Workday, Inc.

Welcome to Workday's fiscal 2024 second quarter earnings call. At this time, all participants are in 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 one question only. I will now hand it over to Justin Furby, Vice President of Investor Relations.

Workday's second quarter fiscal 2024 earnings conference call. On the call, we have Anil Bushri and Carl Eschenbach, our co-CEOs, Zane Rowe, 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 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 third quarter fiscal 2024 quiet period begins on October 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 Carl.

Thank you, Justin, and welcome to Workday's second quarter fiscal 24 earnings call. I am pleased to report that we delivered another solid quarter, achieving subscription revenue growth of 19%, 24-month backlog growth of 23%, and non-GAAP operating margin of 24%. While we continue to see deal scrutiny, our workmates around the world did a remarkable job staying close to our customers and driving this quarter's results in positioning us for strength in the second half of the year and beyond. Workday continues to stand out from the crowd for a few key reasons. First, the mission critical nature of our platform. Our customers, now representing more than 65 million users under contract, are all in on Workday because they trust us to manage their two most important assets, their people and their money. Trust is at the core of our customer relationships and we will always work to earn it. Second, our value proposition is strengthening as businesses consolidate their technology footprint from best of breed solutions to a true platform. Workday is a trusted platform they can turn to to drive productivity gains, agility, skills-based talent strategies, and a great employee experience all at the same time. Third is our unique approach to AI and ML. And Neil will share more on our progress here shortly. And finally, our winning culture and talent, which is only getting stronger as we continue to attract our industry's best talent. We recently welcomed Emma Chawlin as Chief Marketing Officer. Emma is not only a great culture fit, but she has extensive global experience across all facets of marketing at companies like Salesforce and Adobe. We also recently hired an incredible head of our U.S. federal government team and a senior executive in sales operations and another in our services organization to help us scale our go-to-market efforts. And of course, you all know our CFO, Zane Rowe, who is joining us today for his first earnings call. I could not be more excited to welcome these leaders who, along with our existing team, will help us achieve our next phase of growth. Turning to the highlights of the quarter, I will focus on five key areas, land, expand, global, industries, and partners. Starting with land... We see full financials and HCM platform wins on the rise, illustrating the trust customers have in Workday. Wins this quarter include Advocate Health, Assured Partners, Carilion Services, Fortrea, KinderCare, and University of Florida. And we continue to build on our market leadership position in HCM with new customer wins, including Prusanius, Digital Technologies, Stellantis, and Rio Tinto. Once we land customers, we immediately turn our efforts to successful deployments. In Q2, notable HCM Go Lives include A1 Telecom Austria, Korean Airlines, Nike, and Rite Aid. Strategic Financial Go Lives include Fitness International, MultiCare Health Systems, Wintrust, and the University of Washington. We also celebrated our first FedRAMP Go Live which was a full platform rollout at a well-known civilian agency. Expanding our existing business with customers is key to our growth strategy. In addition to strong renewals this quarter, we had a number of expansions at companies such as Airbus, Dell Technologies, Lloyds Bank, Lowe's Companies, and 7-Eleven. Our faster time-to-value solutions, which includes Planning, Pecan, Xtend, Health and talent optimization continue to gain traction, with many deals created and closed within the quarter. This year, we've put increased focus on financials go to market, and it's starting to bear fruit, with healthy customer growth in Q2. Beyond the full platform deals I mentioned earlier, we had a number of financial expansion wins in the quarter, including the Medical College of Wisconsin, Nordic Consulting, and Rakuten. Given our momentum, we continue to invest in financials targeted sellers to lay the foundation for durable growth. From a geographic perspective, the U.S. continues to be our largest market, representing 75% of our revenue. The U.S. team drove solid results in Q2, with particular strength coming from our customer base and industry teams. We have a significant runway for growth in this market and a healthy pipeline looking forward. Expanding our footprint globally is among our largest untapped opportunities and is a top priority. During Q2, we held 20 Elevate customer events across EMEA and APJ, attracting over 5,000 attendees and generating hundreds of leads in net new opportunities. Not only are we building pipeline, we're starting to see more consistent execution in certain regions, notably EMEA. We saw strength in key markets such as Germany, UK, and France, where wins included Rhenus Assets, Simrise, National Westminster Bank, and ALD Automotive SA. Our industry-first approach is paying off. This quarter, retail and hospitality became our second industry joining financial services to exceed $1 billion in annual recurring revenue. And we continue to have strong momentum in financial services, which outperformed in Q2. The healthcare team also delivered another strong performance with three large hospital systems going all in on work-based platform in Q2. A great example is Advocate Health, which as part of their merger with Atrium Health, selected Workday to replace a competitor's cloud HCM financials and supply chain management solution. Workday's supply chain continues to contribute to our traction in healthcare, with more than 220 healthcare organizations investing in it to reduce costs, promote standardization, and boost resiliency. Finally, our education and government team followed up a strong start to the year with an impressive Q2, with wins such as West Virginia University, DePaul University, and Metropolitan Community College, to name a few. The potential we have to accelerate our growth through our partner community is huge. We are seeing early signs that our partner referral program will positively impact new logos And our partnership with the AWS Marketplace led to multiple strategic wins in Q2. In EMEA, our recently announced payroll partnership with Alight is beginning to drive pipeline. And at APJ, our strategic partnership expansion with Samsung SDS is not only helping us drive overall business in South Korea, it also is enabling the development of region-specific applications built on Workday Extend. After spending time with many of our partners at our annual Altitude Conference this past quarter, it is clear our momentum is building. We look forward to welcoming more than 15,000 members of our Workday community at our annual Workday Rising Conference next month in San Francisco. We hope to see many of you there. As this quarter's results show, the diversity and mission-critical nature of our business continues to fuel our success. We are the clear market leader for Cloud HCM in finance, and our value proposition has never been more relevant or powerful. We are investing across our product portfolio, geographies, industries, and through partnerships to drive durable long-term growth. It is an incredible and exciting time to be a workmate, and I truly believe our future has never been brighter. With that, I will turn it over to my co-CEO and good friend, Anil. who will share more about our AI and ML strategy and innovation highlights from the quarter. Anil, over to you.