Workday, Inc.

Welcome to Workday's fiscal 2024 first quarter earnings call. At this time, all participants are on a listen-only mode. We will conduct a question and answer session towards the end of the call. During the Q&A, please limit yourself to questions to one. With that, I will now hand it over to Justin Furby, Vice President of Investor Relations.

Thank you, Operator. Welcome to Workday's first quarter fiscal 2024 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, and our most recent quarterly report on Form 10-Q 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 reconciliation 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 second quarter fiscal 2024 quiet period begins on July 15th, 2023. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2023. With that, I'll hand the call over to Anil.

Thank you, Justin, and welcome to Workday's first quarter fiscal 24 earnings call. I'm pleased to share that Workday reported strong Q1 results and once again outperformed against our key operating metrics, which include a subscription revenue growth of 20% for the quarter. While the macro environment continues to be unpredictable, we remain positive about our future growth prospects for a couple of reasons. First, we got the year off to a strong start and have built a healthy pipeline of opportunities, which gives us better visibility into the rest of fiscal 24. And second, we are seeing the value proposition of the full Workday platform, combined with our unique approach to artificial intelligence and machine learning, continue to gain momentum as more and more organizations across geographies and industries put their trust in us to help them drive the future of work. When it comes to AI and ML, We think about and implement it differently than any other enterprise software company in the world. And we've been at it for nearly a decade, while many of our competitors are scrambling to catch up. We approach AI and ML with a heavy emphasis on being human-centric, using these capabilities to augment people and organizations, to make them more productive, better informed to make decisions, and to help them reduce business risk. Several things set us apart. One, AI and ML are embedded into the very core of our platform, allowing us to rapidly deliver and sustain new ML-infused capabilities into our products to drive more business value for our customers. Two, we have the quantity and quality of data that further differentiates us, meaning that we not only have access to an enormous amount of data due to the more than 60 million users representing more than 600 billion transactions over the last year, But we also have a unified data model that allows us to build and train models in a way our competitors simply cannot replicate. And three, we firmly believe that to deliver on the possibilities it offers, AI and ML must be leveraged in a trustworthy and ethical way. Workday has always been a trusted partner to help companies keep their most critical assets, their people and money, safe, secure, and private. This approach becomes even more essential when leveraging AI and ML. As you know, generative AI is driving the AI and ML discussion right now. Despite the recent hype around large language models, Workday has been delivering AI and ML, including LLMs, for several years. We believe we need to look past the hype cycle and identify the real ways our customers can extract business value from LLMs. Today, we're using generative AI tools behind the scenes to help power products like Workday Search and Skills Cloud. while exploring a variety of generative AI use cases for our customers. For example, we're looking at many content generation use cases within our Workday talent management, recruiting, financial management, and core HCM applications. Additionally, for years, we have taken a leading role in AI-focused policy discussions at the federal, state, and local level in the U.S., while partnering with the European Union and other governments around the world to provide thoughtful and concrete policy approaches to responsible AI. Simply put, we believe AI technology should be regulated. This is an area that you will continue to hear more from us in future quarters, and I look forward to sharing updates about how Workday is helping to drive AI policy globally. Moving to our core set of applications, we continued our investment in Workday Pecan Employee Voice by recently unveiling semantic search capabilities, which leverages AI to analyze millions of employee comments and present the most meaningful insights. While manual keyword searches take hours or days, semantic search can analyze employee comments in seconds to quickly provide leaders with the insights they need to address emerging workplace trends. Employee engagement is one of the biggest hot buttons for CEOs today, and we're continuing to see more organizations turn to PECON to help them stay on top of and address employee sentiment. In fact, PECON hit a significant milestone in Q1 as it surpassed more than 500 million total survey responses and 70 million written comments. providing us with one of the world's largest standardized datasets on employee sentiment. For the Office of the CFO, we recently unveiled Predictive Forecaster, a capability within Workday Adaptive Planning that creates ML-based forecasts with the ability to add additional regressors and datasets. The feature, which is in limited availability today, supports our next evolution of workday adaptive planning to produce increasingly predictive plans and enhance insights to help organizations more effectively navigate today's business landscape. Another important innovation focus area for us is to be more open and connected, whether that's by providing an open and extensible platform or by working closely with our partners to deliver added value to our customers. For our Workday platform, we are continuing to deliver tools and capabilities that simplify and enhance application development with Workday Xtend. For example, we introduced our first set of ML APIs in Q1 to enable our Xtend customers to build extensions that leverage ML. We also released low-code, no-code development functionality with App Builder, enabling developers to create apps with Xtend via a simple drag-and-drop user interface. And we built on our decade-plus partnership with AWS to create a native integration from Xtend to AWS. With this integration, developers can easily and securely leverage AWS services in their Xtend applications. The integration is in early access with GA to follow later this year. Xtend, which surpassed 500 customers in Q1, continues to be a major differentiator for us with the Office of the CIO. Additionally, we held Workday DevCon, our third annual developers conference, earlier this month. In-person attendance for this year's event grew by nearly 200% over last year, which is a testament to the excitement we're seeing from our customers and partners to build on top of the Workday platform, not only with Xtend, but with Prism, Adaptive Planning, Journeys, and Integrations. And on the partner front, we recently announced an expansion of our partnership with Alight to deliver an integrated payroll experience to customers across six key regions for us in Europe. Benelux, Germany, Italy, the Nordics, Spain and Switzerland. As you know, Workday's core values are foundational to everything we do and guide the decisions we make. In recognition of our efforts to always strive to do what's right, I'm pleased to share that Workday, for the third consecutive year, was named one of the world's most ethical companies by Ethisphere. Additionally, we continued our commitment to sustainability by joining Frontier, an advanced market commitment to accelerate carbon removal. Finally, I want to note an organizational change that we will be making. After nearly nine years with Workday, Barbara Larson, our current CFO, is stepping away to spend more time with her family. During her time with Workday, Barbara has served in several senior leadership roles across our finance and product organizations and has played an integral role in shaping Workday into the company we are today. I'm extremely grateful for her friendship and for the countless contributions she has made to the company, and I wish her nothing but the best in her next endeavor. With Barbara leaving, I'm pleased to announce that Zane Rowe will be joining Workday as our new CFO. Zane comes to us from VMware, where he was CFO since 2016, and before that held CFO roles at EMC and United Airlines. Carl and Zane worked together at VMware, so I'll let Carl share more in a minute on what Zane's addition to our leadership team will mean for Workday. In closing, we once again delivered a strong quarter and feel good about our growth prospects throughout the rest of fiscal year 24, despite what will continue to be a challenging macroeconomic environment. Innovation is core to who we are and fuels our continuing focus on infusing differentiated AI and ML across our entire product portfolio. Doing that will enable us to continue to serve as the digital backbone for organizations who want to thrive in today's changing world of work. With that, I'll turn it over to our co-CEO and my good friend, Carl Eschenbach, to share our go-to-market highlights from the quarter. Carl, over to you.