Workday, Inc.

Welcome to Workday's first quarter, full year 2026 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.

Thank you, Operator. Welcome to Workday's first quarter fiscal 2026 earnings conference call. On the call, we have Carl Eschenbach, our CEO, Zane Rowe, our CFO, and Garrett Katzmeyer, our President, Product and Technology. 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 the documents we file with the Securities and Exchange Commission, including our fiscal 2025 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 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, the transcript of this call and our quarterly investor presentation will be posted on our investor relations website following this call. Our second quarter fiscal 2026 quiet period begins on July 15, 2025. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2025. With that, I'll hand the call over to Carl.

Thank you, Justin, and hello to everyone joining us on our call today. I'm pleased to report that Workday delivered a solid first quarter. We drove 13% subscription revenue growth in a non-GAAP operating margin of 30%. This performance was fueled by strong customer adoption across key verticals, geographies, and customer segments. We all know the economic environment remains a bit uncertain, but I'm incredibly proud of how our teams are staying focused on our customer success, and that is driving our results. Workday's value proposition remains highly relevant in today's market. The CEOs I meet have three key priorities. They want to drive efficiencies. They need to be agile and responsive to market shifts. And they want to unlock growth with innovation. And from our perspective, they're turning to Workday for all three. We help manage and optimize their most critical assets. That is their people and money on one platform with AI at the core. This unified approach reduces total cost of ownership and helps them move faster with greater precision. Our customers trust that Workday's AI is powered by the largest and cleanest finance and HR data set. Our AI is fueled by more than 70 million users under contract and 1 trillion transactions processed on the platform last year. which gives us a deep understanding of how people work. This enables us to deliver highly differentiated value to our customers. I'll speak more about that in a moment. But first, let's turn to our customer highlights for the quarter. In Q1, we established new HCM relationships with United Airlines, Pilot Travel Centers, and Mutual of Omaha Insurance Company. And it was another strong quarter of expansions with customers such as FedEx, CVS Health, Asda Stores, and Chipotle. Our investments and financials continues to pay off with solid growth in both net new ACV and customers. More than 30% of our net new wins this quarter were once again full suite. And in our focused industries of SLED and healthcare, it was more than 50%. We also had some strategic financials go live this quarter, including BJ's Restaurants, Essentia Health, and Genesis Cloud Services. Our AI innovation continues to gain traction. New ACV across our AI products more than doubled year over year in Q1. And roughly 25% of our customer expansions in the quarter included one or more of these products, such as recruiting agent, Talent Mobility Agent, Evasor, and XtendPro. Fantastic companies, including Visa, LabCorp, and Aon, all selected our AI products. I'm also excited about the momentum we're building with the Office of the CIO. We're driving increasing demand for XtendPro, which enables our customers to build AI applications on top of our platform. This continues to be one of our fastest-growing products, and it's amplifying innovation for our customers. While Workday serves more than 60% of the Fortune 500, 75% of our customers have fewer than 3,500 employees, and we see a significant growth opportunity in the emerging and medium enterprise markets. In Q1, we launched Workday Go specifically for these companies. It gets them up and running on our enterprise-grade platform fast. We're talking implementations in as little as 30 to 60 days with pre-configured deployments. And it's not just the software. They get the full support of our partner ecosystem in a clear, fixed pricing model. It really moved the needle for us in Q1 helping our emerging and medium enterprise teams deliver a strong quarter. Now, let's talk about industries. I'm excited to share that we now have five industries exceeding $1 billion in annual recurring revenue. Manufacturing and tech and media, two industries that had a solid quarter in Q1 recently reached this milestone. They joined our three other billion-dollar industries, financial services, retail and hospitality, and professional and business services. Like I've mentioned many times, this shows the strength and diversity of our business. Our focus on the federal sector continues to pay off. We are building a foundation for long-term growth in this market. This was clear in the huge success of our third annual federal forum. Attendance was up 65% at this year's event, and we had some great conversations with senior government leaders about the critical need for transforming the federal workforce, especially in the key areas such as AI, security, and skills. We're also very proud of our leadership in higher education. We were just named a leader in the first ever Gartner Magic Quadrant for higher education student information system software as a service. In Q1, we were thrilled to welcome Center College, Bow Valley College, and Gannon University as new customers. And we're seeing great success with Workday Student Go Lives, including the University of Arkansas system, which is now fully live at 14 institutions across the entire state. In an environment where everyone is trying to do more with less, Workday gives our customers the ultimate advantage. AI is built directly into our platform and is always on. Greater than 60% of our customers are already leveraging Workday Illuminate AI. We're excited by the adoption we are seeing, but we are even more excited about the strong ROI our customers are getting from our AI solutions. Look at Western Union, a longtime Evisort customer. Using Evisort's AI-powered contract management solution, which was made available through Workday and Q1, they were able to process contracts 65% faster, while reducing associated outside legal spend by almost 70%. Just incredible results. The Evisort team had a fantastic Q1, and they're just getting started. Customers are clearly willing to pay for these types of results, which opens up significant new AI monetization opportunities to help fuel our long-term growth and set us apart from the competition. When we look at our roadmap, our focus is on delivering innovations that drive meaningful ROI for our customers. In fact, our agents must meet specific TCO or total cost of ownership requirements with our early adopter customers before we even bring them to market. Just this week, we announced a wave of new AI agents that harness the power of our unmatched dataset to help amplify talent potential, reduce costs, accelerate decision-making, and mitigate risk. And to keep us at the forefront of AI innovation, we're really excited to welcome Peter Baylis as our new Chief Technology Officer. Peter will lead our AI and ML initiatives, driving our vision forward. With his background at Stanford and Google Cloud, he has a proven track record of AI innovation at scale, and I couldn't be more excited he chose Workday. Partners continue to be a critical driver of our success, extending the power of our platform, fueling pipeline growth, and bringing new innovations to our customers. In Q1, we once again saw great contributions from our partners, with more than 20% of our net new ACV in the quarter coming from partner source pipeline. Partners are also critical in helping us expand into new markets and meet the diverse needs of our global customers. In Q1, we signed our first volume managed service provider partnership with the Mutual Group to serve the mutual insurance industry. Additionally, our Global Payroll Connect program now supports payroll delivery in 187 countries and territories, thanks to 29 partners building integrations. And through our partnership with Strata, Our customers can manage up to 60 global payrolls all under a single Workday contract. On the innovation front, we're seeing strong momentum in our built-on Workday program. In Q1 alone, we added 25 new partner apps to the Workday marketplace. Our community of customer and partner developers has nearly doubled over the past year. a testament to the power of building on the Workday platform. And in just two weeks, we'll host thousands of them at our developer conference, DevCon, in Las Vegas. Our investments in our global strategy are helping us better serve our existing customers, attract new ones, and make our operations even more efficient. In Q1, we saw solid growth across EMEA, Asia Pacific, and Japan. In EMEA, we had notable net new wins with Opella Healthcare and global manufacturer, Georg Fischer, and we expanded with semiconductor equipment manufacturer, ASML, and insurance provider, Aviva. We also had a major financials expansion with Decathlon as this relationship continues to grow. As part of our ongoing investment in the UK, we went live on the AWS UK public cloud, making it possible for our customers to access Workday solutions locally. We also announced a new location for our EMEA headquarters in Dublin, which will bring our local workforce of more than 2,000 employees together. APAC had a strong start, too, with wins at Swinburne University of Technology, the University of Melbourne in Australia, Collins Foods, and PPL Pharma. And finally, Japan kicked off the year with new wins at Mitsubishi Motors, Tepco, and Rigaku. In Q1, we saw the diversity and durability of our business firsthand, with multiple levers driving long-term growth. Looking ahead, we're staying close to our customers as they navigate the macro environment. No company is immune to these challenges, and we are watching it across particular markets such as SLED and our international business. That said, we've got a compelling value proposition, and our teams are focused on controlling what we can, and that is delivering innovation and strong ROI for our customers. The future of work has evolved. During the pandemic, it was about where people worked and how they collaborated. Today, it's about how humans and AI agents work together and how companies manage the human and digital workforce as one. I believe no company is better positioned than Workday to lead this shift. With our expertise, our unparalleled data, and a platform built with AI at its core, We're ready to shape the future of work. I want to give a heartfelt thank you to our customers for their continued trust in Workday, to our incredible partners, and especially to our workmates around the world. Your hard work and commitment gave us such a solid start to the year, and I couldn't be more grateful. With that, I'll turn it over to Zane.