Workday, Inc.

Welcome to Workday's Fiscal 2024 Third Quarter 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. I will now hand it over to Justin Furby, Vice President of Investor Relations. Justin, you may begin.

Thank you, Operator. Welcome to Workday's Third 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 gap 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 fourth quarter fiscal 2024 quiet period begins on January 15, 2024. 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 thank you, everyone, for joining our Q3 FY24 earnings call. I'm pleased to share that Workday delivered another strong quarter, achieving 18% subscription revenue growth, 22% 12-month backlog growth, and non-GAAP operating margin of 25%. These results were driven by broad base strength across net new and customer-based teams, medium and large enterprise, and across regions, notably the U.S. and EMEA. I want to thank the more than 18,300 workmates around the globe for partnering with our customers to help drive these impressive results. There is a clear sense of momentum across our business, and it was on full display at Workday Rising in September. There, we unleashed new AI innovation, delivered product and partnership announcements, and drew a record 28,000 attendees in person and online. In fact, over half of our active pipeline was touched by our rising event in San Francisco. And just a couple weeks ago in Barcelona, we followed up with our largest ever EMEA rising event with over 4,500 people in attendance. In speaking with customers, prospects, and partners at these events, a few things stood out to me. First, talent continues to be a top C-suite priority. In this macro environment, businesses are looking to scale and drive productivity. They can't achieve both outcomes by simply hiring more. Leaders are turning to Workday to help them reskill and upskill their workforce, all while delivering a great employee experience. That helps them reduce attrition and ultimately drives productivity. Second, leaders are continuing to consolidate their technology footprint on a true platform to realize total cost of ownership benefits while also accelerating their operations. Workday is perfectly positioned to benefit as the intelligent digital backbone businesses can rely on to manage their most precious assets, their people, and their money. And finally, AI, and in particular generative AI, is becoming a business imperative. As a trusted partner and a market leader with over 65 million users under contract, we can uniquely drive efficiencies and improve the employee experience. And Neil will share more, but I will say that it is what we are doing and not just saying that is resonating with our customers. Simply put, our value proposition has never been so relevant and powerful. That's clear in the results our team delivered in Q3 and in the first half of FY24. At our recent Financial Analyst Day, we talked about the diversity and durability of our business and how it helps us grow during times of headwinds and times of tailwinds. This theme was evident in the wins we had this quarter. From a net new customer perspective, we once again saw strength in full platform deals. We welcome customers like AdventHealth, Bentley Systems, Houston Methodist, and Lifespan as new full-platform HCM and financials customers. And new HCM customers such as Green King Brewing, Group One Automotive, Minor Hotel Group, and the U.S. Department of Energy helped us surpass 5,000 core HCM customers on Workday. Alongside helping new customer activity, We had several strategic expansions and renewals in the quarter, including Magna International, Mondelez Global, Sunoco Products Company, and Southwest Airlines. And I'm pleased to share that our Create and Close business had another great quarter and is becoming a meaningful driver of our customer-based sales team's growth. Now I want to highlight some of the key growth areas we discussed with you at Financial Analyst Day. Starting with international, which represents over half our addressable opportunity, in EMEA, I'm pleased to say that our leadership additions are driving improved and more consistent results. The team here once again delivered strong new ACV, particularly in the UK, Germany, France, and Spain, and helped us eclipse the $1 billion ARR mark in the region. Win rates were robust against our competitors, even in their own backyards. We had important new wins like AXA-UK, Aurelius Group, and international schools, along with expansions at BBVA, Carl Zeiss, and Tullis Global Services, among others. And in the Asia-Pacific region, Australia performed well with wins such as Ramsey Healthcare and Wesley Mission Queensland. We still have work to do in APAC, but we're focused on it, and I'm delighted Simon Tate has joined us to run the region. We're also making important investments in Japan to help expand our opportunity within one of the world's largest economies. As part of this, our leader in Japan will now report directly to Patrick Blair, our president of global sales. Moving to financials, we're seeing proof that our go-to-market investments are continuing to pay off, with healthy growth in both core financial customers and new ACV. New full platform wins are on the rise, and our industry approach is contributing to this momentum. Healthcare, for example, grew new ACV over 50% in Q3, and roughly half of the healthcare deals we landed in the quarter were full platform. State and local government also continues to outperform with strategic full-platform WINS at County of Kern, County of Chesterfield, and the Pennsylvania General Assembly. Our back-to-base motion in financials also delivered in Q3. WINS included Clearwater Analytics, Ochsner Clinic Foundation, and Concentrix, which expanded their Workday HR footprint to include Core Financials when it combined with Web Health, a Workday Core Financials customer in EMEA. Our planning business also had a strong Q3, and we welcomed AWS as a planning customer along with NPR and Storrs Kogan Group. And finally, our win rates remain strong, and we see a growing pipeline of opportunities to replace our legacy ERP competitors. On the partner front, we've always recognized the vital role our ecosystem plays in our customer success, and it starts with go-lives. HCM Go Lives this quarter included American Electric Power, Dave & Buster's, and Iberdrola, along with Financials Go Lives at North Shore University Health System, Solution Health, and Wise Markets. Increasingly, we're leaning into our partner ecosystem in other strategic ways. Our Skills Accelerator partnership with Accenture, which we announced at EMEA Rising, is a great example. Accenture will be reselling our skills solution, providing their own services expertise on top of the Workday Skills Cloud. We also announced a partnership with ADP to extend the capability of Workday HCM with ADP's payroll and smart compliance solutions in key global markets. And we announced AI Marketplace at Rising. which allows us to innovate with our ecosystem of partners to deliver trusted and responsible AI solutions for our customers' most compelling use cases. Finally, we see strong momentum from our partner referral program we launched earlier this year. We've already exceeded our full-year targets for the number of partners that have signed on, and while it's early, we are starting to see a positive impact to our pipeline. Another key investment area is around AI, which we've been building into our platform for nearly a decade. As I mentioned, at Rising, we demonstrated our leadership with new announcements and demos that illustrated how AI will shape the future of work. I won't steal Anil's thunder. He'll be joining in just a minute to share more. In closing, we had another quarter of strong and consistent performance amidst a dynamic environment. the diversity in mission-critical nature of our business continues to fuel our success. As we move through Q4, we have a solid pipeline and clear momentum for our solutions. And while we are clearly focused on delivering in the near term, we have our sights set on delivering durable 17% to 19% subscription revenue growth over the long term while expanding margins. With that, I'll turn it over to my co-CEO and good friend, Anil. who will share more about our AI strategy and innovation highlights from the quarter. And Neil, over to you.