Q4 2020 Earnings Call
Ladies and gentlemen, thank you for standing by our conference will begin momentarily once again, ladies and gentlemen, thank you for standing by our conference will be good momentarily.
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Welcome to work these fourth quarter and fiscal year 2020 earnings call. At this time all participants are they listen only mode. We will conduct a question answer session towards the end of the call and with that I'll hand, it over to Justin Furby Senior director of Investor Relations.
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Welcome to workdays fourth quarter fiscal 2020 earnings conference call on the call. We have Aneel Bhusri, our CEO Robbins, Cisco or co president and CFO Chano Fernandez, our co president and Tom Bogan or executive Vice President of the planning business unit.
Following the Neil and Robbins prepared remarks, we'll take questions.
Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast.
Statements made on this call include forward looking statements regarding our financial results applications customer demand operations and other matters. These statements are subject to risks uncertainties assumptions.
Please refer to the press release and the risk factors and documents, we filed with the Securities and Exchange Commission, including her most recent quarterly report on form 10-Q for 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 supplemental measures of work days performance.
Non-GAAP measures should be considered in addition to you 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 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 also the customer page of our website includes a list of selected customers. It is updated monthly.
Our first quarter quiet period begins on April 16th 2020.
Unless otherwise stated all financial comparisons in this call will be to our results for the comparable period of our fiscal 2019.
With that let me hand, it over twin Neil.
Thank you Justin good afternoon, everyone. Thank you for joining us today for a fourth quarter fiscal year 20 earnings call.
I'm pleased to report that work they had another strong quarter ending the year, what significant momentum and position us well as we enter fiscal year 21.
Our success continues to be driven by the relentless dedication of our Workmates bar for thinking customers. We expect more for the enterprise applications I do continue choose workday as their partner for their finance and HR cloud transformations.
I'll have over three to water customers and our commitment to their success as demonstrated by our 97% customer satisfaction rate abroad Referenceability.
In Q4, we saw healthy demand across all product areas starting out with worked H.C.M.. We had another strong quarter as we continue to be the market leader with our differentiated sweeter products.
In total we added 11, new fortune 500 customers almost equally our best Evercore now have 45% of a fortune 500, as HCM customers, including 60% of the Fortune 50.
We also added 60, new global 2000 customers or they'll have almost 20% of the global 2000.
Customers include Spanish multi national Bank BBB, a southwest Airlines at Wells Fargo back.
Notably Tee up go lives in Q4 included that West group that goes out to their other potential company of America as we continue to have over 70% of our HCM customers in production.
Witching over to our financial management applications Q4 was our best quarter ever we got a record number of core financial management customers, including Keybanc.
That's Israel late health Dun <unk> Bradstreet at West, Virginia, you'd I Didnt health system.
In addition to the strong growth from our core financial applications. We saw continued momentum for we're expanding sweeter products that support the office of the CFO.
Both worked their prism analytics and the adaptive insights business planning cloud had outstanding quarters.
Added over 100, new prism customers and over 350 planning customers, which includes over 100 other broader workday platform.
Our new Workmates, that's got RFP had an excellent initial quarter as well would struggle that's about sourcing opportunities both stand alone and as part of work they spend management offerings.
We believe the depth and breadth of our cloud based finance products in combination with our industry, leading HCM suite workday prism analytics adaptive insights business planning cloud and expanding spend management offerings, which got RFP.
There was a global solution does highly differentiated helps from power business leaders to plant execute analyze and extend all in one system powered by machine learning.
Switching to the people from a key part of assess continues to be our vibrant company culture, which allows us to maintain high levels of employee satisfaction.
It really helps us attract and retain talent across all levels of the company.
To that end, we're proud of our recent recognition as fortune great place to work in else. There what are the best copies work for list Rocky worked his number five.
This is the sixth consecutive year that work the has made the list and the third year in a row that we've been in the top 10.
The great place to work its something that David I have heard tie since day. One so it's not are forecasted to be all these prestigious lists.
As we look forward to fiscal year, 21, and beyond where we let Leslie focused on innovation and expect to see continued momentum from our growing family of applications. We're confident in the pipeline. We have built the sales execution, while we haven't place as such we expect fiscal or 21 to be another strong year growth.
We continue invest heavily in our company culture in our value system and have a great group of employees committed to delivering the highest levels of customer satisfaction to work great customers.
I'll now turn over to our CFO co President Robin Cisco or where do you Robyn.
Thanks, Neil and good afternoon, everyone, our fourth quarter kept a strong year driven by solid execution across the company. We not only added a record number of net new HCM and fins customers are high levels of customer satisfaction continued to drive 95, plus percent gross renewal rates as well as strong out on sale.
To existing customers.
Subscription revenue was 840 million in Q4, and 3.1 billion for the full year, representing growth of 25% and 30% respectively.
Professional services revenue came in at 137 million for Q4, and 531 million for the full year.
Fourth quarter revenue outside the U.S. increased 33% year over year to 244 million, representing 25% of total revenue.
We see significant global opportunity ahead, and expect that our revenue mix from the rest of the world markets will continue to increase over both the near and longer term.
Subscription revenue backlog was 8.29 billion at the end of the fourth quarter growth of 23% year over year.
Backlog growth was driven by healthy net new bookings add on business and strong renewals with our net retention once again over 100%.
Subscription revenue backlog that will be recognized within the next 24 months was 5.48 billion growth of 22%.
Our non-GAAP operating profit for the fourth quarter was 117 million or 11.9% of revenue with the margin Overachievement, primarily driven by our topline outperformance.
For the year on non-GAAP operating profit increased to 66% to 484 million or 13.4% of total revenue up more than 300 basis points from a finite team as we continue to scale and drive efficiencies in our business.
Operating cash flow for Q4 was 297 million, bringing our operating cash flow for the full year to 865 million were 43% growth.
This strong performance was driven by a combination of operating margin expansion, an exceptionally strong collections in Q4.
We successfully added an integrated more than 1600 50 that new employees to work day this year, including approximately 850 from the Scout RFP acquisition in Q4.
Our total employee count at year end to over 12200.
Overall, we're very pleased with a strong companywide execution in our seasonally most important quarter.
Now, let me turn to guidance.
We entered the year with considerable momentum and we see significant opportunity ahead to support both our near and long term growth aspirations, while continuing or progression towards 25 plus percent non-GAAP operating margins.
We are raising or f. for 21 subscription revenue guidance to a range of 3.755 billion to 3.770 billion representing year over year growth of 22% at the high end.
As a reminder, skout is expected to add less than one percentage point to our overall subscription revenue growth indefinitely 21.
For the first quarter, we expect subscription revenue to be between 873 million, an 875 million representing 25% year over year growth.
We expect subscription revenue to sequentially increase from the previous quarter by just under 6% in Q2, approximately 4% in Q3 and 4.5% in Q4.
As we continue to expand our product portfolio, we want to provide investors with increased visibility into the growth sectors across our business.
At our analyst day last October we provided incremental disclosure around our HCM and fins plus businesses.
As we look into fiscal 21, our current for your guidance assumes high teens, H.C.M. subscription revenue growth and low 40% growth in orphans plus business.
We do not plan to provide quarterly updates to these numbers, but we'll revisit them annually.
On the professional services front, we continue to value and support a growing systems integrator ecosystem.
The partners are seeing robust growth in their workday practices, and we will continue our tight alignment with them to help ensure customers have successful implementations that support the highest levels of customer satisfaction and business value.
We're expecting professional services revenue to be approximately 137 million in Q1, and 580 million for F. Why 21.
We expect F. why 21 professional services margins to be flat from F. way 20, as we continue to invest in programs to support customer deployments and to sustain our high levels of customer satisfaction.
Based on our current outlook, we expect total subscription revenue backlog growth in the low twentys for the first three quarters of F. White 21, moderating to the high teens in Q4 against a very tough comp.
We are raising our non-GAAP operating margin guidance for the full year to 14.5%.
As a reminder, our margin guidance includes roughly 150 basis points of dilution from the Scout RFP acquisition.
We estimate non-GAAP operating margins of approximately 15% in Q1 and expect a normal seasonal sequential decline in Q2, as we invest in our people through our annual compensation process.
GAAP margins for the first quarter and the full year are expected to be approximately 26 to 27 percentage points lower than the non-GAAP margins.
We expect operating cash flow and a 421 to be approximately 1.8 billion representing growth of 25%.
The F. weight 21, non-GAAP tax rate is 19%.
We continue to invest in our real estate footprint at our Pleasanton headquarters to support our continued growth.
And that's why 21, we expect approximately $230 million owned real estate investments, which includes the potential purchase of a five building complex that we're currently occupied.
We expect to spend an additional 350 million enough white 21 to support our other capital needs, including investments in customer data centers leased facilities and corporate I T infrastructure to support our continued business expansion.
And finally, I'll close by thanking our amazing employees customers and partners for their continued support and hard work, which allowed us to deliver great results. This past year.
We are still in the early stages of executing against our long term vision as a company, but our progress wouldn't be possible without shared goals.
Look forward to updating you on our progress throughout the year.
With that I'll turn it over to the operator to begin couponing.
Thank you will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad confirmation telling all indicate your line is in the question Q you May press start to if you'd like to have you're watching from the Q for participants you think speaker equipment, and maybe necessary to pick up your hands that before passing the.
Sorry, Keith one moment, please only poll for your questions.
Our first question comes from the line of Mark Murphy with JP Morgan. Please proceed with your question.
Thank you and congrats on a very strong finish.
I wanted to.
Inquire about the Corona virus situation, we certainly understand that you. It. There's no reason you would be experts on this but we had seen the headlines about changes to your sales kick off and I'm. Just wondering what you are seeing from your customers, whether they are pulling out of conferences or restricting travel or.
Having employees work from home, if if they visited Italy or southeast Asia and just.
At a high level, whether any disruption kinda seems a manageable Q3, this fiscal year or whether it's just too hard to gauge that [noise].
You know, what's it's still early and we're not we're not experts.
As it relates to the sales kick off.
Hi, and I think the rest of the team didn't think the risk was very high in the U.S., but.
Well, our Asia Pac folks did not intend and then with the outbreak in Italy.
And we actually had a.
Joint meeting with some of the UK in Italy team.
We felt like just the U.S. team that that's not really inclusive enough start really the way workday.
Go forward with a global sales kick off meeting so we're going to wait until we can I get all the people together in person. After this after this outbreak.
It gets passed us.
In the meantime, we're gonna do do things virtually I think in the U.S., though right now it still feels like mostly business as usual.
Okay, Great did just as a quick follow up I was wondering if you could just comment on how far reaching your ambitions are going to be in a procurement and whether you think it along Ronnie you could be possible to replicate the kinda success you've had in recruiting I think it took you five years to go from zero to.
Number one market share in the Fortune 500, there I'm just.
Curious you know whether you see that type of potential in that market.
There's definitely a ton of potentially no one as we've gotten smarter about.
The spend management market and you know in particular with with Scott RFP. It first of all they had a great first quarter as part of work. They are really a great team, but the the dollars that flow through sourcing or just massive or are you going out to even out of work day the amount of money that goes through the procurement organization is huge.
Do you think there's a chance to build a differentiated solution in a short term that is more you know scout as a standalone solution plus as part of our sweet but over time, you could see our procurement sweep b B a best in breed best in class, we and I think the markets only gonna grow I think it's a really exciting market opportunity for us.
Mimic recruiting.
I will tell I think what it can do with the ER.
<unk>.
Oh, great Great driver of financial sales I think financial cells can be a great driver of the spend management marketplace and every company on the planet has to manage their spend effectively so it is a truly global opportunity.
Thank you very much.
Thank you. Our next question comes from the line of Kash Rangan with Bank of America Merrill Lynch. Please proceed with your question.
Hi, Thank you very much like what my congratulations as well.
Did you Aneel I know they your son or just a little cautious about the ER the slowing H.C.M. dismissed I'm curious given the particular strength in the quarter or are we.
Are we doing more of a small does not being but the its you know this is showing August trends in the quarter and also it could talk to the network effect. The Fox one of US like where you are able to sell so that's what do you have to existing customers that I've been very successful their own for your Robyn should we stopped looking at billings Scottrade is deferred revenue train didnt.
That's focused on your backlog because that.
A calculation of bookings are comes up a 28% and it has been more predictable more consistency is that the right. We're looking forward into get off your business. Thank you very much.
Yes, the one on the HCM market, we had a great fourth quarter.
Got 11 Fortune 500 accounts second best where we've ever had as a as a company. So the large enterprise market is alive and well French are all but you know we continue to gain and see growth in the in the medium enterprise business for HR and there's still a ton of.
Green Greenfield opportunity in the medium enterprise market across the globe. So as we head into this year I think we're thinking about high teens growth for HR I think that's what.
Forecasting and and ER and.
I think it's going to hold up I'm not initially focused on the next 12 months I think longer term, we'll just have to understand.
You know, how how that Oh that market matures and you know what we can do to.
Come up with more add ons to continue the growth in that marketplace.
No question that the sweet market is picking up today I think one of every four customers has both product lines and what we saw the fourth quarter for Rob.
The quarter was a bunch again have a financial first customers and that's a great sign for us that means our financial products are winning on a best of breed basis, even without the.
Without the leverage from the HR marketplace, and I still think for the foreseeable future large enterprises are the Mega enterprises. They they will buy HR and finance separately. There just that's just the way they've done it historically, but the medium enterprise increasingly is buying HR and finance together and that's that's a really powerful trend for us.
And cast to your second question, Yeah, We absolutely do you believe that looking at subscription revenue backlog is better indicator of our performance in billings are deferred revenue I keep in mind. However that there are several factors that influence the bookings calculation, including renewal volume duration. So the quarterly bookings how it can vary widely from actually.
You'd be net bookings as we discussed at analyst day.
We've been saying all along that this would be a backend loaded year for us and that's exactly what's played out which has led to the high growth in the bookings number as you noted.
Wonderful can come congratulations thank you very much.
Thank you. Our next question comes from the line of Kirk Materne with Evercore ISI. Please proceed with your question.
Hi, Thanks, very much I'll echo the congratulations on the good quarter and finished the year.
Neil just on the financials side, you're talking your partners health care seems to be one vertical and I think you mentioned a couple of companies on your prepared remarks, you that seems to be picking up some steam for you all can discuss that a little bit and when you think into fiscal 21.
Maybe you know in addition, maybe to health care are there any other verticals you feel that are starting to pick up some amount them for you in that area. Thanks, or so so we did have a good.
Your quarter and health care, but we also had very strong your and quarter in financial services and I think that isn't really.
The market for US and of course Keybanc was it was a big win for Workday that's.
You know a a huge bank a well respected bank.
And they were already worked HR customer it was great to see them by workday financials.
Like financial services is is the next market. We've we've had good success and government I think you'll see that continue.
And I think you'll see business services or be another oh, great market for us with financials, but candidly was it was strong across the board Oh. It was the best quarter, we've ever had for financials.
Last quarter, we ever had for for adaptive planning business insights. It was not only their best quarter growth accelerated in the fourth quarter for for the planning products and that was Oh.
It's a testament to the fact that.
The office the CFO was looking at planning analytics and transactions Ah together and wanting unified system at our message is resonating. So it's resonating to all types of companies.
And then if I guess, that's one quick follow up along that same lots, where he was talking about you know when you think about sort of selling in the office is CFO are your partners aligned with you now in terms of be all the go in there with you know both planning and financials to have feel a little bit of a broader based discussion because it seems like that's where the market wants to go I was just kind of curious I know you all are there but.
Fit your partner base is with you at this point. So you want to do you want to comment on up yeah. Thank you. It will take care to definitely they are I mean dangerous on our partner seem Dan in terms of enabling training resources bowls theme implanting unknowing procure meeting has been the increasing significantly I'm, we're pretty happy.
We now with our friends to kind of strategy as well that is much easier to align to watch the go to market if I were partners.
Super Thank you all.
Thank you. Our next question comes from the line of Brad Zelnick with Credit Suisse. Please proceed with your question.
Great. Thanks, so much and I'll Echo my congratulations on a great finish to the year I wanted to ask a question competitive question of perhaps aneel or China, specifically relative to Oracle because what we're all very familiar with your success, replacing legacy HR systems. We more recently picked up a couple of significant Oracle HCM.
Cloud displacements, which stood out to us just because this is their current generation product can you give us a sense of how prevalent these conversions are and what might be in common when you when you come across them.
Yeah, well I'm not going to comment on how prevalent there I would just say that.
As it relates to all of our legacy competitors.
You know they were slow to move to the cloud they have not had the success on the deployment side.
Right have done a good job on some of the sales opportunities.
But the deployment side hasn't worked out and so those those accounts come back to market and that's happened with Oracle accounts, it's happened with S&P accounts.
Well, we hang our hat on is is a great experience for our customers first in the deployment and then once or deployment and their production phase and and that's that that is how customers measure. The success of these projects, it's not about what they bites with what they get alive and what they get value from and that's going to continue to be the case.
Thanks, so much in if I can follow up with one for Robin just wanted to check on the variability from your preliminary view, a 14% non-GAAP op margin in 21 to now 14.5% what areas in the business gave you. The flexibility you can you speak to the levels of investment into scout or sales and marketing how should we think about that.
Thanks, Yeah sort raise in the margin guide is really.
The top line Overperformance in in the business in Q4, and running that through the year and raising the guidance that we had for sub revenue, but we do expect to continue to get efficiencies across all areas of the business, but one of the things you're gonna see this year and going forward, which is different is given our scale. We do expect to start getting efficiencies out of our.
D and afraid 21 and beyond even as we continue to incrementally invest in our products.
Excellent. Thanks, so much.
Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs. Please proceed with your question.
And if fellini can you check to see if your line is I'm yeah.
Our next question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your question.
Hi, This is Josh bear on for Keith.
There's been a couple of large acquisitions in the H.M. space recently and I'm. Just wondering how you expect those changes in the market to impact the competitive environment. It for you in HR.
Oh, Yes, I think the two are probably cornerstone and Sabah I don't really see any impact on us.
We have just place both both of those weren't products over time.
Oh, I don't I don't really see anything except upside for workday on that one as it relates to Kronos and ultimate time will tell a I've a lot of respect for Aaron I respect for the ultimate team I think bringing together two companies if that scale in that and different cultures is not an easy thing to do but again I you know Aaron is is oh.
Proven excellent CEO or the ultimate team was strong. So so time will tell it's definitely not a negative because there'll be some disruption that gives work there's some benefits yet, but we're not going to count on that.
Great. That's that's helpful and I'm just wondering do you anticipate any disruption from cancelling youre. The in person sales kickoff conference No I'm you know what will replicate as much of it as we can.
Virtually nothing to report time, we'll get well get the people together in person there will be in person meetings across the globe. It just will not involve a travel and that's what we want to do was minimize.
Well, we're in this kind of uncertainty minimize Ah Ah plain travel and Ah Ah actually international plane travel, but you will see clusters of folks getting together in all parts of the U.S. as as we as we do this virtually ever John if you want that anything I know nothing glad we're really excited about they view of two Ali.
Your instead, we are creating for I work colleagues across the world.
Well in Saudi get me Alfie Tuesday, we'd be getting to be there I'm I'm, we're pretty positive we can delever most of the content the naval strategy that.
We have to date for your two or more that we are creating I actually think I actually think if they know the.
There's no silver lining in in a virus that that's affecting so many lives, but it's going to cause us to learn how to do things on a virtual basis that you know frankly, we havent thought about before and I think that will be something we'll learn and use in the future.
That's really interesting are there any costs that are shifting around associated with that or is it not not big enough to show up in a meeting that was not really.
Got it thank you very much.
Thank you. Our next question comes from the line up Ari to Johnny ended with Cleveland Research Company. Please proceed with your question.
Well thanks for taking the question I'm, just hoping a wondering if you give a little bit or color on a international performance this quarter or any specific jio is outperforming and then just which areas you're most excited about for why 21. Thank you.
Yeah, and thanks for your questions I'm actually not remains a very be focus for us and we continue to see healthy subscription growth out of the international markets say I mean, we still great Sig girls intends to continue in Q4 in terms of the various may need to highlight I would say I would die.
We charge, Germany, Austria, Susan I'm, Mark markets as well some of the continent done markets did great performance I wear a is that region and the other side. They Australia New Zealand were settled the markets that maybe I would like to highlight in Q4, but it would always do I have thesis Cristiano <unk> growth in Q4.
[noise] by adding new areas to focus on forever 21.
[noise] room night, you graphic got perspective, nothing that relevance to highlight I mean, we're considering entered the Mexican market say during this year, but that was be basically more on market that we would be developing going forward. If my 22 of them worse.
Alright sounds great. Thanks, so much.
Thank you. Our next question comes from the line of Brett they'll with Jefferies. Please proceed with your question.
Hi, This love soda on Brent to I wanted to ask maybe it was impressive to me that you saw in a prism analytics, becoming part of the net pads, maybe could you talk about you know what do you saw specifically in terms if a deal flow in that and what [laughter]. It represents.
The future.
We saw 100, new accounts had I presume analytics this past quarter, which is a which is a really strong showing again for a relatively young a new product area I.
I think as we bring up more specific solutions like people analytics are we going to finance analytics and spend analytics I think it's going to be even more powerful but you know people. The idea that you can play and execute analyze a in one system and not have to worry about how did it goes back and forth between the different systems and can can do it in.
You know when a real time basis.
It's resonating and.
As a result people look at prism as a as it really great extensions again, not just better transformation from the business process side, but better insight into their business.
And then one quick follow up if I may on though what they cloud platform.
I was wondering if so what the customer feedback has been so Ben yeah.
Then we would become generally available for deployment.
Oh, the customer feedback has been very positive or you know as we as we get ready.
I, just say stay tuned you'll you'll hear about our general availability fairly soon.
Into in the coming quarters, we're very focused on a set of repeatable use cases that we discovered and in terms of working with our first wave of customers. We're just making sure that the platform is really ready for primetime with those with those Ah.
Sort of use cases and Ah. So so just just stay tuned you'll see it fairly shortly.
Great. Thank you.
Thank you. Our next question comes from the line of Matt Pfau with William Blair. Please proceed with your question.
Hey, guys things for you to me I'm just wanted to ask on the vertical strategy for financials. It seems like some of the efforts that you put forth, especially in healthcare and financial services yielded some nice results in 2000 your fiscal 20.
And he plans or update on additional critical that you plan to work on building out over over fiscal 21.
Hi, Matt. This is China was speaking I'd say, Neil mentioned, I mean health care has being I've heard pick up we now being working for the last three or four years highly successfully on debacle in bed to remind it's being I said unique value proposition lending you got to customers taking on to find on children, aged she Yang on top off a education and government is another Burton.
I would being wide for alone I now on the latest through our financial services, where as you say, we're seeing some good success with customers like Keybanc Sun setting, where there's some debacle of our accounting center solution I need also mentioned you know professional business services is becoming another significant one that we're going to stop talking from that go to market perspective on a product.
But the thing I assume that's easier.
Just one follow up and have those vertical efforts resulted in larger enterprises, whether being signed or in the pipeline and those specific verticals that you put that effort into.
Yes, definitely when we are setting out where version kind of strategy as it sits on the backup but do you think value proposition that we have a good product stride Rite aid Dundee we put our go to market. It for us in terms of aligning the worse I work customers. So I guess you are right in saying that.
We're seeing more larger customers more we see financial solutions offering onto those articles on customers.
Great. Thanks, guys.
Thank you. Our next question comes from the line of Karl Keirstead with Deutsche Bank. Please proceed with your question.
Oh, great. Thanks, maybe two for Robynne Robynne just to start the growth rate of deferred revs and the growth rate of your subscription revenue backlog have been relatively similar.
Through the first three quarters of the fiscal year just ended but in the in the fourth quarter IDR grew by 18% backlog by 23, so the gap widened a little bit I just love to ask you what might have happened in terms of you know invoicing duration or anything interesting around contract structure maybe.
More more backend loaded deal something that might have caused that spread to widen a little bit. Thank you yeah. Carl there's no really one thing for us to point to I mean, these metrics are going to vary with occasionally deferred revenue growth being above sub revenue and sometimes it being or backlog, sometimes it being below as he mentioned it really does vary with invoicing and contractual term is.
And renewals. So you know don't read anything into the difference in those growth rates and you'll continue to see some disconnects and that was going forward just based on.
Contractual invoicing terms.
Okay got it and then my second one for your Robin is thank you for the beginning of fiscal year guidance around the seasonality in subscription revenue growth when we look at it and try to compare it to the.
So bretts growth or seasonality you experienced in the last couple of years, it's a little bit tricky given that you've had some acquisitions that might have distorted that so do you mind, just taking a mom and then just maybe qualitatively reflecting on how.
Seasonality might be changing in fiscal 2001 on the revenue growth line. Thank you Yeah I think the one thing I would point out is we got an interesting dynamic in Q1, when we look at sequential growth from Q4 to Q1 this year and there's really two things behind that.
First of all Q4 linearity within the quarter was actually more pronounced in what we'd seen in that flight 20, and so that's going to increase the step up in revenue from Q4 to Q1, and then layering on top of that is the fact that we're in the leap year and so we got one extra day of revenue recognition in Q1 as well.
And so that's changing the sequential dynamics from Q4 to Q1 and then also from Q1 to Q2, that's really the only thing that I would I would point out as being different this year Yep got it okay. Thanks Robin.
Thank you. Our next question comes from the line of Mark Marconi with Baird. Please proceed with your question.
Afternoon, Let me add my congratulations with regard to strong ended the year.
Obviously this is occurring real crime and it's very fluid, but I'm just wondering to what extent.
You know covert 19 ended up being factored into the guidance and you know there have been other periods of uncertainty that we've gone through together you know over the years and.
Just wondering how do you think that ends up playing out I know it obviously do for different but.
You know how are you how are you thinking about how it could end up impacting things and then I've got a couple of.
Critical question.
And Mark really approach guidance. This year the same way that we have every single year right and so we think we've provided you know realistic view based on what we know today a we'd today to date have not seen an impact to our business. So far but as you mentioned, it's really early in in this situation we're gonna country.
I need to monitor and we'll obviously.
Update you as we go through the year.
Great and then with regards to financial sometimes you give us plenty trunks and you've got some really nice wins.
Can you talk a little bit about like Keybanc, where you ended up beating out key reasons why they weren't with you and I think there's a few other companies within the Fortune 500 that you ended up winning or within financial.
The recent for a few months just the progress that you're seeing there.
Well, you know without getting into the deal by deal basis. The two major competitors, we see on everything all recipe and Oracle for financial <unk>.
More cloud centric opportunities favour favorite workday and if there's a second when we see is it's oracle or the more cloud.
Such that people are looking out at Sep tends to tends to fall away.
So you can love to talk account by account.
As the cloud continues to mature the finance marketplace I think we'll see.
More of Oracle, then we will of S&P.
Great and any update on to the number of acquired from financials now.
We we didn't 90 in the quarter, which was are most ads ever in any given quarter. So we're really pleased with what that result.
Terrific. Thank you.
Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs. Please proceed with your question.
Great. Thank you so much I wanted to touch a little bit on the success that you guys have had with planning you gave some stats in the quarter about how many customers you've added I guess, if you could if you can share where that's kind of if you work since the acquisition. If he can tell us kind of the number of customers. If you could kind of kind of give that to a funny.
Cumulative basis, if you have it and also just as you know if you could give us a sense. If you look to this year, how do you think about.
You know that growth did add on you know and the penetration you're seeing into your installed base right. If you can you give enough that's in the past about like payroll penetration into the installed base and learning and things like that and just wondering if you could share with that's kind of the met momentum you're seeing there.
With that with the planning product. Thank you.
Yeah. Heather this is a this is Tom and we continue to see excellent progress yeah with our planning process products I would have an exact customer number, but it's well over a thousand do customers that we've added and that's a combination of customers that were selling planning first as well those customers that were selling into the.
The work they installed base I'd say that.
It's we're very pleased with the progress we've made particularly with larger enterprise customers as both as they look at financial planning and for worst workforce planning applications as well. So your six quarters into the acquisition I think we're really pleased with the progress Oh there continues to.
Be significant opportunity in the work they installed base in terms of selling planning into that base as well as penetration both for large enterprise and and middle enterprise customers and just just if I may just one quick follow up any commentary on kind of you know are you typically seeing greenfield opportunities.
You know legacy opportunities or is it head to head versus you know kind of a newer companies such as Anaplan.
Yeah, we see both I think there are customers, who are converting from legacy on premise solutions and they want to cloud solution for planning ads. They typically coming from an oracle or an essay piece solution Oh, they're also customers who have used a we see spreadsheets a in many parts of their enterprise was even.
They have a legacy planning solution, but model and business logic is in spreadsheets and were great solution to bring that bring bring that planning process into the cloud Oh, So it's typically and a plan or oracle for our cloud competes EM and we have Ah, we do exceptionally well and those companies.
Thank you if I could just two things in a in my prepared remarks, I mentioned 350, new.
Planning customers for the for the fourth quarter that was that was.
Really an outstanding performance and ER and the growth rate for the business planning cloud is significantly faster than the rest of workday.
Thank you. Our final question comes from the line Alexander with RBC Capital. Please proceed with your question.
Hey, guys. Thanks for squeezing me in I guess, Neil when you think about the durability of the growth rate in your HCM business and you think about the Tailwinds there maybe even beyond next year, but over a longer time duration, which is going to add more more of a growth tailwind in your mind going down market.
And and seeing kind of continued success there selling into the base. We're you know new new additional functionality that that we haven't seen yet.
You know I would definitely say the biggest opportunity at least at least in my mind is bringing the medium enterprise solution to the rest of the world.
We've been doing that in the past 12 months, where we brought the medium enterprise offering which is a different pricing and packaging and lower cost services. We've taken into places like UK a lot of the rest of world is a medium enterprise marketplace. So that's what that's a big opportunity.
And it's largely it's largely a greenfield opportunity I combine that with you know we're still we're still largely a underpenetrated in almost all parts of the world outside the U.S. where.
The market was.
First you know first hot for cloud. So we still have a tremendous amount of opportunity. There's always the there's always the ability to sell back into the base.
But wouldn't but landing the new accounts is what drives the longer term growth and durability growth because you need to first land. The account before you can sell back into the into them.
And so we're still very focused on that Charlie you went out anything no I think the only thing obviously is kind of they finance held last opportunities, but I think it's a combination with those yesterday GAAP medium enterprise totally with you aneel sitting into the base. We had a very strong record order or these past Q4, I lakes, we feel where 50% growth I don't AC.
That was really good to lead me personally I'm very excited about the rest of the world opportunity I'm doing it with the anyway.
That's super helpful and maybe just as a final one you know if we think about the sales tweaks and changes that you make every year around this time, what's the best way to characterize how did the go forward kind of the or the focus areas that you're you're looking out for 2020 and kinda give.
Giving us a bit of a help on the magnitude of the changes made this year versus previous.
Alex It's a great question I think you you know we tried to always to keep unable Lucy I'm wondering how revolution when that will go to market I'm you supporting our girls the opportunities. So if you characterized it was changing is clearly one of these de verticalization that we tell them how would I know he's day, we've been talking on the school and that is more to support that were financials Plaza.
You need the I seem to be distressed thing out where most of them into the selling into the base do you mean last year I. Just commend you don't sound that results in Q4, and you're going to see that coin hopping I'm clearly last about no lease I, nearly saying extending that medium enterprise software offering in turn so if a shorter time to valuing the rest of the world.
This success, we've been seeing indeed in the U.S. So we've been taking go to market decisions to support these growth opportunities emotions, I'd say cities be more and more I'm able to loosen with Sony is strengthening on to the talent that we haven't signed with the markets we need to do so.
Perfect. Thank you guys congratulations.
Thank you ladies and gentlemen, thank you for your participation on today's conference. This does conclude workdays fourth quarter and fiscal year 2020 earnings Conference call. Thank you again for joining US you may disconnect your lines and have a wonderful day.
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