forecasting capabilities that leverage AI and ML to help retailers forecast business demand based on external data such as sales and foot traffic history. Retail continues to be one of our target industries as more than 50% of the retail organizations in the Fortune 500 are Workday customers. And innovations like this will enable us to build on our momentum in this space. We're also continuing to double down on AI and ML through our Workday Ventures Fund. We announced a $250 million expansion of the fund to focus on larger growth areas such as generative AI, all with an eye to embracing emerging technologies that help us further enable our customers in today's changing world of work. Finally, I want to touch on how we're continuing to invest in our brand. Hopefully you all saw our fun, rockstar-themed advertisement during the Super Bowl, which reached an estimated 110 million viewers. While finance and HR leaders are familiar with us, We saw the Super Bowl as the stage to help us become more well-known to a broader audience. We firmly believe that our brand is strategic, and investments in marketing drive awareness and demand for our products and services. Going forward, we feel very confident in our ability to capitalize on the long-term growth opportunity in front of us, thanks to the strategy we have in place, the mission-critical nature of our solutions, and the amazing talents of our more than 17,700 workmates around the globe. In fact, we are hosting today's call from our annual sales kickoff meeting, and the excitement from all of our go-to-market teams here in Las Vegas about the incredible opportunity we have in front of us is palpable. With that, I'll hand it over to our co-CEO, my buddy, Carl Eschenbach. Carl, over to you.