Workday, Inc.

Gentlemen, welcome to Workday's second quarter fiscal year 2027 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 session, please limit your questions to one. I will now hand it over to Justin Furby, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Welcome to Workday's second quarter fiscal 2027 earnings conference call. On the call, we have Aneel Bhusri, our CEO, Gerrit Kazmaier, our President, Product and Technology, Gabe Monroy, our Chief Technology Officer, Rob Enslin, our President and Chief Commercial Officer, and Zane Rowe, our CFO. 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 and solutions, 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 2026 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, the prepared remarks of this call and our quarterly investor presentation will be posted on our investor relations website following this call. Our third quarter fiscal 2027 quiet period begins on October 15, 2026. unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2026. With that, I'll pass the call to Aneel.

Thanks, Justin, and thanks, everyone, for joining us today. It's hard to believe I've been back in the CEO seat for six months. Time flies when we're having fun, and I'm having a lot of fun. This is a fun time to be back in the tech industry. Q2 was another strong quarter, and AI played an increasingly bigger role. AI products alone drove more than 100 million of new ACV, which accounted for more than 25% of all new ACV closed in the quarter. And it's starting to lift our core business, too, including our win rates. We had commercial success with AI in the quarter, including strong early returns with flex credits. And we expect this to accelerate going forward. What I'm watching more closely is adoption. Today, more than 5,500 customers are using one or more of our organic agents. That's up more than 35% from last quarter. As we continue to build organic agents on Workday, we're also deeply integrating acquired agents like those from Paradox, Hired Score, and Evisort into our platform. And we've signed some of the world's largest brands for our Light Us program, which gives strategic customers Sana Enterprise free for a year. We've rolled it out to our own workmates last month, and they're hooked. I expect these customers will be too, and we know that if we deliver the value, modernization will follow. After two strong back-to-back quarters, I really like the momentum we have going into the second half of the year. Gerrit and our product and technology teams have our innovation engine humming again, while Rob and his team have done a phenomenal job building pipeline that will drive more new business. They will cover the numbers shortly, including the impact of AI adoption on our outlook for the second half and Fiscal Year 28. I spent much of the past six months with customers. Last quarter I told you I hadn't met a single customer looking to replace Workday with something they're building internally or buying from a startup. A quarter later, that hasn't changed. The reason is the deterministic rails I've talked about before. Our agents are lawful. They work inside the permissions, policies and business processes a company already runs on. That's why our customers can trust them with the work that matters. And it's why we're seeing our organic agents really take off this year. One of those customers is BMO, a top 10 bank in North America. They piloted self-service agent with 500 employees in May and successfully rolled it out to all 55,000 employees in June. SSA gives BMO employees and managers a personal, intuitive way to get HR questions answered and work done faster and easier. And because it's native to Workday, The agent understands employee permissions and which HR policies apply to them. That built-in context is exactly what makes this a responsible and scalable AI deployment for BMO. BMO is one of many. More customers are moving from pilots to production with our agents. But we know that no one company will build every agent. The future will be open, and CIOs need a trusted platform to connect it all. We're building for that world with Data Cloud and Developer Agent. Data Cloud lets customers use their Workday data alongside the other systems they run on without copying or moving it. Customers see the value, and demand is building. Developer Agent, which we announced at DEVCON in June, makes it dramatically faster and easier for developers to build on Workday using natural language. It's one of the innovations I'm most excited about. I'll add just one thing. because I don't think it's fully understood. Workday is not just an enterprise apps company. We're an enterprise contacts platform, and we were built that way from the start. Agency contacts can do anything useful. Who reports to whom, what the policies are, how money moves. So whether a customer runs our agents or builds their own on top of Workday, we win either way. Gabe will go deeper on this shortly. Finally, Rising is coming to Las Vegas October 12th through the 15th. I have to tell you, Gerrit and his team have walked me through our rising announcements, and I was blown away by how much innovation we have to show, not slides. Live demos and customers talking about the work our agents are already doing inside their businesses. That's the proof I care about most. We'll also be hosting our financial analyst day at Rising, and I hope to see you all there. To close, as many of you know, I'm an unabashed optimist, but I'm not leaning on optimism here. We're shipping AI products. Our customers are adopting them rapidly, and it's happening across the board, from the agents we built ourselves to the ones we've acquired. This is Workday's moment, and I've never felt better about where we're headed. With that, I'll hand it to my Vulcan mind-mail friend, Gerrit.