Q4 2022 Workday Inc Earnings Call
[music].
Welcome to workdays fourth quarter fiscal year 2022 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.
With that I will now hand, it over to Justin Furby, Vice President of Investor Relations.
Thank you operator, welcome to workdays fourth quarter fiscal 2022 earnings conference call.
On the call, we have Aneel Bow Street, and channel Fernandez, our co Ceos, Barbara Larson, our CFO and Peter Lamb, our Chief strategy Officer.
Following prepared remarks, we will take questions are.
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 with our guidance.
Just 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, including those related to the impacts of the ongoing COVID-19 pandemic on our business and global economic conditions.
Please refer to the press release and the risk factors and documents, we filed with the Securities and Exchange Commission, including our 2022 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 workdays 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.
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 customers page of our website includes a list of selected customers and is updated monthly.
Our first quarter of fiscal 2023 quiet period begins on April 16 2022.
Unless otherwise stated all financial comparisons in this call will be to our results for the comparable period of our fiscal 2021.
With that I will hand, the call over to Aneel.
Thank you Justin and good afternoon, everyone.
Thank you for joining us today for our fourth quarter fiscal year 'twenty two earnings call.
Before we begin I wanted to spend a moment acknowledging the current situation in the Ukraine.
Our thoughts are with all of those who are personally impacted by the devastating situation.
Workday contractors in Ukraine, workmates across the water region in Europe .
Families of military personnel, who have been deployed in the region.
Turning now to our business results I'm pleased to report that workday delivered an exceptional fourth quarter.
It helped us achieved the fastest growth for your new ACD bookings in over five years.
This acceleration in our business along with our relentless focus on employees customers and innovation is serving as a strong foundation for driving durable growth on our path to $10 billion in revenues and beyond.
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Our business success is enabling us to attract talent at a pace we've never seen before.
And it's allowing us to continue to expand and support new customers across our broad suite of solutions.
And with the <unk> and CFO .
Indeed, we now serve more than 6 million total users across 9500 organizations.
Leading with a 4100 core HCM and finance customers.
As our customer community continues to expand.
So those are opportunities to serve the more strategic ways.
China will soon share we closed several significant transactions within our customer base sales team in Q4.
Our continued commitment to our customer success is also reflected in our industry, leading gross retention rate of over 95%.
Additionally, we are seeing customers increase their engagement and usage of our applications.
Evidenced by the over 440 billion transactions processed within workday in fiscal year 2022.
Which is an increase of 67% over the previous year.
Altogether, we now work with over 50% of the Fortune 500, and over 25% of the global 2000.
Before I turn it over to Ciano, who will share more on our go to market success and Barbara Larson, our new CFO will provide specifics on our res growth outlook for fiscal year 'twenty, three I would like to share some fourth quarter highlights.
First momentum for our human capital management suite remained strong as organizations continue to transition their HR operations to the cloud.
In Q4, we saw healthy demand across all HCM product areas.
Driven by our ability to attract new customers, while strengthening and deepening our relationships with existing ones.
New customers in Q4 included ally financial Dick's Sporting goods National Australia Bank Limited Rite Aid Corporation.
<unk> foods and 711 to name a few.
Notable HCM go lives in Q4 included <unk>.
<unk> industries, Anheuser Busch, Inbev and Wells Fargo Bank.
As we continue to have over 70% of our HCM customers in production.
Switching over to our financial management applications Q4 was another solid quarter, several marquee wins, including Genpact limited.
Mass General Brigham University of Melbourne, and U S Bank.
During the quarter, we doubled the number of add on core financial management wins, when compared to the same period a year ago.
Customers go live, including bright Horizons children's centers sharp healthcare and <unk> technologies.
In addition to the strong growth from our core financial applications. We saw continued momentum from our expanding suite of products that support the opposite the CFO Couldnt planning analytics and spend management, where our strategic sourcing solution experience roughly 50% new ACB growth.
And our procure to pay solution grew even faster we continue to see very healthy attach rates were spend management solutions within our financial customers.
Those trading how finances increasingly partnering with their procurement peers drive visibility and bottomline impact for the single solution.
As we head into fiscal year 'twenty three.
And the opportunity we have in front of us.
Ability to execute on our growth initiatives on our path to 10 billion in revenues.
As such we expect fiscal year 'twenty three to be another strong year for us.
Lastly, I'd like to share a couple of updates related to workdays board of directors.
First Tom Bogan, who most recently served as vice chairman of corporate development.
Tired from Workday on January 31.
And while we're excited for Tom in his well deserved retirement.
We're thrilled to announce that he has joined our board.
Tom came to work day in 2018 as part of the adaptive insights acquisition. The company led as CEO for nearly four years.
During his time at Workday, Tom has been a trusted advisor a true culture champions and passionate leader, who embodies workdays values. We're fortunate that he will know lenders expertise and guidance to help us capitalize on new opportunities for the business and work to accelerate future growth.
The second update I want to share is that Dave Duffield, My mentor, best friend and workplace co founder and former CEO and chairman.
Stepped down from our board of directors and will now carry the honorary title of CEO of areas, while Dave will no longer be on the board remains our largest shareholder and will continue to provide us invaluable counsel as an advisor of workday.
When Dave and I started worked at nearly 17 years ago.
<unk> is to build a lasting multi generational company with employees center and a relentless focus on customer service and innovation.
We wanted to have fun along the way.
The growth we've experienced this past year in the face of a challenging macro environment is only solidified my belief in the foundation that we've built.
An amazing group of employees and leaders, who embrace our values and are committed to delivering the industry's best products and customer experience.
I will end by saying that I'm quite optimistic about our future.
With that I'll turn it over to our co CEO charter Fernandez over to your child.
Thank you Neil and thank you to everyone for joining today I want to start off by acknowledging the more than 15200 walk me across the globe.
Helped drive our incredibly strong finish to the ER.
Yep.
I can't wait to see what we accomplished together in FY 'twenty three.
I'm also looking forward to safely is spending time with many of you. This week at our sales kickoff here and you got to pay you guys.
Where we're taking great care to final safety measures in accordance with the CDC and local health authority guidelines.
As Daniel mentioned, we delivered an exceptional Q4 growth reacceleration drill.
Driven by a strong execution and healthy demand across solutions.
Yes.
Our performance in North America would stand out.
We had another solid quarter internationally, where Asia Pacific markets, such as Australia, and New Zealand where highlight.
In addition to healthy growth in key EMEA markets, such as Germany.
We had a solid quarter of London, new core HCM and fins customers.
Including several fortune 500, and global 2000 company.
I don't know with healthy activity in the medium enterprise.
Our expanding portfolio of lending solution has also experienced significant momentum.
Including <unk>.
Marketing strategic sourcing and planning.
New customers included Tony's healthcare plastic omnium I'm at home stores.
And we couldnt be more excited.
Thanks to all of our portfolio of strategic lending solution.
Even though it's early we're already seeing the results with Q4 wins, including RSM.
The UK and gift mortgage among others.
In addition to strengthening our net new team our customer base sales teams drove outstanding performance across both adult and renewals.
Once again, demonstrating the strategic nature of our platform.
Customer base expansions in Q4, including U S Bank, who purchased coughing accounting center bracing and extend.
If I add a purchase workforce planning extend and Canadian UK payroll.
America, VP International advocate Aurora health or added extend.
In Q4, we also expanded our relationship with Accenture.
Who is deploying <unk> to gain a real time pause on its employee base to help power global planning a strategy.
As a strategic partners of ours accent jewelry supplying its innovation in this area to drive engagement and deep employee related insights for our mutual customers.
From an industry lens, we continued to see it with a differentiated value proposition and winning in the market.
In financial services. For example, we closed several strategic deals in Q4, including core fans at the aforementioned U S Bank.
And we true up payment mutual life insurance.
Our core HCM win at National Australia Bank ally Finance Health and also cloud growth.
In addition, we expanded our footprint with several financial services customers this quarter.
<unk> Commonwealth Bank of Australia camp, there on the Western Union.
Industry specific investments such as accounting center, along with our deep industry knowledge and our rapidly expanding reference base of customers, which now includes more than 70%, while the financial services companies in the Fortune 500 are all key to our success.
I mean, it's not just the innovation we are driving that is enabling our success.
But also that of our partners such as Pwc.
<unk> solution for multi dimensional bunker planning and profitability.
Workday financials extent accounting center briefing adaptive planning.
Our partners are key to our industry approach and were excited by the innovation happening across our ecosystem.
We enter FY 'twenty, three with healthy pipelines and clear momentum in our business.
In order to capitalize on that momentum we plan to continue making significant investments we've seen our go to market and service and support team with.
With key focus areas, including customer base international industry and American land motion.
All of which are important growth that sourcing achieving our goal of sustaining 20% plus subscription growth well into the future.
Part of this investment in both a strengthening our leadership team as we continue to scale.
Which I'm pleased to welcome Patrick Blair as our newly appointed President of the Americas.
Patrick brings more than 25 years of enterprise software sales experience.
And not only is a proven leader.
Great person and a tremendous fit into the organization.
Couldnt be more happy to have been joined <unk> and the team to lead our largest market.
With that I'll now pleased to hand, you over to our newly minted CFO .
Who is that we think the workday organization Barbara Larson.
Barbara over to you.
Thanks, John I appreciate the kind words, good afternoon, everyone and thank you for joining I look forward to working with all of you over the coming quarters and years and I'm thrilled to be joining aneel, China and Pete today to update you on our progress.
Join workday seven years ago, and have witnessed unbelievable growth in the company over that time, one observation I'd make is that our market position has never been stronger and the broad based momentum that we saw across the business in Q4.
<unk> is a great validation of that.
Now, let's turn to our results.
Subscription revenue was 123 billion in Q4, representing year over year growth of 22%.
For the full year subscription revenue was $4 $5 5 billion growth of 20%.
Professional services revenue was 147 million for Q4 and $592 million for the full year.
Fourth quarter revenue outside of the U S with $348 million, representing 25% of total revenue.
24 month backlog at the end of the fourth quarter was $7 98 billion growth of 22%.
This strong result was driven by new bookings outperformance and continued strength in renewals with gross and net retention rate over 95% and 100% respectively.
Total subscription revenue backlog was $12 eight 1 billion growth of 27%.
Our non-GAAP operating income for the fourth quarter with $237 million.
<unk> and our non-GAAP operating margin of 17, 2%.
As expected our non-GAAP operating margin declined from last quarter, driven by an accelerated pace of hiring the rollout of our previously mentioned cash based performance bonus.
Other growth investments made across the business, including the recent friendly acquisition.
For the year non-GAAP operating income was a record $1, one 5 billion or 22, 4% of total revenue showcasing the strength of our business model.
Operating cash flow for Q4 was $615 million, bringing our full year operating cash flow to $1 65 billion growth of 30%.
Record cash flow results were driven by solid operating income performance as well as strong cash collections throughout the year.
Our largest investments continue to be in our people and attracting top talent to workday.
We successfully added and integrated roughly 1000 net new employees in Q4.
Including over 140 from Bentley.
In the year with more than 15200 employee growth of 21% and in line with our hiring aspiration. When we entered FY 'twenty two.
The record hiring is a testament to our culture, our global brand and the significant growth opportunity that we have had.
Overall, we are very pleased with the strong companywide execution in our seasonally most important quarter.
Turning now to guidance, we are encouraged by the significant momentum in our business and we're optimistic that the environment will remain robust throughout FY 'twenty three as organizations continue to prioritize and invest in their strategic finance and HR transformation initiatives.
With that context, we now expect FY 'twenty three subscription revenue to be in the range of 553 billion to $5 55 billion, representing 22% year over year growth.
For the first quarter of FY 'twenty, three we expect subscription revenue to be between one to six 3 billion and $1 $2 65 billion, representing 23% year over year growth at the high end.
We expect subscription revenue to increase sequentially by approximately 7% in Q2 and approximately five 5% in Q3 and Q4.
We expect the 24 month backlog to grow approximately 22% in Q1 of FY 'twenty three.
We are expecting professional services revenue to be approximately $160 million in Q1 and $650 million for the full year. We will continue our title alignment with our growing partner ecosystem to help ensure customers have successful implementations that support the highest levels of customer satisfaction.
<unk> and business value.
From a margin standpoint since the onset of Covid, we have demonstrated the scalability inherent in our model.
As we've discussed however, investing for growth remains our number one priority.
In FY 'twenty three we plan to continue hiring across the company at a rapid pace.
With a focus on sales and products.
We are also expecting a return to travel and in person events.
And as we have discussed we have rolled out our performance based cash bonus program across the company.
Given this ramp level of investment and taking into account our increased revenue outlook. We are raising our FY 'twenty three non-GAAP operating margin guidance to 18, 5%.
Investing for growth remains our focus and we will continuously evaluate growth margin tradeoff.
We are currently expecting to resume margin expansion in FY 'twenty four and have continued confidence in reaching 25% margin at $10 billion in revenue.
We estimate non-GAAP operating margins of approximately 19% in Q1 and.
And expect a normal seasonal sequential decline in Q2, as we invest in our people through our annual compensation process.
The GAAP margins for the first quarter and the full year are expected to be approximately 28, and 24 percentage points lower respectively than the non-GAAP margin.
The FY 'twenty three non-GAAP tax rate remains at 19%.
We expect operating cash flow in FY 'twenty three to be approximately 165 billion flat from record levels in FY 'twenty, two driven by the ramp in growth investment the corresponding decrease in margins and an estimated $80 million one time tax payment related to the expected.
Transfer of acquired intellectual property.
We expect capital expenditures of roughly $475 million in FY 'twenty three to support continued business expansion and phased return to offense with investments across our existing facilities corporate it infrastructure and customer data centers. This includes opportunistic.
Data Center investment that was previously planned for FY 'twenty four as we manage the supply chain and plan for future growth.
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 exceptional results during yet another unprecedented year, we're more confident than ever in our long term opportunity ahead.
With that I'll turn it over to the operator to begin Q&A.
Thank you.
At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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All participants using speaker equipment, it may be necessary to pick up your handset.
Keith.
As a reminder, we ask that you please limit to one question.
Our first question comes from the line of Kash Rangan with Goldman Sachs. Please proceed with your question.
Alright, Thank you very much what our finish to the system.
Several metrics to that but I'm, just curious to get your take on.
The number of transactions in fiscal 'twenty, two up 67% Europe .
Total subscription backlog if I heard you Greg was up 27% and we are now.
Close to 70% of Fortune 500, and I think.
The number was about 50% not too long ago.
Clearly an acceleration in your reported results and you're calling for acceleration in fiscal 'twenty three.
As you look at it.
What is the best way to look at your longer term targets are.
Are we tracking towards that longer term target.
And a very high level. Thank you so much.
Thank you for the question Kash.
This was a phenomenal year.
Fastest growth we've had in several years from a from a new ACD bookings.
Perspective, I first want to thank the team Doug Robinson in China are driving great results.
I also think it comes back to existing customer satisfaction.
And a growing product line.
That combination.
With the innovation that we're building into these products I think is really driving that growth also I think for anybody that was going through the pandemic and we're still on premise.
It was really tough to run your business with with those kind of applications and so.
Disclose the pandemic was I do think it was a forcing function.
Move to the cloud for.
The ability to run your business remotely or at least in a hybrid manner and we benefited from that and also I think the competitive landscape continues to.
B.
Positive for workday so.
Very optimistic going forward.
We'll see where it goes but were very optimistic going forward.
Touch on or anything that.
Nothing to add Aneel, maybe the only clarification cash 70 per saying is of the fortune 500 within the financial services vertical.
We still of course.
<unk> market share north of 55% on the World Fortune 500.
Okay.
Cash flow when we say the transactions were up 67% to me.
That's just awesome that means the customers are really using our product and getting value from our products. So while our growth rate.
<unk> a nice end of the fiscal year Charlotte was wondering if you could just talk a little bit more about the international opportunity as as you look out to counter 22 fiscal twenty-three just where do you think you are and say APAC in <unk>.
In terms of getting into those bigger sort of core fins deals are hcm's, obviously, a little bit more wide open for you all outside the U S. So can you just give us an update in international and kind of what your plans are for the good of market in that area of this year. Thanks.
Thank you Curt.
We saw a noticeable improvement on our international markets at this last fiscal year, we see great continue momentum, which is reflecting on the pipeline FY 2003.
We have healthy growth across regions with significant ways that companies such as National Australia Bank gym pack on the University of Melbourne, our leisure among others.
I would say is new customer base grows internationally, we are adding some capacity in our customer base teams internationally as well.
I am finally be call has also helped open new customers opportunities for us and they had a really strong ordering EMEA, London, new customers, but just as a reminder occurred.
International remain one of the largest opportunity for us and we're ready and Dr. Leanings of the journey, but still having a great Foundation one good point with the menu referenceable customers across <unk> on Finance Hills at this point.
Thank you. Our next question comes from the line of Mark Murphy with J P. Morgan. Please proceed with your question.
Yes, Thank you very much and I'll add my congrats on a great finished to the ear.
I wanted to ask you about the procurement opportunity because.
Ah Neal I believe you mentioned, 50% new ACB growth in strategic sourcing and I think you said it was faster.
Growth and procure to pay to I'm curious if if there is any extra type of tailwind on the procurement side.
Due to reopening or anything else and just whether those results.
Increase your conviction to try to invest more aggressively into procurement as a major focus area.
Well Margaret per Se, we're going to continue to invest aggressively.
On the procurement side it's.
It's a big market opportunity our products are strong, but there are gaps that we need we still need to fill.
I think the growth rate was.
Distributed both to.
Be interested in the space, but also the past financials, there's just a lot of companies.
But one of by finance and procurement together from one vendor in a unified way when people that wanted to address the breed.
Want to buy it in a unified way in in the cloud. We are we are a great solution and I think that's becoming more and more of the case so.
I think I would attribute a lot of that too close to that.
Unified view between procurement and finance, which historically work close together anyways.
Thank you.
January Doug you want anything.
But said O'neill.
Thank you. Our next question comes from the line of Keith wife, with Morgan Stanley . Please proceed with your question.
Excellent. Thank you guys for taking the question and congratulations on a great tend to FY 2002.
Talked about the increase of the subscription revenue get up in that subscription revenue Guy about two percentage points is no small feat. When you are talking about a revenue base as big as what you guys have in the Ah no momentum necessary to make those changes in such a big subscription base can you talk to us about what happened in queue for that gave you.
Guys the confidence to.
The the revenue guide in that fashion and then on the on the backlog side of the equation at the beginning of last year, we were talking about X freebase and how that was a headwind to growth on the 24 month backlog, but you guys talked about a couple of percentage points does that become a tailwind now as we start to anniversary.
And can you talk to us about where does that tailwind if it does exist, where where do we see that and how long into the into the year would that persist. Thank you.
I'm going to make one very quick comment in Hanover channel.
Just say that we wouldn't up the guidance.
The way we did it was just based on queue for it was a super strong year.
Year.
Q1, Thank you for every quarter was better than our plans.
And so as we think about the future I'm going to turn it over to China, but we would never we would never up guidance just on one quarter.
Got it thank you nal and thank you for Ya.
Serena.
Okay.
Thank you for your question Keith I'll make a comment on the one hand it over to Barbara.
I think it's fair.
First of all is the investments we've been doing from a boulder market on product perspective, they are paying off with the.
Undeniable, let's say positive trends that cover it is creating within the alcohol based on the relevance of the solutions, we bring to the market.
Pipeline momentum that we have been seeing for several quarters now Keith continuing in queue for.
So, we and tear FY 2003 with healthy growth and pipeline.
Sadie's across both net new on customer base on also HCA financial.
So healthy pipelines say combined with the favorable across rates that we've been seeing is what is keeping us the confident on the momentum that we're seeing in the market, but Barbara anything too yeah, I'll just around it out with an answer to your question on backlog. So as both a neon channel mentioned, we've got significant momentum entering F.
23, and you see that reflected in our backlog guide for Q1.
With respect to renewals specifically as we've said we are expecting to return to have more normalised rate of growth for a renewal base in FY 23, So therefore that headwind that we face to over the last year to 24 month backlog does go away this year.
Got it would it be correct to think of it as a tailwind now or is it just kind of neutral and it it's just a normalised operating environment.
It's best to think it's neutral and it's kind of more of a normalised growth rate this year.
Excellent great quarter guys. Thanks, so much.
Q.
Our next question comes from the line of Michael <unk> with Wells Fargo. Please proceed with your question.
Hey, there. Thank you and congrats for me as well, maybe maybe one on margin you set the stage for some of the impacts there are a few months back you're already bringing targets up there as well for fiscal twenty-three you mentioned still so moving pieces with return to travel we know it's a tight labor market. So maybe you could just add some more around what gives the confidence to bring those targets up.
Here in any additional color commentary around the pace of hiring.
It's also appreciate it thank you.
Yeah, absolutely I'll I'll give you some specifics on the margins have we are planning to add more head count this year than we did last year again with a focus on a sales and product. If you think about hiring last year. It was weighted more towards the back half of the year, we've got that hiring engine ramps now and we expect.
Add head count relatively even evenly throughout the rest of the year this year.
We also are planning to layer back some of that cost back into the business that will return to office travel in person events are all here together today is sitting at S. K L. And then finally, just a reminder, that our company wide bonus program that rollout in queue for and this has a full year impact <expletive> .
Proximately 300 basis points in FY 23.
If I were if I were to start with the headline the headline is our higher growth rate.
Cover some of it.
And let's just start with that but the higher growth rate gives us more.
Ability to to drive a higher margin.
In addition to everything that all set Barber said.
So helpful. Thank you.
Our next question comes from the line of Brad sales with Bank of America. Please proceed with your question.
Oh, great Ah Luckily congratulations on a real nice quarter, guys and thanks for taking the question of just one on verticals I know this has been a big focus and certainly for fins and for your P. Financials. It's not a one size fits all are there any industries, where you're further along here are ones that we should expect to be come more incremental.
Contributors from here, obviously financials is the key one you've got a lot of success there.
Others like that where you could get to the kind of penetration you've seen.
In the near term. Thank you so much.
Sean and you want to take that.
I am happy to take it.
Brought hopefully hobo as well clearly financial services.
Think a very important handwriting on that as well as the cough things wing with accounting center on the rest of solutions for U S Bank.
On solid decorate customer's going knife within our financials vertical and what we mentioned that 70% blasts of the Fortune 500, Finance health services companies being already customers healthcare as well performing queue for brat, including the Queen's at companies like Moss Gennaro Bringdown Worldstar health on several all there is.
<unk>.
I commented on mine through Mark notes as well.
<unk> solution and customers like advocate over aura on some older is expanding our portfolio hygiene.
Hygeia higher education that we've been mentioning and we have some significant momentum.
Including us well some go lives in some more customers joining our students solution as a whole last but not least I think you are aware. This year, we will start with all we're also ready to operate in the spring within the federal market and that is more of a long term. One so you should not expect significantly impact this year.
But clearly you should expect that.
B a growth growth bextor for us going forward.
Great to hear thanks channel.
Thank you.
Our next question comes from the line of Alex as you can with Wolf Research. Please proceed with your question.
Hi, This is strecker bath beyond for Alex Thanks for taking my question.
So when we talk department does it seems to be an ever increasing focus on the same side of the business.
You talk about that pipeline some more and then if you have seen or expect to see any bottlenecks related to a tougher hiring environment are tighter labor environment or the S. I.
And then just a quick second one is your guidance assume any increase conservatism coming out of Europe , given the situation between Russia and Ukraine. Thank you.
On the finance side, and then I'll turn the channel on the finance side.
We feel very good where we are a product wise febs size are already.
Finance definitely.
The function took a hit during COVID-19 , because we reviewed as longer term projects for those projects are coming back on line very quickly it's not back to agree Coca days, but it is coming back and that's a very positive.
Very positive.
Data point for us and candidly as it relates to finance. It really just has two R. 's race between us and Oracle and there's plenty of room for both of us.
Oracle is doing well, we're doing well.
As a Martin comes back.
There is a huge growth opportunity.
For both of Us in China, what I'm talking about Europe .
Yes, I would comment on the partners on talk about Europe . I mean, we are focused on ensuring that we don't have any bottlenecks on the bottom answering our ecosystem.
We'll go to where we are as a matter of fact I'm, having some discussions with partners. This week I meet these quite exciting kind of investments that they are planning within their finance.
Programs, So that's great to see.
Not sure of what was the questions regarding your voice.
Think more a macro one if I understood correctly.
It is related to the guidance I can go ahead and answer that we haven't built in any increase conservatism as a result of the geopolitical environment right now.
Thank you very much.
Thank you.
Our next question comes from the line of Brent Franklin with Piper Sandler. Please proceed with your question.
Thanks for taking the question here in the good afternoon, Neil you had me at the fastest growth and new ACB bookings in five years.
Wanted to walk through and drill down into the why now I appreciate doug's commentary around this big opportunity to sell into the installed base is that really resonating or are there other industry factors b labor shortages driving a need to invest more in HCM.
And or just to return to office. That's also contributing to the acceleration here in new ACB bookings any color there it would be helpful. Thanks.
Honestly, you kind of answered the question.
As all of the above.
I've talked to so many C E OS during Covid, who just wanted to know.
Other employees were doing and they are engaged with levels because it's been a great acquisition that way.
Everything about comp everything about engagement retention everything and if they had a legacy system. There was struggling and so that was a driver on the far side.
And.
Returning back to work all all the things you mentioned matter I'm going I'm going to.
I would like to answer, but I think that it was channel and does that really drove this great success over to the three years. So I want to turn it over to China to give you his perspective.
Perfect.
I think you provide a great context and nearly finally at.
I believe there are undeniable market trends in our favor. It once you mentioned a significant amount of digital transformation happening across many businesses or industries and were truly the backbone to enable those transformations and really the only club first solution doing solo across ACM finance.
<unk> says things that are built for the old ways of doing business and can support current business models on business agility and you had mentioned they need to engage debated with employees changing workforce sinus gives understanding suggest doing a few these are all sea levels and feel discussions that we're having.
Frankly, we are really well positioned to provide solutions to those challenges.
Partner to help our customers to transform.
Helpful color. Thank you.
Our next question comes from the line of Brad Zelnick with Deutsche Bank. Please proceed with your question.
Great. Thanks, so much and congrats not only on the strong result.
But the breath across G OS products various segments.
Install base in new ACB, I mean, it really sounds like a strong finish and I know we've touched on vertical a few times in the call.
You have featured financial services, you called out retail is particularly strong in your press release, we've picked up strong things happening in education and sled more broadly in another vertical and I'd just be curious if if maybe you can comment on some of the vertical and opportunities that we might be talking about a year from now.
And things that might be brewing and maybe even some of the.
Concerns around service based industries hospitality leisure.
Travel the extent to which they're bouncing back thank you.
I'll comment on higher Ed and government, then I'll I'll, let so I'll I'll talk about the future, but we've had a commitment to higher Ed and state local government.
Since we started the company, but not not too far afterwards.
That was a big focus of days as late as the higher Ed and.
And while the state and local suffer are intertwined with higher Ed. So we continue to be very strong. There that was that was our first industry slash vertical we went after.
And as the students system that we're building gains more functionality is becoming more accessible to the larger and larger universities.
It's a great solution for University are you by the <unk> by the students system and you'll get HR in finance.
Along with that and in the case of public sector say local government.
We we have work to build all their unique rules into the product so.
So you see it in cities you see it in the states.
Quickly adopting workdays. So that is the market does probably our first vertical before financial services within a chance to talk about what comes next.
Yeah I think what comes next is I mentioned before the further are vulgar Maine.
Remains of the large large on premise for opportunity for a term finances application and we see really great.
Fortunately there to provide cloud solutions for a significant portion of the market I mentioned before all authority to operate coming on with only spring game. I think you should also think about on on the core services VRT calls because.
Instead, we have like and use bogged down in Gore financier us on the momentum we see on the pipeline hopefully that we keep progressing you'll see us gaining traction there and last but not least.
Set with those as a core services severity customer where core financial some financial fast category overall apply and they are better I think our land motions with planning sourcing peak, calling them Binley will allow us to even penetrate far there on those verticals even outside of our more natural.
Let's say ones where.
They are no maybe I know might be ready yet to transform gore ACM or poor financials, but definitely will be ready to land.
And do not take advantage of solid Dissolutions, we provide there.
Thanks, very much of the color.
Thank you we will now take two more questions.
Our next question comes from the line of Brentsville with Jeffrey. Please proceed with your question.
[noise] channel you mentioned healthy activity in medium enterprise I'm curious if you could elaborate on what you're seeing there.
The medium enterprises being executed really well for quite some time now we've been highlighting dawan we.
See significant alone term for community. We seen these six men on this continued to be a significant investment focus for us.
I think we've done a nice yobbo tapping into that market and figuring out a way to write site that deployment cost withheld about investments and we are really well plus issue with the bro their blood for a solution. So long as me that things have been doing extremely well.
Significantly fast and we're excited by the momentum and the pipeline and investments that we're doing into that market.
And was there a quick follow up was there any follow up on what you're seeing with planning uptake I know that's been when you're stronger growth areas any any color there would be helpful. Thanks.
Yeah planning as you know, it's a car focus for us as part of our fence Plaza approach that has been getting a solution that has benefited from the trends how to cover it and we're pretty happy how we are doing regarding planning overall under referenceable customers. We do have we.
We do have more investments coming on to that solution is part of our land motion on some more self especially is just supporting those go to market airforce, particularly this year and going forward.
Thank you.
Our final question comes from the line of Ramo line shall with Barclays. Please proceed with your question.
Thank you. Thanks was creasman and congrats from me as both channel I wanted to go back to a Christian I asked last quarter already in there and it's about the evolution of pipeline.
Can you talk a little bit of what you're seeing there because of it all plays out Weldon actually this quarter. The pilot should have those more for the next year and I guess.
Increasing guidance shorter confidence as well.
But it also how do we have to think about the increase in Capex, where you pull forward 24 spending into next year that all seems to suggest that that post pandemic build out of the pipeline and changes in the pipeline continuously but maybe a couple of words on that one and congrats from you as well. Thank you.
Thank you Ramo I think the way to think about the pipeline is that there's good momentum as they say that has been built in during the last few quarters and we also saw that in queue for on a thing is broad base is across net new.
And you know any of the mentioned some with their results in queue for with Delta extraordinary performance of that team is it wrong customer base is around <unk> Finance Hills.
From a <unk> perspective, we see balance as well in North America, but also the rest of the world. So I think that's the way we look at it in the right way with think about it going forward. So it is now more question turning onto the execution under the investments we are doing within the new go to market on self say Fox that our joy.
<unk> really enabling them properly to properly position the value proposition keep aware conversion ratios as we're being performing within the last this less FY 2002.
Thank you.
Ladies and gentlemen, thank you for your participation on today's conference.
Will conclude workdays Fourthquarter F Y 22 earnings call. Thank you again for joining us.
Hello.