Q2 2025 Workday Inc Earnings Call

August 22, 2024

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 and documents we file with the Securities and Exchange Commission, including our fiscal 2024 annual report on form 10K for additional information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

Unknown Executive: 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 and documents we file with the Securities and Exchange Commission, including our fiscal 2024 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.

Unknown Executive: 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 and documents we file with the Securities and Exchange Commission, including our fiscal 2024 annual report on Form 10K for additional information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

Yes.

Speaker Change: These statements are subject to risks uncertainties and assumptions that could cause actual results to differ materially.

Speaker Change: Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission, including our fiscal 2024 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.

Speaker Change: In addition, during today's call, we will discuss non-gap financial measures, which we believe are useful as supplemental measures of workday's performance. These non-gap measures should be considered in addition to and not as a substitute for or in isolation from gap results.

Speaker Change: In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of workdays performance.

Unknown Executive: 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 reconciliation with comparable GAAP results in our earnings press release, in our investor presentation, and on the investor relations page of our website.

Unknown Executive: In addition, during today's call, we will discuss non-gap financial measures, which we believe are useful as supplemental measures of workday's performance. These non-gap measures should be considered in addition to and not as a substitute for or in isolation from gap results. You can find additional disclosures regarding these non-gap measures, including reconciliation with comparable gap results, in our earnings press release, in our investor presentation, and on the investor relations page of our website.

Speaker Change: These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

Speaker Change: You can find additional disclosures regarding these non-gap measures, including reconciliation with comparable gap results in our earnings press release, in our investor presentation, and on the investor relations page of our website.

Can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, and our Investor presentation and on the Investor Relations page of our website.

Unknown Executive: The webcast replay of this call will be available for the next 90 days on our company website under the Investor Relations link. Additionally, the transcript of this call and our quarterly investor presentation will be posted on our Investor Relations website following this call. Also, the customer's page of our website includes a list of selected customers and is updated monthly.

Speaker Change: The webcast replay of this call will be available for the next 90 days on our company website under the investor relations link.

Speaker Change: The webcast replay of this call will be available for the next 90 days on our company website under the Investor Relations link.

Unknown Executive: The webcast replay of this call will be available for the next 90 days on our company website under the investor relations link. Additionally, the transcript of this call and our quarterly investor presentation will be posted on our investor relations website following this call. Also, the customer's page of our website includes a list of selected customers and is updated monthly.

Speaker Change: Additionally, the transcript of this call and our quarterly investor presentation will be posted on our investor relations website following this call.

Speaker Change: Additionally, the transcript of this call and our quarterly Investor presentation will be posted on our Investor Relations website. Following this call also the customers page of our website includes a list of selected customers and is updated monthly.

Speaker Change: Also, the customer's page of our website includes a list of selected customers and is updated monthly.

Unknown Executive: Our third quarter of fiscal 2025 quiet period begins on October 15th, 2024. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2024.

Our third quarter of fiscal 2025 quiet period begins on October 15th 2024, unless otherwise stated all financial comparisons in this call will be to our results for the comparable period of our fiscal 2024 with that I'll hand, the call over to Carl.

Speaker Change: Our third quarter of fiscal 2025 quiet period begins on October 15, 2024.

Speaker Change: Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2024.

Unknown Executive: With that, I'll hand the call over to Carl.

Speaker Change: With that, I'll hand the call over to Carl.

Carl Eschenbach: With that, I'll hand the call over to Carl. Thank you, Justin, and thank you all for joining us today. I'm pleased to report that workday delivered another solid quarter highlighted by 17% subscription revenue growth, 16% 12 month backlog growth, and 25% non-gap operating margin. Though we continued to experience steel scrutiny and moderated headcount growth within our customer base, our win rate remained high and our teams delivered a very solid Q2. I couldn't be prouder of our workmates and our partners for their continued focus on driving customer value and success.

Carl: Thank you Justin and thank you all for joining US today I am pleased to report that workday delivered another solid quarter highlighted by 17% subscription revenue growth, 16% 12 month backlog growth and 25% non-GAAP operating margin.

Carl Eschenbach: Thank you, Justin, and thank you all for joining us today. I'm pleased to report that Workday delivered another solid quarter highlighted by 17% subscription revenue growth, 16% 12-month backlog growth, and 25% non-GAAP operating margin. Though we continued to experience steel scrutiny and moderated headcount growth within our customer base, our win rate remained high and our teams delivered a very solid Q2.

Carl: Thank you, Justin, and thank you all for joining us today.

Carl: I'm 18% subscription revenue growth, 16% 12 month backlog growth, and 25% non-gap operating margin.

Speaker Change: Though we continued to experience steel scrutiny and moderated headcount growth within our customer base, our win rate remained high, and our teams delivered a very solid Q2. I couldn't be prouder of our workmates and our partners for their continued focus on driving customer value and success.

Speaker Change: So we continued to experience deal scrutiny and moderated head count growth within our customer base, our win rates remain high and our teams delivered a very solid Q2 I.

Carl Eschenbach: I couldn't be prouder of our workmates and our partners for their continued focus on driving customer value and success. Right now, companies are focusing their investments on the areas that will help them increase productivity and improve their operations. Workday gives them the ultimate advantage. We help them manage their two most fundamental elements of their business, their people and their money, all on a unified AI-powered platform. Workday empowers businesses to increase productivity, deliver incredible employee experience, and drive greater efficiencies across finance. And because all our products are built on the foundation of our platform, our customers can unlock value faster and reduce total cost of ownership.

Speaker Change: I couldnt be prouder of our Workmates and our partners for their continued focus on driving customer value and success.

Speaker Change: Right now, companies are focusing their investments on the areas that will help them increase productivity and improve their operations.

Carl Eschenbach: Right now, companies are focusing their investments on the areas that will help them increase productivity and improve their operations. Workday gives them the ultimate advantage. We help them manage their two most fundamental elements of their business, their people and their money, all on a unified AI-powered platform. Workday empowers businesses to increase productivity, delivering credible employee experience, and drive greater efficiencies across finance. And because all our products are built on the foundation of our platform, our customers can unlock value faster and reduce total cost of ownership.

Speaker Change: Right now companies are focusing their investments on the areas that will help them increase productivity and improve their operations workday gives them the ultimate advantage.

Speaker Change: Workday gives them the ultimate advantage. We help them manage their two most fundamental elements of their business, their people and their money, all on a unified AI-powered platform.

We help them manage their two most fundamental elements of their business their people and their money all on a unified AI powered platform.

Speaker Change: <unk> empowers businesses to increase productivity deliver incredible employee experience and drive greater efficiencies across finance.

Speaker Change: Workday[inaudible] It's also contributing to our momentum, which helped us debut in the prestigious Fortune 500 List in Q2.

And because all our products are built on the foundation of our platform our customers can unlock value faster and reduce total cost of ownership.

Carl Eschenbach: This is evident in the healthy growth we're seeing in full sweet wins and in our balance of net new relationships and customer expansions. It's also contributing to our momentum, which helped us debut in the prestigious Fortune 500 list in Q2. We couldn't be prouder to be amongst the largest, most influential companies in the US, with more than 60% of them being Workday. Businesses of all sizes, industries, and geographies increasingly turned to Workday as their trusted partner. In Q2, we expanded with J.B. Hunt, Nissan, Target, and Trinity Health, and we formed new relationships with Lamb Research, the City of Cleveland, Colorado State University System, and Johns Hopkins, among many others.

Carl Eschenbach: This is evident in the healthy growth we're in full-sweet wins and in our balance of net new relationships and customer expansions. It's also contributing to our momentum, which helped us debut in the prestigious Fortune 500 List in Q2. We couldn't be prouder to be amongst the largest most influential companies in the US with more than 60% of them being workday customers. Businesses of all sizes, industries, and geographies increasingly turned to workday as their trusted partner.

This is evident in the healthy growth, we're seeing in full suite wins and in our balance of net new relationships and customer expansions.

Speaker Change: It is also contributing to our momentum which helped US debut in the prestigious Fortune 500 list in Q2.

Speaker Change: We couldn't be prouder to be amongst the largest, most influential companies in the US, with more than 60% of them being workday customers.

Speaker Change: We couldnt be prouder to be amongst the largest most influential companies in the U S with more than 60% of them being workday customers.

Speaker Change: Partners, Businesses of all sizes, industries, and geographies, increasingly turned to work day as their trusted partner.

Speaker Change: Businesses of all sizes industries, and geographies increasingly turned to workday as their trusted partner in.

Speaker Change: In Q2, we expanded with J.B. Hunt, Nissan, Target, and Trinity Health, and we formed new relationships with Lamb Research, the City of Cleveland, Colorado State University System, and Johns Hopkins, among many others.

Carl Eschenbach: In Q2, we expanded with J.B. Hunt, Nissan, Target, and Trinity Health, and we formed new relationships with Lamb Research, the City of Cleveland, Colorado State University System, and Johns Hopkins, among many others. In Q2, we officially crossed the 2000 customer milestone in Workday Financial Management, and Workday was ranked the market share leader for worldwide financial development. This was a worldwide SaaS ERP revenue in 2023 by Gardner Research. From an industry perspective, we had a banner quarter in our longest standing vertical higher education, leading institutions, including Florida A&M, the University of Mississippi, and Clemson University all selected Workday's full suite in Q2.

In Q2, we expanded with J B Hunt, Nissan target and Trinity Health, and we formed new relationships with Lam research the city of Cleveland, Colorado State University system, and Johns Hopkins among many others.

Speaker Change: We strengthened our leadership in the HCM Market Globally, with key wins including G.E. Bernova, First Bus, Sunrise Senior Living, along with several notable wins in Amia and A-PAC.

Speaker Change: We strengthened our leadership in the HCM market globally, with key wins, including <unk> or Nova first bus Sunrise senior living along with several notable wins in EMEA and APAC.

Carl Eschenbach: It's the same market globally, with key wins including G.E. Bernova, First Bus, Sunrise Senior Living, along with several notable wins in Amia and APAC. And our continued investment in financials is helping us drive momentum across the platform. In Q2, we officially crossed the 2000 customer milestone in Workday Financial Management. And Workday was ranked the market share leader for worldwide SaaS ERP revenue in 2023 by Gartner Research. From an industry perspective, we had a banner quarter in our longest standing vertical, higher education, leading institutions including Florida A&M, the University of Mississippi, and Clemson University all selected Workday's full suite in Q2.

Speaker Change: And our continued investment in financials is helping us drive momentum across the platform.

And our continued investment in financials is helping us drive momentum across the platform.

Speaker Change: In Q2, we officially crossed the 2000 customer milestone in Workday Financial Management, and Workday was ranked the market share leader for worldwide SaaS ERP revenue in 2023 by Gardner Research.

Speaker Change: In Q2, we officially crossed 2000 customer milestone in Workday financial management.

And workday wish ranked the market share leader for worldwide SaaS ERP revenue in 2023 by Gartner research.

Speaker Change: From an industry perspective, we had a banner quarter in our longest standing vertical higher education, leading institutions including Florida A&M, the University of Mississippi, and Clemson University all selected Workday's full suite in Q2. Clemson started as a Workday adaptive planning customer and added HCM in financial management in the quarter. The partnership with Workday represents a significant milestone in their transformation journey to modernize systems and improve experiences for faculty, staff, and students.

From an industry perspective, we had a banner quarter in our longest standing vertical higher education.

Speaker Change: Leading institutions, including Florida, A&M University of Mississippi, and Clemson University, all selected workdays full suite in Q2.

Carl Eschenbach: Clemson started as a Workday Adaptive Planning customer and added HCM and Financial Management in the quarter. The partnership with the Workday represents a significant milestone in their transformation journey to modernize systems and improve experiences for faculty, staff, and students. We once again had strong momentum in healthcare with full suite wins at Grady Health System, Reed Health, and Children's National Medical Center. Our success in state and local government continued in Q2 as well with wins at Delaware County, County of San Joaquin, and Santa Cruz County. I also want to call out the expansion momentum we're seeing with Bentley and our ability to deliver a complete workforce management solution, spanning salary employees to hourly, contingent, freelance, and outsource workers.

Speaker Change: Clemson started as a workday adaptive planning customer and added HCM and financial management in the quarter. The partnership with Workday represents a significant milestone in their transformation journey to modernize systems and improve experiences for faculty staff and students.

Carl Eschenbach: Clemson started as a Workday Adaptive Planning customer and added HCM and Financial Management in the quarter. The partnership with the Workday represents a significant milestone in their transformation journey to modernize systems and improve experiences for faculty, staff, and students. We once again had strong momentum in healthcare, with full suite wins at Grady Health System, Reed Health, and Children's National Medical Center. Our success in state and local government continued in Q2 as well, with wins at Delaware County, County of San Joaquin, and Santa Cruz County.

Speaker Change: We once again had strong momentum in healthcare, with full suite wins at Grady Health System, Reed Health, and Children's National Medical Center.

Speaker Change: We once again had strong momentum in health care with full suite wins at Grady Health system read health and children's National Medical Center.

Speaker Change: Our success in state and local government continued in Q2 as well, with wins at Delaware County, County of San Joaquin, and Santa Cruz County.

Speaker Change: Our success in state and local government continued in Q2 as well.

Speaker Change: Wins at Delaware County County of San Joaquin and Santa Cruz County.

Speaker Change: I also want to call out the expansion momentum we're seeing with Bentley, and our ability to deliver a complete workforce management solution, spanning salary to employees to hourly, contingent, freelance, and outsourced workers.

Speaker Change: I also want to call out the expansion momentum, we're seeing with thinly and our ability to deliver a complete workforce management solution spanning salaried employees to hourly contingent freelance and outsource workers.

Carl Eschenbach: I also want to call out the expansion momentum we're seeing with Bentley and our ability to deliver a complete workforce management solution, spanning salary employees to hourly, contingent, freelance, and outsourced workers. Pushman and Wakefield lows in Ryder Truck all added Bentley in Q2. Beyond the wins, we celebrate when our customers go live on our platform. Auto Nation, Barclays, CDW, Cross Country, Mortgage, Forvis, Maysars, and Texas Roadhouse all successfully deployed on Workday in Q2.

Carl Eschenbach: Pushmen and Wakefield lows in Ryder Truck all added Bentley in Q2. Beyond the wins we celebrate when our customers go live on our platform, AutoNation, Farquhlees, CDW, Cross Country Mortgage, Forvis Mazar's, and Texas Roadhouse all successfully deployed on Workday in Q2. Global growth continues to be a massive opportunity for Workday, and we had a strong performance in APAC and Japan regions in Q2, along with several strategic wins in AMIA. In Australia, Workday was accepted to the government's Digital Transformation Agency software marketplace for ERP, opening new opportunities with federal agencies. We also expanded our business with a ministry in New Zealand and had a full-sweet win at Kelsey and Group Limited.

Speaker Change: Pushman and Wakefield lows in Ryder Truck all added Bentley in Q2.

Speaker Change: <unk> Wakefield lows and Ryder truck all added Bentley in Q2.

Speaker Change: Beyond the wins, we celebrate when our customers go live on our platform. Auto Nation, Barclays, CDW, Cross Country Mortgage, Forvis Maysars, and Texas Roadhouse all successfully deployed on Workday in Q2.

Beyond the wins, we celebrate when our customers go live on our platform Autonation Barclays CDW Cross country mortgage for vis maze ours in Texas Roadhouse, all successfully deployed on workday in Q2.

Speaker Change: Global growth continues to be a massive opportunity for Workday, and we had a strong performance in APAC and Japan regions in Q2, along with several strategic wins in Amia. In Australia, Workday was accepted to the government's digital transformation agency software marketplace for ERP, opening new opportunities with federal agencies. We also expanded our business with a ministry in New Zealand, and had a full suite win at Kelsey and Group Limited.

Speaker Change: Global growth continues to be a massive opportunity per workday and we had a strong performance in APAC and Japan regions in Q2, along with several strategic wins in EMEA and.

Carl Eschenbach: Global growth continues to be a massive opportunity for Workday, and we had a strong performance in APAC and Japan regions in Q2, along with several strategic wins in AMIA. In Australia, Workday was accepted to the government's digital transformation agency software marketplace for ERP, opening new opportunities with federal agencies. We also expanded our business with a ministry in New Zealand, and had a full suite win at Kelsey and Group Limited. We're setting a strong foundation for our business in Japan, which performed very well in Q2.

Speaker Change: In Australia Workday was accepted to the government's digital transformation agency software marketplace for ERP opening new opportunities with federal agencies.

We also expanded our business with a ministry in New Zealand and had a full suite win at calcium Group Ltd.

Carl Eschenbach: We're setting a strong foundation for our business in Japan, which performed very well in Q2. We formed new relationships with Turumo Corporation in Xi-Zen Energy and expanded our business with Tokyo Electronics. In Europe, we experience the same deal scrutiny I discussed in Q1, but the team was able to deliver more large deals in last quarter, including MA East, St. Govain, and Group Atlantic Synergy. Additionally, our elevator events across the region in Q2 outperformed our pipeline expectations, and our partner momentum is building in key markets across the media. In fact, two of the largest deals we close in the region were sourced from partners.

Speaker Change: We're setting a strong foundation for our business in Japan, which performed very well in Q2. We formed new relationships with Turumo Corporation in Xi-Zen Energy and expanded our business with Tokyo Electronics.

Speaker Change: We're setting a strong foundation for our business in Japan, which performed very well in Q2, we formed new relationships with to room or corporation, and she's an energy and expanded our business with Tokyo electron.

Carl Eschenbach: We formed new relationships with Turumo Corporation in Xi-Zen Energy and expanded our business with Tokyo Electronics. In Europe, we experience the same deals scrutiny I discussed in Q1, but the team was able to deliver more large deals in last quarter, including MA East, St. Govain, and Group Atlantic Synergy. Additionally, our elevator events across the region in Q2 outperformed our pipeline expectations, and our partner momentum is building in key markets across the media.

Speaker Change: In Europe, we experience the same deal scrutiny I discussed in Q1, but the team was able to deliver more large deals in last quarter, including MA East, St. Gaubein, and Group Atlantic Synergy.

In Europe, we experienced the same deal scrutiny I discussed in Q1, but the team was able to deliver more large deals in last quarter, including Maa's, Saint Gobain and group Atlantic synergy. Additionally, our elevate events across the region in Q2 outperformed our.

Speaker Change: Additionally, our elevator events across the region in Q2 outperformed our pipeline expectations, and our partner momentum is building in key markets across the MIA. In fact, two of the largest deals we close in the region were sourced from partners.

Speaker Change: Pipeline expectations and our partner momentum is building in key markets across EMEA. In fact, two of the largest deals we closed in the region were sourced from partners.

Carl Eschenbach: In fact, two of the largest deals we close in the region were sourced from partners. We innovate to drive customer success and deliver true business value, and that's why customers are coming to Workday for our AI innovation. They want to partner and are looking to us to lead them into the future. Workday AI is fueled by the quality and quantity of our data set and Workday's understanding of our customers HR and finance processes.

Carl Eschenbach: We innovate to drive customer success and deliver true business value, and that's why customers are coming to Workday for our AI innovation. They want to partner, and they're looking to us to lead them into the future. Workday AI is fueled by the quality and quantity of our data set and Workday's understanding of our customers' HR and finance processes. We now have more than 70 million users under contract, conducting more than 800 billion transactions on the Workday platform annually. This data and the context behind it gives us the ability to unlock productivity in a way no other company can.

Speaker Change: We innovate to drive customer success and deliver true business value, and that's why customers are coming to Workday for our AI innovation.

Speaker Change: We innovate to drive customer success, and deliver true business value and Thats why customers are coming to workday for our AI innovation, they want to partner and they're looking to us to lead them into the future.

Speaker Change: They want to partner and are looking to us to lead them into the future.

Speaker Change: Workday AI is fueled by the quality and quantity of our dataset and workdays understanding of our customers' HR and finance processes.

Speaker Change: Workday AI is fueled by the quality and quantity of our data set in Workday's understanding of our customers' HR and finance processes.

Speaker Change: We now have more than 70 million users under contract, conducting more than 800 billion transactions on the Workday platform annually.

Carl Eschenbach: We now have more than 70 million users under contract, conducting more than 800 billion transactions on the Workday platform annually. This data and the context behind it gives us the ability to unlock productivity in a way no other company can. In Q2, we announce new AI innovations to help our customers hire the right talent, better and faster than ever before. For instance, our new AI capabilities and our HCM product identify emerging skills and simplify job profile management to accelerate skills-based talent strategies.

Speaker Change: We now have more than 70 million users under contract conducting more than 800 billion transactions on the workday platform annually.

Speaker Change: This data and the context behind it gives us the ability to unlock productivity in a way no other company can.

Speaker Change: This data in the context behind it gives us the ability to unlock productivity in a way no other company can.

Speaker Change: In Q2, we announce new AI innovations to help our customers hire the right talent, better and faster than ever before. For instance, our new AI capabilities and our HCM product identify emerging skills and simplify job profile management to accelerate skills-based talent strategies.

Speaker Change: In Q2, we announced new AI innovations to help our customers hire the right talent better and faster than ever before.

Carl Eschenbach: In Q2, we announce new AI innovations to help our customers hire the right talent. Better and faster than ever before. For instance, our new AI capabilities in our HCM product identify emerging skills and simplify job profile management to accelerate skills-based talent strategies. Just one quarter after closing the Hired Score acquisition, we made Hired Score AI for recruiting and Hired Score AI for talent mobility available for purchase under one unified contract. The hired score team is off to a great start, and we're continuing to build pipeline across our recruiting customers. And what better validation did this quote from our customer, as Southwest Airlines, who called Hired Score a game changer that's setting new standards in talent management?

Speaker Change: For instance, our new AI capabilities in our HCM product identify emerging skills and simplify job profile management to accelerate skills based talent strategies.

Speaker Change: Just one quarter after closing the Hired Score acquisition, we made Hired Score AI for recruiting and Hired Score AI for talent mobility available for purchase under one unified contract.

Carl Eschenbach: Just one quarter after closing the hired score acquisition, we made hired score AI for recruiting and hired score AI for talent mobility available for purchase under one unified contract. The hired score team is off to a great start and we're continuing to build pipeline across our recruiting customers. And what better validation did this quote from our customer as Southwest Airlines, who called hired score a game changer that's setting new standards in talent management?

Speaker Change: Just one quarter after closing the higher score acquisition, we made higher score AI for recruiting and hired score AI for talent mobility available for purchase under one unified contract.

Speaker Change: The Hired Score team is off to a great start and we're continuing to build pipeline across our recruiting customers.

Speaker Change: The higher score team is off to a great start and we're continuing to build pipeline across our recruiting customers.

Speaker Change: And what better validation did this quote from our customer as Southwest Airlines, who called Hired Score a game changer that's setting new standards in talent management?

Speaker Change: And what better validation than this quote from our customer as southwest Airlines, who called hired score a game changer that is setting new standards in talent management.

Speaker Change: Through the power of our platform, we're enabling AI innovation not only from Workday, but from our customers and partners as well. In Q2, at our annual developer conference, we launched new APIs in our AI gateway. We also introduced Workday Extend developer co-pilot, leveraging Gen AI to help developers to build custom applications on our platform faster than ever before.

Carl Eschenbach: Through the power of our platform, we're enabling AI innovation not only from Workday, but from our customers and partners as well. In Q2, at our annual developer conference, we launched new APIs in our AI gateway. We also introduced Workday Extend Developer Co-Pilot, leveraging Gen AI to help developers to build custom applications on our platform faster than ever before. Extend remains one of our fastest growing skews. New ACV increase more than 75 percent in Q2 driven by Extend Pro, which taps into the power of Workday AI. Many of our customers are already realizing incredible value from Workday AI.

Carl Eschenbach: Through the power of our platform, we're enabling AI innovation not only from Workday, but from our customers and partners as well. In Q2, at our annual developer conference, we launched new APIs in our AI gateway. We also introduced Workday Extend Developer Co-Pilot, leveraging Gen AI to help developers to build custom applications on our platform faster than before. Extend remains one of our fastest growing skews. New ACV increase more than 75% in Q2, driven by Extend Pro, which taps into the power of Workday AI.

Speaker Change: Due to the power of our platform, we are enabling AI innovation, not only from workday, but from our customers and partners as well.

Speaker Change: In Q2 at our annual developer conference, we launched new Apis and our AI Gateway we also.

Speaker Change: Introduced workday extend developer co pilot leveraging <unk> AI to help developers to build custom applications on our platform faster than ever before.

Speaker Change: Extend remains one of our fastest growing skews.

Speaker Change: Extend remains one of our fastest growing skus, new HCV increase more than 75% in Q2, driven by extend pro which taps into the power of Workday AI.

Speaker Change: New ACV increase more than 75% in Q2, driven by Extend Pro, which taps into the power of Workday AI.

Many of our customers are already realizing incredible value from workday AI.

Carl Eschenbach: Many of our customers are already realizing incredible value from Workday AI. For example, a hired score for talent mobility customer saw a 40% increase in internal application rates. For one of our entertainment customers, invoice automation is driving 70% plus increase in processing capability. Keys, and for another customer, our Cal optimization product, which is one of our fastest growing skews, help reduce turnover by 39 percent, and the list goes on, but we're just scratching the surface.

Speaker Change: Many of our customers are already realizing incredible value from Workday AI. For example, a Hired Score for talent mobility customers saw a 40% increase in internal application rates.

Carl Eschenbach: For example, a hired score for talent mobility customers saw a 40 percent increase in internal application rates. For one of our entertainment customers, invoice automation is driving a 70 percent plus increase in processing capability. Keys, and for another customer, our Cal optimization product, which is one of our fastest growing skews, helps reduce turnover by 39 percent, and the list goes on, but we're just scratching the surface.

Speaker Change: For example, a higher score for talent mobility customers saw a 40% increase in internal application rates for one of our entertainment customers invoice automation is driving 70% plus increase in processing capabilities.

Speaker Change: For one of our entertainment customers, invoice automation is driving 70% plus increase in processing capability.

Speaker Change: Keys, and for another customer, our Cal optimization product, which is one of our fastest growing skews, help reduce turnover by 39 percent, and the list goes on, but we're just scratching the surface.

Speaker Change: For another customer our talent optimization product, which is one of our fastest growing skus help reduce turnover by 39% and the list goes on but we're just scratching the surface.

Speaker Change: The industry has been focusing on fitting AI into how we work now, not on what work should look like next.

Speaker Change: The industry has been focusing on fitting AI into how we work now not on what work should look like next we see an opportunity to exponentially increase the value to our customers by re imagining and do an HR and finance processes through the power of AI.

Carl Eschenbach: The industry has been focusing on fitting AI into how we work now, not on what work should look like next. We see an opportunity to exponentially increase the value to our customers by re-imagining end-to-end HR and finance processes through the power of AI.

Carl Eschenbach: The industry has been focusing on fitting AI into how we work now, not on what work should look like next. First, we see an opportunity to exponentially increase the value to our customers by reimagining end-to-end HR and finance processes through the power of AI. At Workday Rising, we will introduce the next generation of AI to illuminate the future of work. For the past ten years, we've been building towards this vision, and we're excited to showcase Workday innovations that will not only accelerate how work gets done, but ultimately transform how customers run their businesses.

Speaker Change: We see an opportunity to exponentially increase the value to our customers by reimagining end to end HR and finance processes through the power of AI.

Speaker Change: Hi.

Carl Eschenbach: At Workday Rising, we will introduce the next generation of AI to illuminate the future of work. For the past ten years, we've been building towards this vision, and we're excited to showcase Workday innovations that will not only accelerate how work gets done, but ultimately transform how customers run their businesses. We're expecting more than 30,000 virtual and in-person attendees at Rising this year, our biggest event yet. In addition to unveiling our AI vision, we'll also showcase due innovations across our application's platform and user experience.

Speaker Change: At Workday Rising, we will introduce the next generation of AI to illuminate the future of work.

Speaker Change: At Workday rising we will introduce the next generation of AI to illuminate the future of work for the past 10 years, we've been building towards this vision and we're excited to showcase workday innovations that will not only accelerate how work gets done but ultimately transform how.

Speaker Change: For the past 10 years, we've been building towards this vision, and we're excited to showcase Workday innovations that will not only accelerate how work gets done, but ultimately transform how customers run their businesses.

Speaker Change: Customers run their businesses.

Speaker Change: We're expecting more than 30,000 virtual and in-person attendees at Rising this year, our biggest event yet.

We're expecting more than 30000 virtual and in person attendees at rising this year, our biggest event yet in addition to unveiling our AI vision will also showcased new innovations across our applications platform and user experience.

Carl Eschenbach: We're expecting more than 30,000 virtual and in-person attendees at Rising this year, our biggest event yet. In addition to unveiling our AI vision, we'll also showcase due innovations across our application's platform and user experience. I mentioned before that our partner ecosystem is a powerful driver of customer success, and it continues to grow in both breadth and depth. In Q2, partner contributions to new ACV more than doubled from last quarter, and partners had another record quarter of pipeline generation, and we're just getting started.

Speaker Change: In addition to unveiling our AI vision, we'll also showcase due innovations across our applications platform and user experience.

Carl Eschenbach: I mentioned before that our partner ecosystem is a powerful driver of customer success, and it continues to grow in both breadth and depth. In Q2, partner contributions to new ACV more than doubled from last quarter, and partners had another record quarter of pipeline generation, and we're just getting started. In the quarter, we launched Bill on Workday to make it easy for our partners to build, distribute, and monetize their applications on the Workday platform. Our long-standing partner, Kenos, was among the first to lean into this new program, with several more partners already active early adopters. We continue to open the aperture to our partners as a driver of both sales and innovation, and in Q2, we announced new partnerships that will help us deliver even greater value.

Speaker Change: I mentioned before that our partner ecosystem is a powerful driver of customer success, and it continues to grow in both breadth and depth. In Q2, partner contributions to new ACV more than doubled from last quarter, and partners had another record quarter of pipeline generation, and we're just getting started.

I mentioned before that our partner ecosystem is a powerful driver of customer success and it continues to grow in both breadth and depth.

Speaker Change: In Q2 partner contributions to new HCV more than doubled from last quarter.

Speaker Change: <unk> partners had another record quarter of pipeline generation and we're just getting started.

Speaker Change: In the quarter, we launched fill on workday to make it easy for our partners to build distribute and monetize their applications on the workday platform.

Carl Eschenbach: In the quarter, we launched Bill on Workday to make it easy for our partners to build, distribute, and monetize their applications on the Workday platform. Our longstanding partner, Canos, was among the first to lean into this new program with several more partners already active early adopters. We continue to open the aperture to our partners as a driver of both sales and innovation and in Q2, we announced new partnerships that will help us deliver even greater value.

Speaker Change: In the quarter, we launched Bill on Workday to make it easy for our partners to build, distribute, and monetize their applications on the Workday platform. Our longstanding partner, Canos, was among the first to lean into this new program with several more partners already active early adopters.

Speaker Change: Our long standing partner <unk> was among the first to lean into this new program with several more partners already active early adopters.

Speaker Change: We continue to open the aperture to our partners as a driver of both sales and innovation, and in Q2, we announce new partnerships that will help us deliver even greater value. Our partnership with Salesforce is a perfect example. Whether it's accelerating employee onboarding, enabling continuous financial planning, or closing deals faster, our partnership is bringing humans and AI together to drive success for employees and customers.

Speaker Change: We continue to open the aperture to our partners as a driver of both sales and innovation and in Q2, we announced new partnerships that will help us deliver even greater value.

Carl Eschenbach: Our partnership with Salesforce is a perfect example. Whether it's accelerating employee onboarding, enabling continuous financial planning, or closing deals faster, our partnership is bringing humans and AI together to drive success for employees and customers. And it's all made possible by bringing together the most important data sets in the enterprise. And today, we are announcing a new employment verification connector for Aquifax, making it easier for customers to transmit data for employment verification requests. As you can see, it was a big quarter for our ecosystem, and we are looking forward to continuing this momentum in partner-led growth.

Speaker Change: Our partnership with Salesforce is a perfect example.

Carl Eschenbach: Our partnership with Salesforce is a perfect example. Whether it's accelerating employee onboarding, enabling continuous financial planning, or closing deals faster, our partnership is bringing humans and AI together to drive success for employees and customers. And it's all made possible by bringing together the most important data sets in the enterprise. And today, we are announcing a new employment verification connector for Equifax, making it easier for customers to transmit data for employment verification requests.

Speaker Change: Whether it's accelerating employee onboarding, enabling continuous financial planning or closing deals faster our partnership is bringing humans in AI together to drive success for employees and customers and.

Speaker Change: And it's all made possible by bringing together the most important data sets in the enterprise.

Speaker Change: And it's all made possible by bringing together the most important datasets in the enterprise.

Speaker Change: And today, we are announcing a new employment verification connector for aquifax, making it easier for customers to transmit data for employment verification requests.

Speaker Change: And today, we are announcing a new employment verification connector for equifax, making it easier for customers to transmit data for employment verification requests.

Speaker Change: As you can see, it was a big quarter for our ecosystem, and we are looking forward to continuing this momentum in partner led growth.

Speaker Change: As you can see it was a big quarter for our ecosystem and we are looking forward to continuing this momentum and partner led growth.

Carl Eschenbach: As you can see, it was a big quarter for our ecosystem, and we are looking forward to continuing this momentum in partner-led growth. Before I turn over to Zane, I'd like to update you on how we're planning for the medium term. We continue to build Workday as a durable business with balanced growth in margin expansion, something I've been saying since I joined the company nearly two years ago. Our key growth areas are already paying off in creating momentum for our future.

Carl Eschenbach: Before I turn over to Zane, I'd like to update you on how we're planning for the medium term. We continue to build Workday as a durable business with balanced growth in margin expansion, something I've been saying since I joined the company nearly two years ago. Our key growth areas are already paying off in creating momentum for our future. They amplify our opportunity to bring in new customers to expand our footprint with existing customers. Over the past year, we've been able to see how our growth areas are developing, particularly in the current selling environment. And we've identified opportunities to drive efficiencies across the business.

Speaker Change: Before I turn it over to Zane I'd like to update you on how we're planning for the medium term, we continue to build workday as a durable business with balanced growth and margin expansion something I've been saying since I joined the company nearly two years ago.

Speaker Change: Before I turn over to Zane, I'd like to update you on how we're planning for the medium term. We continue to build work day as a durable business with balanced growth in margin expansion.

Speaker Change: Something I've been saying since I joined the company nearly two years ago.

Speaker Change: Our key growth areas are already paying off in creating momentum for our future. They amplify our opportunity to bring in new customers into expand our footprint with existing customers.

Speaker Change: Our key growth areas are already paying off and creating momentum for our future.

Carl Eschenbach: They amplify our opportunity to bring in new customers into expand our footprint with existing customers. Over the past year, we've been able to see how our growth areas are developing, particularly in the current selling environment, and we've identified opportunities to drive efficiencies across the business. In light of this, we're making some adjustments to our medium-term plans, including a slightly moderated pace of subscription revenue growth balance with accelerated margin expansion. Our revised medium-term outlook reflects the confidence we have to drive durable, profitable growth at scale. We're focused on continuing to gain share in our core markets of HR and finance, while delivering strong operating income growth and continuing to innovate for our customers and partners.

Zane: They amplify our opportunity to bring in new customers into expand our footprint with existing customers.

Zane: Over the past year, we've been able to see how our growth areas are developing, particularly in the current selling environment, and we've identified opportunities to drive efficiencies across the business.

Zane: Over the past year, we've been able to see how our growth areas are developing particularly in the current selling environment.

Zane: And we've identified opportunities to drive efficiencies across the business and.

Zane: In light of this, we're making some adjustments to our medium-term plans, including a slightly moderated pace of subscription revenue growth balanced with accelerated margin expansion. Our revised medium-term outlook reflects the confidence we have to drive durable, profitable growth at scale.

Carl Eschenbach: In light of this, we're making some adjustments to our medium-term plans, including a slightly moderated pace of subscription revenue growth, balanced with accelerated margin expansion. Our revised medium-term outlook reflects the confidence we have to drive durable, profitable growth at scale. We're focused on continuing to gain share in our core markets of HR and finance, while delivering strong operating income growth and continuing to innovate for our customers and partners.

Zane: In light of this we're making some adjustments to our medium term plans, including a slightly moderated pace of subscription revenue growth balanced with accelerated margin expansion.

Zane: Our revised medium term outlook reflects the confidence we have to drive durable profitable growth at scale, we're focused on continuing to gain share in our core markets of HR and finance, while delivering strong operating income growth and continuing to innovate for our customers and partners.

Zane: We're focused on continuing to gain share in our core markets of HR and finance, while delivering strong operating income growth and continuing to innovate for our customers and partners.

Carl Eschenbach: I couldn't be more excited and energized about the opportunity ahead, and we are thrilled to have you on the ride with us, with that alternative over to Zane.

Zane: I couldnt be more excited and energized about the opportunity ahead, and we are thrilled to have you on the ride with us with that I'll turn it over to Zane.

Zane: I couldn't be more excited and energized about the opportunity ahead, and we are thrilled to have you on the ride with us, with that alternative over to Zane.

Zane Rowe: I couldn't be more excited and energized about the opportunity ahead, and we are thrilled to have you on the ride with us, with that alternative over to Zane. Thanks, Carl, and thank you to everyone for joining today's call. Our Q2 performance was slightly ahead of our expectations across all key metrics. Subscription revenue in the second quarter was $1.903 billion, up 17%. Professional services revenue was $182 million in the quarter, leading to total revenue in Q2 of $2.085 billion, also growth of 17%.

Zane: Thanks, Carl, and thank you to everyone for joining today's call.

Zane Rowe: Thanks, Carl.

Zane: Thanks, Carl and thank you to everyone for joining today's call.

Zane Rowe: And thank you to everyone for joining today's call. Our Q2 performance was slightly ahead of our expectations across all key metrics. Subscription revenue in the second quarter was $1.903 billion, up 17%. Professional services revenue was $182 million in the quarter, leading to total revenue in Q2 of $2.085 billion, also growth of 17%. U.S. Revenue in Q2 totaled $1.56 billion, up 16%, and international revenue totaled $524 million, growing 18%. 12-month subscription revenue backlog, or CRPO, was $6.8 billion at the end of Q2, representing growth of 16%. The year-of-year growth rate was impacted by the strength and last year's renewal activity, including early renewals.

Zane: Our Q2 performance was slightly ahead of our expectations across all key metrics. Subscription revenue in the second quarter was $1.903 billion, up 17%. Professional services revenue was $182 million in the quarter, leading to total revenue in Q2 of $2.085 billion, also growth of 17%. US revenue in Q2 totaled $1.56 billion, up 16%, and international revenue totaled $524 million, growing 18%. 12-month subscription revenue backlog, or CRPO, was $6.8 billion at the end of Q2, representing growth of 16%.

Zane: Q2 performance was slightly ahead of our expectations across all key metrics.

Zane: Subscription revenue in the second quarter was $1 nine 3 billion.

Speaker Change: Up 17%.

Zane: Professional services revenue was $182 million in the quarter, leading to total revenue in Q2 of $2 <unk> 5 billion.

Zane: Also growth of 17%.

Zane: U S revenue in Q2 totaled 156 billion up 16% and international revenue totaled $524 million growing 18%.

Zane Rowe: U.S, revenue in Q2 totaled $1.56 billion, up 16%, and international revenue totaled $524 million, growing 18%. 12-month subscription revenue backlog, or CRPO, was $6.8 billion at the end of Q2, representing growth of 16%. The year-of-year growth rate was impacted by the strength and last year's renewal activity, including early renewals. Gross and net revenue retention rates remained strong at over 95% and over 100% respectively. Total subscription revenue backlog at the end of the quarter was $21.58 billion, up 21%.

Zane: 12 months subscription revenue backlog or <unk> was $6 8 billion at the end of Q2 representing growth of 16%.

Zane: The year-of-year growth rate was impacted by the strength and last year's renewal activity, including early renewals.

Zane: The year over year growth rate was impacted by the strength in last year's renewal activity, including early renewals.

Zane: Growth and net revenue retention rates remained strong at over 95%, and over 100% respectively. Total subscription revenue backlog at the end of the quarter was $21.58 billion, up 21%.

Zane Rowe: Gross and net revenue retention rates remained strong at over 95% and over 100%, respectively. Total subscription revenue backlog at the end of the quarter was $21.58 billion, up 21%. A non-gap operating income for the second quarter was $518 million, resulting in a non-gap operating margin of 24.9%. Q2 operating cash flow was $571 million, growing 34%, driven by strong collections. We accelerated the pace of our buyback in Q2, repurchasing $309 million of our shares at an average price of $223.10 per share. With our existing $500 million buyback authorization nearing completion, our board has authorized a new $1 billion share repurchase program.

Zane: And net revenue retention rates remained strong at over 95% and over 100% respectively.

Zane: Total subscription revenue backlog at the end of the quarter was 20 158 billion up 21%.

Zane: A non-gap operating income for the second quarter was $518 million, resulting in a non-gap operating margin of 24.9%. Q2 operating cash flow was $571 million, growing 34%, driven by strong collections.

Zane Rowe: A non-gap operating income for the second quarter was $518 million, resulting in a non-gap operating margin of 24.9%. Q2 operating cash flow was $571 million, growing 34%, driven by strong collections. We accelerated the pace of our buyback in Q2, repurchasing $309 million of our shares at an average price of $223.10 per share. With our existing $500 million buyback authorization nearing completion, our board has authorized a new $1 billion share repurchased program.

Zane: Our non-GAAP operating income for the second quarter was $518 million, resulting in a non-GAAP operating margin of 24, 9%.

Zane: Q2, operating cash flow was $571 million growing 34% driven by strong collections.

Zane: We accelerated the pace of our buyback in Q2, repurchasing $309 million of our shares at an average price of $223.10 per share. With our existing $500 million buyback authorization nearing completion, our board has authorized a new $1 billion share repurchase program.

Zane: We accelerated the pace of our buyback in Q2 repurchasing $309 million of our shares at an average price of $223 10 per share with our existing $500 million buyback authorization nearing completion, our board has authorized a new $1 billion share repurchase program.

Zane Rowe: We remained committed to investing in organic growth, pursuing strategic M&A opportunities, and managing delusion while returning excess capital to shareholders via share repurchases. We ended the quarter with $7.4 billion in cash and marketable securities.

Zane: We remain committed to investing in organic growth.

Zane: We remained committed to investing in organic growth, pursuing strategic M&A opportunities, and managing delusion while returning excess capital to shareholders via share repurchases.

Zane: <unk> strategic M&A opportunities and managing dilution, while returning excess capital to shareholders via share repurchases.

Zane: We ended the quarter with $7.4 billion in cash and marketable securities.

Zane: We ended the quarter was $7 4 billion in cash and marketable securities.

Zane Rowe: As of July 31, headcount stood at over 19,900 workmates around the globe. Deb.

Zane: As of July 31, headcount stood at over 19,900 workmates around the globe.

Zane: As of July 31, head count stood at over 19900 Workmates around the globe.

Zane: Deb.

Zane Rowe: Deb. Now turning to guidance. As Carl indicated, we continue to see the macro environment consistent with our last quarter, including moderated head count growth within our customer base. And as we discuss last quarter, we expect these trends to continue. We are reiterating our full year FY25 subscription revenue guidance of $7.7 billion to $7.725 billion, growth of approximately 17%. We expect Q3 FY25 subscription revenue to be $1.95 billion, growth of 16%. We expect FY25 professional services revenue of approximately $680 million to $690 million, driven by customer demand.

Zane Rowe: Now turning to guidance. As Carl indicated, we continue to see the macro environment consistent with our last quarter, including moderated head count growth within our customer base. And as we discussed last quarter, we expect these trends to continue. We are reiterating our full year FY 25 subscription revenue guidance of $7.7 billion to $7.725 billion, growth of approximately 17%. We expect Q3 FY 25 subscription revenue to be $1.95 billion, growth of 16%. We expect FY 25 professional services revenue of approximately $680 million to $690 million, driven by customer demand. For Q3, we expect professional services revenue of $175 million.

Zane: Now turning to guidance.

Zane: Now turning to guidance as Carl indicated we continue to see the macro environment consistent with our last quarter, including moderated head count growth within our customer base and as we discussed last quarter. We expect these trends to continue.

Zane: As Carl indicated, we continue to see the macro environment consistent with our last quarter, including moderated head count growth within our customer base.

Zane: And as we discuss last quarter, we expect these trends to continue.

Carl: We are reiterating our full year FY25 subscription revenue guidance of $7.7 billion to $7.725 billion, growth of approximately 17%. We expect Q3 FY25 subscription revenue to be $1.95 billion, growth of 16%. We expect FY25 professional services revenue of approximately $680 million to $690 million driven by customer demand.

Carl: We are reiterating our full year FY 'twenty five subscription revenue guidance of $7 7 billion.

Carl: To 772 5 billion.

Speaker Change: Growth of approximately 17%.

Speaker Change: We expect Q3, FY 'twenty five subscription revenue to be $195 5 billion.

Speaker Change: Growth of 16%.

Speaker Change: We expect FY 'twenty five professional services revenue of approximately $680 million to $690 million driven by customer demand for Q3, we expect professional services revenue of $175 million.

Speaker Change: For Q3, we expect professional services revenue of $175 million.

Zane Rowe: For Q3, we expect professional services revenue of $175 million. Turning to backlog in Q3, we expect CRPO growth also to be impacted by last year's strong early renewal activity. As a reminder, last year the gap between CRPO growth and subscription revenue growth was roughly 4 percentage points in Q3. As we left the strong renewal activity from last year, we expect CRPO growth of 14% to 15% for Q3. While the growth rate is impacted by the timing of renewals, the aggregate CRPO level supports our view of subscription revenue growth of approximately 16% for the second half of the year.

Zane Rowe: Turning to backlog, in Q3, we expect CRPO growth also to be impacted by last year's strong early renewal activity. As a reminder, last year the gap between CRPO growth and subscription revenue growth was roughly 4 percentage points in Q3. As we lap the strong renewal activity from last year, we expect CRPO growth of 14% to 15% for Q3. While the growth rate is impacted by the timing of renewals, the aggregate CRPO level supports our view of subscription revenue growth of approximately 16% for the second half of the year. We continue to balance both targeted investments in key growth areas with increased focus on end-to-end company-wide efficiencies and transformation.

Speaker Change: Turning to backlog, in Q3, we expect CRPO growth also to be impacted by last year's strong early renewal activity. As a reminder, last year the gap between CRPO growth and subscription revenue growth was roughly 4 percentage points in Q3. As we lap the strong renewal activity from last year, we expect CRPO growth of 14% to 15% for Q3.

Speaker Change: Turning to backlog in Q3, we expect <unk> growth also to be impacted by last year's strong early renewal activity.

As a reminder, last year the gap between <unk> growth and subscription revenue growth was roughly four percentage points in Q3.

Speaker Change: As we lap the strong renewal activity from last year, we expect <unk> growth of 14% to 15% for Q3.

Speaker Change: While the growth rate is impacted by the timing of renewals, the aggregate CRPO level supports our view of subscription revenue growth of approximately 16% for the second half of the year.

While the growth rate is impacted by the timing of renewals the aggregate CR peer level supports our view of subscription revenue growth of approximately 16% for the second half of the year.

Speaker Change: We continue to balance both targeted investments in key growth areas with increased focus on end-to-end company-wide efficiencies and transformation.

Speaker Change: We continue to balance both targeted investments in key growth areas with increased focused on end to end companywide efficiencies and transformation.

Zane Rowe: We continue to balance both targeted investments in key growth areas with increased focus on end-to-end company-wide efficiencies and transformation. We now expect FY25 non-gap operating margin of 25.25%. For Q3, we also expect non-gap operating margin of 25.25%. Gap operating margin for the third quarter and full year are expected to be approximately 19 and 20 percentage points lower than the non-gap margins respectively. The FY25 non-gap tax rate remains at 19%. We're increasing our FY25 operating cash flow expectations to $2.350 billion and we continue to expect capital expenditures of approximately $330 million.

Zane Rowe: We now expect FY 25 non-GAAP operating margin of 25.25%. For Q3, we also expect non-GAAP operating margin of 25.25%. Gap operating margin for the third quarter and full year are expected to be approximately 19 and 20 percentage points lower than the non-GAAP margins, respectively. The FY 25 non-gap tax rate remains at 19%. We're increasing our FY 25 operating cash flow expectations to $2.350 billion, and we continue to expect capital expenditures of approximately $330 million. Over the past year, we've made good progress across our key growth areas. While the number of these initiatives are still in their early development, they are already supporting growth in FY 25 as well as for future years as they scale across our products and geographies.

Speaker Change: We now expect FY25 non-gap operating margin of 25.25%.

Speaker Change: We now expect FY 'twenty, five non-GAAP operating margin of 25% to 5%.

Speaker Change: For Q3, we also expect non-gap operating margin of 25.25%. Gap operating margin for the third quarter and full year are expected to be approximately 19 and 20 percentage points lower than the non-gap margins respectively.

Speaker Change: For Q3, we also expect non-GAAP operating margin of $25 two 5%.

Speaker Change: GAAP operating margin for the third quarter and full year are expected to be approximately 19, and 20 percentage points lower than the non-GAAP margins respectively.

Speaker Change: The FY 'twenty five non-GAAP tax rate remains at 19%.

Speaker Change: The FY25 non-gap tax rate remains at 19%. We're increasing our FY25 operating cash flow expectations to $2.350 billion and we continue to expect capital expenditures of approximately $330 million.

Speaker Change: We are increasing our FY 'twenty five operating cash flow expectations to 2350 $1 billion.

Speaker Change: And we continue to expect capital expenditures of approximately $330 million.

Speaker Change: Over the past year, we've made good progress across our key growth areas. While the number of these initiatives are still in their early development, they are already supporting growth in FY25 as well as for future years as they scale across our products and geographies.

Speaker Change: Over the past year, we've made good progress across our key growth areas.

Zane Rowe: Over the past year, we've made good progress across our key growth areas. While the number of these initiatives are still in their early development, they are already supporting growth in FY25 as well as for future years as they scale across our products and geographies. Our focus areas have been ramping over the past year, providing us better insight into how their growth trajectories augment our core business. As we incorporate this into our planning, along with the current environment, we now expect subscription revenue growth in the midteens for both FY26 and FY27.

Speaker Change: A number of these initiatives are still in their early development. They are already supporting growth in FY 'twenty five as well as for future years as they scale across our products and geographies.

Zane Rowe: Our focus areas have been ramping over the past year, providing us better insight into how their growth trajectories augment our core business. As we incorporate this into our planning, along with the current environment, we now expect subscription revenue growth in the midteens for both FY 26 and FY 27. We're seeing success across full suite opportunities, the partner ecosystem, and international markets, along with emerging areas like Federal and Belt-on-Work Day, which help reinforce our conviction in enduring growth as we strengthen our market leadership in Cloud ERP. In addition, we now expect to deliver greater margin expansion than previously planned.

Speaker Change: Our focus areas have been ramping over the past year, providing us better insight into how their growth trajectories augment our core business. As we incorporate this into our planning, along with the current environment, we now expect subscription revenue growth in the midteens for both FY26 and FY27.

Speaker Change: Our focus areas have been ramping over the past year, providing us better insight into how their growth trajectories augment our core business as we incorporate this into our planning along with the current environment. We now expect subscription revenue growth in the mid teens for both FY 'twenty six and FY 'twenty seven.

Speaker Change: We're seeing success across full suite opportunities, the partner ecosystem and international markets, along with emerging areas like federal and built on workday, which help reinforce our conviction in enduring growth as we strengthen our market leadership in Cloud ERP.

Zane Rowe: We're seeing success across full suite opportunities, the partner ecosystem, and international markets, along with emerging areas like federal and built-on workday, which help reinforce our conviction in enduring growth as we strengthen our market leadership in Cloud ERP. In addition, we now expect to deliver greater margin expansion than previously planned. Investing to support durable growth remains a core focus, and at the same time we've made progress driving efficiencies as we continue to scale the business globally.

Speaker Change: Seeing success across a full suite opportunities the partner ecosystem in international markets, along with emerging areas like federal and bolt on workday, which help reinforce our conviction and enduring growth as we strengthen our market leadership in cloud ERP.

Speaker Change: In addition, we now expect to deliver greater margin expansion than previously planned.

Zane Rowe: Investing to support durable growth remains a core focus, and at the same time we've made progress driving efficiencies as we continue to scale the business globally. We are relentlessly focused on scaling all of our processes across the company as we review our product and go-to-market initiatives. We're also becoming increasingly more targeted in our growth investments, balancing product developments with go-to-market resources. With this, we are driving to enhance ROI across our portfolio while we continue to execute on opportunities to drive growth in the business. With that context and assuming M&A levels consistent with recent history, our updated expectations for FY26 and FY27 are for annual subscription revenue growth of approximately 15%, while expanding non-GAAP operating margin to 30% over the same period.

Speaker Change: Investing to support durable growth remains of core focus, and at the same time we've made progress driving efficiencies as we continue to scale the business globally.

Speaker Change: Investing to support durable growth remains a core focus and at the same time, we've made progress driving efficiencies as we continue to scale the business globally.

Speaker Change: We are relentlessly focused on scaling all of our processes across the company as we review our product and go to market initiatives.

Zane Rowe: We are relentlessly focused on scaling all of our processes across the company as we review our product and go to market initiatives. We're also becoming increasingly more targeted in our growth investments, balancing product developments with go-to-market resources. With this we are driving to enhance ROI across our portfolio, while we continue to execute on opportunities to drive growth in the business. With that context and assuming M&A levels consistent with recent history, our updated expectations for FY26 and FY27 are for annual subscription revenue growth of approximately 15% while expanding non-gap operating margin to 30% over the same period. This updated framework also increases our expected FY27 cash flow. Our focus remains leveraging the power of the platform to deliver durable long-term top and bottom line growth.

Speaker Change: We're also becoming increasingly more targeted in our growth investments.

Speaker Change: We're also becoming increasingly more targeted and our growth investments balancing product developments with go to market resources with this we are driving to enhance ROI across our portfolio. While we continue to execute on opportunities to drive growth in the business with that context, and assuming M&A levels consistent with recent.

Speaker Change: Balancing product development with go-to-market resources.

Speaker Change: With this we are driving to enhance ROI across our portfolio while we continue to execute on opportunities to drive growth in the business.

Speaker Change: With that context and assuming M&A levels consistent with recent history, our updated expectations for FY26 and FY27 are for annual subscription revenue growth of approximately 15% while expanding non-gap operating margin to 30% over the same period. This updated framework also increases our expected FY27 cash flow.

Speaker Change: <unk>, our updated expectations for FY, 'twenty, six and FY 'twenty seven or for annual subscription revenue growth of approximately 15%, while expanding non-GAAP operating margin to 30% over the same period. This updated framework also increases our expected FY 'twenty seven cash flow.

Zane Rowe: This updated framework also increases our expected FY27 cash flow. Our focus remains leveraging the power of the platform to deliver durable long-term top and bottom line growth.

Speaker Change: Our focus remains leveraging the power of the platform to deliver durable long term top and bottom line growth.

Speaker Change: Our focus remains leveraging the power of the platform to deliver durable long term top and bottom line growth. We look forward to sharing more at our upcoming financial analyst day on September 17th with that I'll turn it back over to the operator to begin Q&A.

Zane Rowe: We look forward to sharing more at our upcoming Financial Analyst Day on September 17th.

Speaker Change: We look forward to sharing more at our upcoming financial analyst day on September 17th.

Unknown Executive: We look forward to sharing more at our upcoming financial analyst day on September 17th. With that I'll turn it back over to the operator to begin Q&A. Thank you.

Unknown Executive: With that, I'll turn it back over to the operator to begin Q&A. Thank you.

Speaker Change: With that, I'll turn it back over to the operator to begin Q&A.

Speaker Change: Thank you well now be conducting a question and answer session.

Speaker Change: Thank you.

Unknown Executive: Well, now we can open a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you.

Speaker Change: We'll now be conducting a question-and-answer session.

Unknown Executive: We'll now begin with a question-and-answer session. If you would like to ask a question please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your questions from the queue. For participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: If you would like to ask a question, please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star two if you'd like to remove your questions from the queue.

Speaker Change: You May press star two if you'd like to remove your question. Thank you for participating.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Using speaker equipment and may be necessary to pick up your handset before pressing with Barclays.

Speaker Change: One moment please while we pull for questions.

Speaker Change: Please poll for questions.

Kirk <unk>: Thank you. Our first question is from Kirk <unk> with Evercore. Please proceed with your question.

Kirk <unk>: Thank you.

Kirk Materne: Our first question is from Kirk McCurk with Evercore. Please proceed with your question. Yeah, thanks very much, and appreciate the early update on the midterm outlook as we look forward to seeing you guys out in Vegas in a few weeks. But you know, Carl, could you just talk about where you think you can get some additional efficiency efficiency at scale while still investing obviously in places like international. Yeah, I'm sure you go through this a little bit at the analyst day, but I was just kind of curious, you'll wear some places that you guys can continue to get that efficiency because then I know you're not going to want to stop investing in some of these green shoots that you're seeing right now.

Kirk <unk>: Our first question is from Kirk McCurk with Evercore.

Kirk Materne: Our first question is from Kirk McCurk with Evercore. Please proceed with your question. Yeah, thanks very much and appreciate the early update on the midterm outlook as we look forward to seeing you guys out in Vegas in a few weeks. But you know, Carl, can you just talk about where you think you can get some additional efficiency, you know, efficiency at scale while still investing obviously in places like international. Yeah, I'm sure you'll go through this a little bit at the analyst day, but I was just kind of curious, you'll wear some places that you guys can continue to get that efficiency because then I know you're not going to want to stop investing in some of these green shoots that you're saying right now.

Kirk <unk>: Please proceed with your question.

Kirk <unk>: Hi, yes, thanks, very much and I appreciate the early update on the mid term outlook.

Kirk <unk>: Yeah, thanks very much and appreciate the early update on the midterm outlook as we look forward to seeing you guys out in Vegas in a few weeks.

Kirk <unk>: Of course, when you guys aren't in Vegas in a few weeks, but Carl could you just talk about.

Kirk <unk>: But you know, Carl, can you just talk about where you think you can get some additional efficiency, you know, efficiency at scale while still investing, obviously in places like international.

Carl: Where you think you can get some additional efficiency.

Carl: Efficiency at scale, while still investing obviously in places like international.

Speaker Change: Yeah, I'm sure you'd go through this a little bit at the analyst day, but I was just kind of curious, you'll wear some places that you guys can continue to get that efficiency because I know you're not going to want to stop investing in some of these green shoots that you're saying right now.

Speaker Change: Yes, I am sure you go through this and we'll have at the analyst day, but I was just kind of curious.

Speaker Change: There were some places that you guys can continue to get that efficiency, because I know youre not going to want to stop investing in some of these green shoots that youre that youre seeing right now.

Speaker Change: Yes, Thanks, Craig for the question and by the way. Thanks for your preview note I thought it was really well written and as you can see all of the things you highlighted in your preview note. We actually spoke about in our prepared remarks and part of it is what you just asked I wanted to start by just reinforcing our thesis for long term profitable growth.

Speaker Change: Yeah, thanks Kirk for the question.

Carl Eschenbach: Yeah, thanks, Kirk, for the question, and by the way, thanks for your preview note. I thought it was really well written, and as you can see, a lot of things you highlighted in your preview note. What we actually spoke about in our prayer remarks, and part of it is what you just ask.

Kirk Materne: Yeah, thanks Kirk for the question and by the way, thanks for your preview note. I thought it was really well written and as you can see, a lot of things you highlighted in your preview note. What we actually spoke about in our prayer remarks and part of it is what you just ask.

Speaker Change: And by the way, thanks for your preview note.

Speaker Change: I thought it was really well written.

Speaker Change: And as you can see, all the things you highlighted in your preview note, we actually spoke about in our prayer remarks.

Speaker Change: And part of it is what you just ask.

Carl Eschenbach: I want to start by just reinforcing our thesis for long-term profitable growth at scale at Workday. We remain very excited about the opportunity we have ahead, and we think we'll continue to take share in our core markets around HR and finance while, at the same time, continuing to innovate and drive additional operating efficiencies as we think about the broader market. As far as where we think we can get efficiencies, let me start and remind people by saying over the last two and a half years, we've expanded our operating margin by 500 basis points, and now we're talking about moving it up another 500 basis points over the next few years.

Speaker Change: I want to start by just reinforcing our thesis for long term, profitable growth at scale at work day.

Carl Eschenbach: I want to start by just reinforcing our thesis for long term, profitable growth at scale at work day. We remain very excited about the opportunity we have ahead and we think we'll continue to take share in our core markets around HR and finance while at the same time continuing to innovate and drive additional operating efficiencies as we think about the broader market. As far as where we think we can get efficiencies, let me start and remind people by saying over the last two and a half years, we've expanded our operating margin by 500 basis points.

Speaker Change: As scale at Workday, we remain very excited about the opportunity. We have ahead and we think we'll continue to take share in our core markets around HR and finance while at the same time, continuing to innovate and drive additional operating efficiencies as we think about the broader market as far as where we think we can get efficiencies let me.

Speaker Change: We remain very excited about the opportunity we have ahead.

Speaker Change: And we think we'll continue to take share in our core markets around HR and finance while at the same time continuing to innovate and drive additional operating efficiencies as we think about the broader market.

Speaker Change: As far as where we think we can get efficiencies, let me start and remind people by saying over the last two and a half years, we've expanded our operating margin by 500 basis points. And now we're talking about moving it up another 500 basis points over the next few years. So we are finding efficiencies.

Speaker Change: Star and remind people by saying over the last two and a half years, we've expanded our operating margin by 500 basis points and now we're talking about moving it up another 500 basis points over the next few years. So we are finding efficiencies. Some examples of where we're finding efficiencies is in our global workforce.

Carl Eschenbach: And now we're talking about moving it up another 500 basis points over the next few years. So we are finding efficiencies. Some examples of where we're finding efficiencies is in our global workforce strategy, which includes leveraging our current global workforce as well as some of the new offices we brought online in the last six to 12 months like India and Costa Rica. We're also being smart and prudent about what we're hiring going forward and specifically we're focusing on quota carrying capacity as well as continuing to invest in software development on our product and technology side of the business.

Carl Eschenbach: So we are finding efficiencies. Some examples of where we're finding efficiencies is in our global workforce strategy, which includes leveraging our current global workforce as well as some of the new offices we brought online in the last six to 12 months, like India and Costa Rica. We're also being smart and prudent about what we're hiring going forward, and specifically we're focusing on quota carrying capacity, as well as continuing to invest in software development on our product and technology side of the business. We also are finding operating efficiencies internally across our systems and our technology. We're using AI in our finance organization, we're using AI in our call centers and our support organization, and we're also using AI like co pilots and software development to drive efficiencies.

Speaker Change: Some examples of where we're finding efficiencies is in our global workforce strategy, which includes leveraging our current global workforce as well as some of the new offices we brought online in the last six to 12 months, like India and Costa Rica.

Speaker Change: G, which includes leveraging our current global workforce as well as some of the new offices, we brought online in the last six to 12 months like India in Costa Rica, We're also being smart and prudent about what we're hiring going forward and specifically, we're focusing on quota carrying capacity as well.

Speaker Change: We're also being smart and prudent about what we're hiring going forward and specifically we're focusing on quota carrying capacity as well as continuing to invest in software development on our product and technology side of the business.

Speaker Change: Continuing to invest in software development on our product and technology side of the business. We also are finding operating efficiencies in sort of internally across our systems and our technology, we're using AI in our finance organization, we're using AI in our call centers and our support organization.

Speaker Change: We also are finding operating efficiencies internally across our systems and our technology.

Carl Eschenbach: We also are finding operating efficiencies internally across our systems and our technology. We're using AI in our finance organization. We're using AI in our call centers and our support organization. And we're also using AI like co-pilots and software development to drive efficiencies. And the last thing I'd say Kirk, to kind of combine your questions here is number one, some of the investment areas we've leaned into over the last two years are actually starting to drive operating efficiencies of scale for us.

Speaker Change: We're using AI in our finance organization, we're using AI in our call centers and our support organization.

Kirk <unk>: And we're also using AI like co pilots in software development to drive efficiencies and the last thing I'd say Kirk to kind of combine your questions. Here is number one some of the investment areas. We've leaned into over the last two years are actually starting to drive operating efficiencies with scale for us for example.

Kirk <unk>: And we're also using AI like co-pilots and software development to drive efficiencies.

Carl Eschenbach: And the last thing I'd say, Kirk, to kind of combine your questions here is, number one, some of the investment areas we've leaned into over the last two years are actually starting to drive operating efficiencies of scale for us. For example, we spent a lot of time talking about partners. We've highlighted once again our partners today continue to drive a significant portion of our pipeline and actually we're responsible for a 2X growth in new ACV from what they participated or drove in Q1. We're actually starting to see scale now with the big build out we did in our financial sales force.

Kirk <unk>: And the last thing I'd say, Kirk, to kind of combine your questions here is number one, some of the investment areas we've leaned into over the last two years are actually starting to drive operating efficiencies of scale for us.

Carl Eschenbach: For example, we spent a lot of time talking about partners. We highlighted once again our partners today continue to drive a significant portion of our pipeline and actually were responsible for two X growth in new ACV from what they participated or drove in Q1. We're actually starting to see scale now with the big build out we did in our financial sales force. They're all starting to ramp and we're seeing better productivity going forward.

Speaker Change: For example, we spent a lot of time talking about partners.

Speaker Change: <unk>, we spent a lot of time talking about partners. We've highlighted once again our partners today continue to drive a significant portion of our pipeline and actually were responsible for <unk> growth and new ACB from what they participated or drove in Q1, we're actually starting to see scale now with the big buildup.

Speaker Change: We've highlighted once again our partners today continue to drive a significant portion of our pipeline.

Speaker Change: And actually we're responsible for two X growth in new ACV from what they participated or drove in Q1.

Speaker Change: We're actually starting to see scale now with the big build out we did in our financial sales force. They're all starting to ramp and we're seeing better productivity going forward.

Speaker Change: We did in our financial sales force, they're all starting to ramp and we're seeing better productivity going forward. So there are a number of different areas that we're investing in.

Zane Rowe: They're all starting to ramp, and we're seeing better productivity going forward. So there are a number of different areas that we're investing in, and it's actually not only helping us maintain this terrible growth over the next few years, but it's also giving us operational efficiencies at the same time. Hey Kirk, I'll just add this is a, you know, we look at all of these investments with an ROI mentality, and as you've seen over the last number of years where we've outperformed and really leaned in, we've been able to drive bottom line growth and increase our operating margin even versus our expectation.

Speaker Change: So there are a number of different areas that we're investing in and it's actually not only helping us maintain this terrible growth over the next few years, but it's also giving us operational efficiencies at the same time.

Carl Eschenbach: The number of different areas that we're investing in and it's actually not only helping us maintain this terrible growth over the next two years, but it's also giving us operational efficiencies at the same time. Kirk, I'll just add this is saying, we look at all of these investments with an ROI mentality. And as you've seen over the last number of years where we've outperformed and really leaned in, we've been able to drive bottom line growth and increase our operating margin even versus our expectation.

Zane: And it's actually not only helping us maintain this durable growth over the next few years, but it's also giving us operational efficiencies at the same time, Hey, Kirk I'll just add this is Zane we look at all of these investments with an ROI mentality and as you've seen over the last number of years, where we've outperformed and really leaned in we've been able to drive bottom line.

Zane: Hey Kirk, I'll just add this is a, you know, we look at all of these investments with an ROI mentality.

Zane: And as you've seen over the last number of years where we've outperformed and really leaned in, we've been able to drive bottom line growth and increase our operating margin even versus our expectations.

Zane: Growth and increase our operating margin even versus our expectation. So you should expect to hear a little more in this area and three five weeks in Vegas, but we're pleased with the progress have a lot of work to do and we feel like we're never done on just coming up with more efficiencies across the business.

Zane: So you should expect to hear a little more in this area in three and a half weeks in Vegas, but we're pleased with the progress.

Kirk Materne: So you should expect to hear a little more in this area in three and a half weeks in Vegas, but we're pleased with the progress; have a lot of work to do. We feel like we're never done on just coming up with more efficiencies across the list. Thank you very much, guys.

Carl Eschenbach: So you should expect to hear a little more in this area in three and a half weeks in Vegas, but we're pleased with the progress. Have a lot of work to do and we feel like we're never done on just coming up with more efficiencies across the list.

Zane: Have a lot of work to do and we feel like we're never done on just coming up with more efficiencies across the list.

Speaker Change: Lewis.

Unknown Executive: Lewis. Thank you very much, guys. I'll turn some on. Thank you.

Speaker Change: Great.

Speaker Change: Alright, Thank you very much guys I'll turn to <unk>.

Speaker Change: Thank you very much, guys.

Unknown Executive: I'll turn some on. Thank you.

Speaker Change: I'll turn some on.

Speaker Change: Thank you.

Kasthuri Rangan: Our next question is from Kasth Rangan with Goldman Sachs. Please proceed with your question. Hi, thank you very much. Good to see that you guys are taking a more balanced approach to growth and margin.

Speaker Change: Our next question is from Kash Rangan with Goldman Sachs. Please proceed with your question.

Speaker Change: Our next question is from Kasth Rangan with Goldman Sachs.

Kash Rangan: Please proceed with your question.

Kash Rangan: Hi, thank you very much.

Kash Rangan: Alright. Thank you very much good to see that you guys are taking a more balanced approach to growth and margin. One short term question and one long term if I could short term the impact of elections and potentially lower rates. How do you see this playing out curve I know that you will not hear acos to go but I knew famously wanted about volatility in the upcoming Q4 back then and ended up surprising us on the upsell.

Kash Rangan: Good to see that you guys are taking a more balanced approach to growth and margin.

Carl Eschenbach: One short term question, one long term if I could. Short term, the impact of elections and potentially lower rates. How do you see this playing out, Karl? I know that you were not here eight years ago, but Aneel famously warned about volatility in the upcoming Q4 back then and ended up surprising us on the upside as contract activity and renewal activity happened on the upside. So what does your take on the short term?

Kash Rangan: One short term question, one long term if I could.

Kasthuri Rangan: One short term question, one long term, if I could. Short term, the impact of elections and potentially lower rates. How do you see this playing out, Karl? I know that you went out here eight years ago, but Aneel famously warned about volatility in the upcoming Q4 back then and ended up surprising us on the upside as there's contract activity and renewal activity happened on the upside. So what does you take on the short term?

Kash Rangan: Short term, the impact of elections and potentially lower rates.

Kash Rangan: How do you see this playing out, Karl?

Kash Rangan: I know that you went out here eight years ago, but Aneel famously warned about volatility in the upcoming Q4 back then and ended up surprising us on the upside as contract activity and renewal activity happened on the upside.

Zane: Is this contract activity renewal activity happened on the upside. So what is your take on the short term and then one for you Zane longer term.

Zane: So what does you take on the short term?

Carl Eschenbach: And then one for you, Zane, longer term, the expansion and margin. How comfortable can we get that it's not coming at the expense of the ability to reinvigorate growth if you do see that opportunity open up if you get a better spending environment? Thank you so much. Yeah, thanks, Cash. I'll take the first one. Listen, I can't predict the future and the impact of the election one way or the other. But what I do know is the current macro environment we're selling into hasn't changed at all from what we saw on Q1. In fact, we think the current environment of IT spending and the environment we're selling into isn't something that's just been here the last couple of quarters.

Zane: And then one for you, Zane, longer term, the expansion and margin.

Carl Eschenbach: And then one for you, Zane, longer term, the expansion and margin. How comfortable can we get that it's not coming at the expense of the ability to reinvigorate growth if you do see that opportunity open up if you get a better spending environment. Thank you so much. Yeah, thanks, Cash. I'll take the first one. Listen, I can't predict the future and the impact of the election one way or the other, but what I do know is the current macro environment we're selling into hasn't changed at all from what we saw on Q1.

Zane: Expansion in margin.

Zane: How comfortable can we get that it's not coming at the expense of the ability to reinvigorate growth if you do see that opportunity open up if you get a better spending environment?

Comfortable can we get that it's not coming at the expense of the ability to reinvigorate growth. If you do see that opportunity open up if you've got a better spending environment. Thank you so much.

Zane: Thank you so much.

Zane: Yes, Thanks, Kash I'll take the first one listen I.

Zane: Yeah, thanks, Cash.

Zane: I'll take the first one.

Zane: Listen, I can't predict the future and the impact of the election one way or the other, but what I do know is the current macro environment we're selling into hasn't changed at all from what we saw on Q1.

Zane: I can't predict the future and the impact of the election, one way or the other but what I do know is the current macro environment, we're selling into hasnt changed at all from what we saw in Q1. In fact, we think the current environment of it spending in the environment, we're selling into isn't something that's just been here. The last couple of quarters, We think it's the new norm.

Zane: In fact, we think the current environment of IT spending and the environment we're selling into isn't something that's just been here the last couple of quarters. We think it's the new norm going forward. We're prepared because we have a great product.

Carl Eschenbach: In fact, we think the current environment of IT spending and the environment we're selling into isn't something that's just been here the last couple of quarters. We think it's the new norm going forward. We're prepared because we have a great product. We provide a tremendous value proposition to both customers and prospects. And regardless of what we're dealing with in the macro or the elections, we're going to continue to grow our business over the short term and long term because of that powerful value proposition we have.

Zane Rowe: We think it's the new norm going forward. We're prepared because we have a great product. We provide a tremendous value proposition to both customers and prospects. And regardless of what we're dealing with in the macro or the elections, we're going to continue to grow our business over the short term and long term because of that powerful value proposition we have. Yeah, and Cash, just to add your question on longer term, I mean we've done a good job investing and measuring those investments when it's opportunity for us to increase that investment level dependent upon growth or where it comes from.

Zane: <unk> forward, we're prepared because we have a great product, we provide a tremendous value proposition to both customers and prospects and regardless of what we're dealing with in the macro or the elections, we're going to continue to grow our business over the short term and long term because of that powerful value proposition we have.

Zane: We provide a tremendous value proposition to both customers and prospects.

Zane: And regardless of what we're dealing with in the macro or the elections, we're going to continue to grow our business over the short term and long term because of that powerful value proposition we have.

Speaker Change: Yeah, and Cash just to add your question on longer term.

Zane Rowe: Yeah, and Cash, just to add your question on longer term. I mean, we've done a good job investing and measuring those investments when it's opportunity for us to increase that investment level dependent upon growth or where it comes from will be agile and quick to adjust accordingly. But we feel good that we can grow both the top line and the bottom line in this business and make sure that we're investing sufficiently to continue that growth and innovation across the company. So we feel like we've got a good balance here.

Speaker Change: Cash just to add your question on longer term I mean, we've done a good job of investing in and measuring those investments when it's opportunity for us to increase that investment level dependent upon growth of where it comes from we'll be agile and quick to adjust accordingly, but we feel good that we can grow both the topline and the bottom line in this business and make.

Speaker Change: I mean, we've done a good job investing and in measuring those investments when it's opportunity for us to increase that investment level dependent upon growth or where it comes from will be agile and quick to adjust accordingly, but we feel good that we can grow both the top line and the bottom line in this business and make sure that we're investing sufficiently to continue that growth and innovation across the company.

Zane Rowe: We'll be agile and quick to adjust accordingly, but we feel good that we can grow both the top line and the bottom line in this business and make sure that we're investing sufficiently to continue that growth and innovation across the company. So we feel like we've got a good balance here.

Speaker Change: Sure that we're investing sufficiently to continue that growth and innovation across the company. So we feel like we've got a good balance here.

Speaker Change: So we feel like we've got a good balance here.

Unknown Executive: Wonderful. Thank you so much. Well done. Thank you.

Wonderful. Thank you so much.

Speaker Change: Wonderful.

Unknown Executive: Wonderful. Thank you so much. Well done. Thank you.

Speaker Change: Thank you so much.

Speaker Change: Well done.

Speaker Change: Thank you. Our next question is from Mark Murphy with Jpmorgan. Please proceed with your question.

Speaker Change: Thank you.

Mark Murphy: Our next question is from Mark Murphy with JP Morgan. Please proceed with your question.

Speaker Change: Our next question is from Mark Murphy with JP Morgan.

Mark Murphy: Our next question is from Mark Murphy with JP Morgan. Please proceed with your question. Well, thank you so much.

Speaker Change: Please proceed with your question.

Mark Murphy: Well, thank you so much.

Unknown Executive: Thank you so much.

Mark Murphy: Alright, thank you so much.

Mark Murphy: Carl, how would you characterize the cross-currence of AI on software landscape and work day itself at the moment? The reason I ask is you're sitting on this wealth of data. You have the solubility to unlock it. You're not overcharging for AI services like others are. And I'm wondering if that is giving you some type of advantage in the actual AI product adoption and usage somehow, under the radar.

Mark Murphy: Carl, how would you characterize the cross-currence of AI on the software landscape and work day itself at the moment?

Mark Murphy: How would you characterize the crosscurrents of AI on the software landscape and work itself at the moment. The reason I ask is that youre sitting on this wealth.

Mark Murphy: Carl, how would you characterize the cross-currence of AI on the software landscape and work day itself at the moment? The reason I ask is you're sitting on this wealth of data. You have the solubility to unlock it. You're not overcharging for AI services like others are. And I'm wondering if that is giving you some type of advantage in the actual AI product adoption and usage somehow under the radar.

Mark Murphy: The reason I ask is you're sitting on this wealth of data.

Mark Murphy: Of data you have this whole ability to unlock it youre not overcharging for AI services like others are and I am wondering if that is giving you some type of advantage in the actual AI product.

Mark Murphy: You have the solubility to unlock it.

Mark Murphy: You're not overcharging for AI services like others are.

Mark Murphy: And I'm wondering if that is giving you some type of advantage in the actual AI product adoption and usage somehow under the radar.

Speaker Change: The option and usage somehow under the radar, but then on the other side of the ledger as you do re tweak the growth and margin.

Mark Murphy: But then, on the other side of the ledger, as you do retweet the growth in March and the midterm target, do you sense any customers pausing to digest application purchases broadly? Just as they're trying to understand the GPU landscape at the infrastructure layer. Yeah, so I think there were two questions in there, Mark. So I'll try to answer both of them.

Speaker Change: But then on the other side of the ledger, you know, as you do retweet the growth in March and the midterm target, do you sense any customers pausing to digest application purchases broadly just as they're trying to understand, you know, the GPU landscape at the infrastructure layer?

Carl Eschenbach: But then on the other side of the ledger, as you do retweet the growth in March and the midterm target, do you sense any customers pausing to digest application purchases broadly just as they're trying to understand the GPU landscape the AI landscape at the infrastructure layer? Yeah, so I think there was two questions in their marks. I'll try to answer both of them.

Speaker Change: Our mid term target do you sense any customers pausing to digest.

Application purchases broadly just as they're trying to understand the GPU landscape the landscape at the infrastructure layer.

Speaker Change: Yes. So I think there was two questions in your remarks, so I'll try to answer both of them first I'll talk about our approach to monetization. So first we've said we're going to take a very measured multi pronged approach to how we monetize AI first and foremost we're monetizing it through our competitive win rates that are up once again this quarter our <unk>.

Speaker Change: Yeah, so I think there was two questions in their marks.

Speaker Change: I'll try to answer both of them.

Carl Eschenbach: First, I'll talk about our approach to monetization. So first, we've said we're going to take a very measured, multi-pronged approach to how we monetize AI. First and foremost, we're monetizing it to our competitive win rates that are up once again in this quarter. Our renewal rates remain very high, and our customer satisfaction remains very strong. We are also at the same time not rushing to market and saying to our customers, we're going to have an uplift on our pricing just because we have now have more than 50, for example, AI use cases into platform. We think they're entitled to that innovation.

Speaker Change: First, I'll talk about our approach to monetization. So first, we've said we're going to take a very measured, multi-pronged approach to how we monetize AI.

Carl Eschenbach: First, I'll talk about our approach to monetization. So first, we've said we're going to take a very measured, multi-pronged approach to how we monetize AI. First and foremost, we're monetizing it to our competitive win rates that are up once again in this quarter. Our renewal rates remain very high and our customer satisfaction remains very strong. We are also at the same time not rushing to market and saying to our customers, we're going to have an uplift on our pricing just because we have now have more than 50, for example, AI use cases in the platform.

Speaker Change: First and foremost, we're monetizing it to our competitive win rates that are up once again this quarter.

Speaker Change: Our renewal rates remain very high and our customer satisfaction remains very strong.

Speaker Change: <unk> rates remain very high and our customer satisfaction remains very strong. We are also at the same time not rushing to market and saying to our customers. We're going to have an uplift on our pricing just because we have now have more than 50. For example, AI use cases into platform. We think they are entitled to that innovation.

Speaker Change: We are also at the same time not rushing to market and saying to our customers, we're going to have an uplift on our pricing just because we have now had more than 50, for example, AI use cases in the platform.

Speaker Change: We think they're entitled to that innovation.

Carl Eschenbach: We think they're entitled to that innovation. We will, though, when we see opportunity to do so, Mark, we will bring new skews to market where we can help our customers justify spending incremental dollars on AI from workday. For example, talent optimization is one of our fastest growing skews. Extend and now extend pro. Extend pro is an AI platform that allows people to develop and build new applications on top of us. There's a new AI API gateway associated.

Carl Eschenbach: We will, though, when we see opportunity to do so, Mark, we will bring new skews to market where we can help our customers justify spending incremental dollars on AI from Workday. For example, talent optimization. Talent optimization is one of our fastest growing skews. Extend and now extend pro. Extend Pro is an AI platform that allows people to develop and build new applications on top of us. There's a new AI API gateway associated. We have a co-pilot to help people develop software faster, leveraging the AI API. And we also, as you know, last quarter talked about higher score.

Speaker Change: We will, though, when we see opportunity to do so, Mark, we will bring new skews to market where we can help our customers justify spending incremental dollars on AI from workday.

We will though when we see opportunity to do so mark we will bring new skus to market, where we can help our customers justify spending incremental dollars on AI from Workday. For example talent optimization talent optimization is one of our fast one of our fastest growing skus extend and now extend pro <unk>.

Speaker Change: For example, talent optimization is one of our fastest growing skews.

Speaker Change: Extend and now extend pro.

Speaker Change: Extend pro is an AI platform that allows people to develop and build new applications on top of us.

<unk> Pro is an AI platform that allows people to develop and build new applications on top of us there's a new AI API gateway associate it we have a co pilot to help people develop software faster leveraging the AI API and we also as you know last quarter, you talked about higher score higher score.

Speaker Change: There's a new AI API gateway associated.

Speaker Change: We have a co-pilot to help people develop software faster leveraging the AI API.

Carl Eschenbach: We have a co-pilot to help people develop software faster leveraging the AI API. And we also, as you know, last quarter, talked about hired score. Hired score is something we're very excited about. We're in a very early days of this going into the market, but we're seeing a rapid build of the pipeline as people are trying to reduce their recruiting spend because it's one of the biggest spends they have across their platform today when it comes to recruiting.

Speaker Change: And we also, as you know, last quarter, talked about higher score.

Carl Eschenbach: Higher score is something we're very excited about. We're in the very early days of this going into the market. But we're seeing a rapid build of the pipeline as people are trying to reduce their recruiting spend because it's one of the biggest spends they have across their platform today when it comes to recruiting.

Speaker Change: Higher score is something we're very excited about.

Speaker Change: Or is something we're very excited about where in the very early days of this going into the market, but we're seeing a rapid build of the pipeline as people are trying to reduce that.

Speaker Change: We're in a very early days of this going into the market, but we're seeing a rapid build of the pipeline.

Speaker Change: As people are trying to reduce their recruiting spend because it's one of the biggest spends they have across their platform today when it comes to recruiting.

Speaker Change: Sure.

Speaker Change: Recruiting spend because it's one of the biggest spends they have across their platform today when it comes to recruiting and now let me address what we're seeing because we get asked this question all the time Mark.

Carl Eschenbach: And now let me address what we're seeing because we get asked this question all the time, Mark. Are we seeing people spend on AI and not spend, for example, in our case on Workday? We see just the opposite. Well, we see and we hear from our customers. Our customers believe in new prospects as we engage with them. They are investing in AI when they invest in partner with Workday. The reason for that is because of what you said. I think customers are now recognizing the value of AI in Gen AI is only as good as the data you're using to train.

Speaker Change: Now, let me address what we're seeing because we get asked this question all the time, Mark, are we seeing people spend on AI and not spend, for example, in our case on workday?

Carl Eschenbach: Now, let me address what we're seeing because we get asked this question all the time, Mark, are we seeing people spend on AI and not spend, for example, in our case on workday? We see just the opposite. Well, we see and we hear from our customers our customers believe and new prospects as we engage with them. They are investing in AI when they invest in partner with workday. The reason for that is because of what you said.

Mark Murphy: Are we seeing people spend on AI and not spend for example in our case on Workday, we see just the opposite what we see and we hear from our customers our customers believe and new prospects as we engage with them. They are investing in AI when they invest in partner with workday.

Mark Murphy: We see just the opposite.

Mark Murphy: Well, we see and we hear from our customers our customers believe and new prospects as we engage with them.

Mark Murphy: They are investing in AI when they invest in partner with workday.

Speaker Change: The reason for that is because of what you said I think customers are now recognizing the value of AI in Jan AI is only as good as the data youre using to train and we have one that most clean highly curated data sets around HR and finance to drive value for our customers and we think that's a huge.

Speaker Change: The reason for that is because of what you said.

Speaker Change: I think customers are now recognizing that value of AI in Gen AI is only as good as the data you're using to train.

Carl Eschenbach: I think customers are now recognizing the value of AI in Gen AI is only as good as the data you're using to train. And we have one of the most clean, highly curated data sets around HR and finance to drive value for our customers. And we think that's a huge differentiator for us both today and going forward.

Carl Eschenbach: And we have one of the most clean, highly curated data sets around HR and finance to drive value for our customers. And we think that's a huge differentiator for us both today and going forward.

Speaker Change: And we have one of the most clean, highly curated data sets around HR and finance to drive value for our customers. And we think that's a huge differentiator for us both today and going forward.

Speaker Change: <unk> differentiator for us both today and going forward and we can't wait to share more of the AI innovation with everyone, including the entire world at rising in September.

Carl Eschenbach: And we can't wait to share more of the AI innovation with everyone, including the entire world, at Rising in September.

Speaker Change: And we can't wait to share more of the AI innovation with everyone, including the entire world at rising in September.

Unknown Executive: And we can't wait to share more of the AI innovation with everyone, including the entire world at rising in September. Thank you very much. Thank you.

Mark Murphy: Thank you very much.

Speaker Change: Thank you very much.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question is from Brent Thill with Jefferies. Please proceed with your question.

Speaker Change: Thank you.

Brent Thill: Our next question is from Brent Thill with Jefferies. Please proceed with your question. Thanks, Karl. Many of you asked your confidence in the Mint team's growth. What is giving you that underpinning of that the market is going to be there versus continuing to ratchet that number down, which you're lowered that growth rate a bit. What is still giving you the confidence that the market is still in place?

Speaker Change: Our next question is from Brent Thill with Jeffries.

Brent Thill: Our next question is from Brent Thill with Jeffries. Please proceed with your question. Thanks, Carl. Many of you asked your confidence in Mint team's growth. What is giving you that underpinning of that the market is going to be there versus continuing to ratchet that number down, which you're, you know, lowered that growth rate a bit. What is still giving you the confidence that that market is still in place? Thanks, Brent.

Speaker Change: Please proceed with your question.

Brent Thill: Thanks, Carl.

Brent Thill: Thanks Carl.

Brent Thill: Many of you asked your confidence in mentees growth.

Brent Thill: Many have asked your confidence in mid teens growth what is giving you.

Brent Thill: What is giving you that underpinning of that the market is going to be there versus continuing to ratchet that number down which you're lowered that growth rate a bit.

Speaker Change: That underpinning of of.

Speaker Change: The market is going to be there versus continuing to ratchet that number down which you lowered that growth rate a bit.

Speaker Change: What is still giving you the confidence that that market is still in place?

Speaker Change: Still giving you the confidence that that market is still still in place.

Speaker Change: Yeah, thanks, Brent.

Carl Eschenbach: Thanks, Brent. Well, there's a number of reasons I think, you know, not just myself, but all of us here at Workday are confident in that 15% growth rate for the foreseeable future. And that says we scale beyond $10 billion. Number one, the investments we've made, for example, in our partner community and the ecosystem, are paying off. They're building pipeline. They're innovating on top of the platform. They're co-selling with us. They're reselling with us. And we see them continuing to lean into the Workday opportunity more than we've ever seen in the past. We still believe we have a tremendous opportunity internationally.

Speaker Change: Yeah, Thanks, Brent well Theres a number of reasons I think not just myself, but all of US here at work. They are confident in that 15% growth rate for the foreseeable future and thats as we scale beyond $10 billion number one the investments. We've made for example in our partner community and the ecosystem are paying off they are building pipeline.

Speaker Change: Well, there's a number of reasons I think, you know, not just myself, but all of us here at Workday are confident in that 15% growth rate for the foreseeable future.

Carl Eschenbach: Well, there's a number of reasons I think, you know, not just myself, but all of us here at work, they are confident in that 15% growth rate for the foreseeable future. And that says we scale beyond $10 billion. Number one, the investments we've made, for example, in our partner community and the ecosystem are paying off. They're building pipeline. They're innovating on top of the platform. They're co-selling with us. They're reselling with us.

Speaker Change: And that's as we scale beyond $10 billion.

Speaker Change: Number one, the investments we've made, for example, in our partner community and the ecosystem are paying off. They're building pipeline.

Speaker Change: They're innovating on top of the platform.

Speaker Change: They're innovating on top of the platform. They are co selling with us, they're reselling with us and we see them continuing to lean into the workday opportunity more than we've ever seen in the past we still believe we have a tremendous opportunity internationally, we've hired some amazing talent across Europe in the last six months we talk.

Speaker Change: They're co-selling with us.

Speaker Change: They're reselling with us.

Speaker Change: And we see them continuing to lean into the Workday opportunity more than we've ever seen in the past.

Carl Eschenbach: And we see them continuing to lean into the Workday opportunity more than we've ever seen in the past. We still believe we have a tremendous opportunity internationally. We've hired some amazing talent across Europe in the last six months. We talked about new leadership in APAC and in Japan. And we highlighted some of the success they had here this quarter. And we continue to believe that more than 50% of our addressable market opportunity is outside the US that we can go attack.

Speaker Change: We still believe we have a tremendous opportunity internationally. We've hired some amazing talent across Europe in the last six months.

Carl Eschenbach: We've hired some amazing talent across Europe in the last six months. We talked about new leadership in APAC and in Japan. And we highlighted some of the success they had here this quarter. And we continue to believe that more than 50% of our addressable market opportunity is outside the US that we can go attack. We also continue to believe in the opportunity around financials. As all of you know, for the last couple of years, we've leaned in heavily to the financials opportunity because we still see greater than 75% of workloads on premises and they're moving to the cloud.

Speaker Change: We talked about new leadership in APAC and in Japan.

What about new leadership in APAC and in Japan, and we highlighted some of the success <unk> had here this quarter and we continue to believe that more than 50% of our addressable market opportunity is outside the U S. That we can go attack. We also continue to believe in the opportunity around financials as all of you know.

Speaker Change: And we highlighted some of the success they had here this quarter.

Speaker Change: And we continue to believe that more than 50% of our addressable market opportunity is outside the US that we can go attack.

Speaker Change: We also continue to believe in the opportunity around financials. As all of you know, for the last couple years, we've leaned in heavily to the financials opportunity because we still see greater than 75% of workloads on premises and they're moving to the cloud.

Carl Eschenbach: We also continue to believe in the opportunity around financials. As all of you know, for the last couple years, we've leaned in heavily to the financials opportunity because we still see greater than 75% of workloads on premises and they're moving to the cloud. It's not if it's when and when they move to the cloud, we see competitive in rates on our financials platform and full suite or full platform financial solutions with Workday and HCM continuing to rise.

Speaker Change: For the last couple of years, we've leaned in heavily to the financials opportunity because we still see greater than 75% of workloads on premises and they are moving to the cloud it's not if it's when and when they move to the cloud we see competitive win rates on our financials platform and full suite or full platform.

Carl Eschenbach: It's not if it's when. And when they move to the cloud, we see competitive in rates on our financials platform and full sweet or full platform financial solutions with Workday and HCM continuing to rise.

Speaker Change: It's not if it's when and when they move to the cloud, we see competitive in rates on our financials platform and full suite or full platform financial solutions with Workday and HCM continuing to rise.

Speaker Change: <unk> financial solutions, with Workday, and HCM continuing to rise and the last thing that gives us confidence is innovation.

Carl Eschenbach: And the last thing that gives us confidence is innovation. We are driving so much innovation on the Workday platform, leveraging AI and Gen AI. We also continue to believe that the ecosystem will innovate on top of us, leveraging a powerful platform called Extend.

Speaker Change: In the last thing that gives us confidence is innovation.

Speaker Change: We are driving so much innovation on the Workday platform, leveraging AI and Gen AI.

We are driving so much innovation on the workday platform leveraging AI and Gen. II. We also continue to believe that the ecosystem more innovate on top of us leveraging a powerful platform called extend.

Speaker Change: We also continue to believe that the ecosystem will innovate on top of us, leveraging a powerful platform called extend.

Speaker Change: And then finally, M&A.

Carl Eschenbach: And then finally, M&A. We are, I'd say we're inquisitive. We continue to believe there's assets out there that we can look at to help us continue or maintain our growth. But we're going to be smart and prudent as we think about it. So that's the reason that gives us confidence to be able to drive this profitable growth at scale for the next few years.

Carl Eschenbach: And then finally, M&A, we are, I'd say we're inquisitive. We continue to believe there's assets out there that we can look at to help us continue or maintain our growth, but we're going to be smart and prudent as we think about it. So that's the reason that gives us confidence to be able to drive this profitable growth at scale for the next few years. Thanks, Sean. Thank you.

Speaker Change: And then finally.

Speaker Change: M&A, we are we're I'd say, we're an inquisitive we continue to believe theres assets out there that we can look at to help us continue or maintain our growth, but we're going to be smart and prudent as we think about it. So that's the reason that gives us confidence to be able to drive this profitable growth at scale for the next few years.

Speaker Change: I'd say we're inquisitive.

Speaker Change: We continue to believe there's assets out there that we can look at to help us continue or maintain our growth. But we're going to be smart and prudent as we think about it.

Speaker Change: So that's the reason that gives us confidence to be able to drive this profitable growth at scale for the next few years.

Brent Thill: Thanks, Rob.

Thanks Ralph.

Speaker Change: Thanks, Rob.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question is from Brad Sills with Bank of America. Please proceed with your question.

Speaker Change: Thank you.

Brad Selnick: Our next question is from Brad Stills with Bank of America. Please proceed with your question. Oh, wonderful. Thank you so much. I wanted to ask a question, Carl, on some of the comments you made earlier. It sounds like you took a hard look at some of the growth initiatives to determine which ones are going well. And, you know, which ones perhaps could be sources of upside that they're now backing that 15% or, sorry, the mid teens rather growth outlook. Just curious for some color, if you will, on, you know, what were some of the puts and takes?

Speaker Change: Our next question is from Brad Sills with Bank of America.

Brad Selnick: Our next question is from Brad Sills with Bank of America. Please proceed with your question. Oh, wonderful. Thank you so much. I wanted to ask a question, Carl, on some of the comments you made earlier, it sounds like you took a hard look at some of the growth initiatives to determine which ones are going well and which ones perhaps could be sources of upside that they're now backing that 15%. Sorry, the mid teens rather growth outlook.

Speaker Change: Please proceed with your question.

Brad Sills: Oh, wonderful.

Brad Sills: Okay wonderful. Thank you so much I wanted to ask a question Karl on some of the comments you made earlier it sounds like you you took a hard look at some of the growth initiatives to determine which ones are going well and which ones perhaps could be sources of upside that are now backing that 15% or sorry mid teens, rather growth outlook just curious for some <unk>.

Brad Sills: Thank you so much.

Brad Sills: I wanted to ask a question, Carl, on some of the comments you made earlier.

Brad Sills: It sounds like you took a hard look at some of the growth initiatives to determine which ones are going well and which ones perhaps could be sources of upside that they're now backing that 15%.

Brad Sills: I'm sorry, the mid teens rather growth outlook just curious for some color, if you will, on what were some of the puts and takes, what were some of those growth initiatives that you felt more bullish about after having gone, through the one-year review process, which are ones that could perhaps be potential sources of incremental growth in the future.

Carl Eschenbach: Just curious for some color, if you will, on what were some of the puts and takes, what were some of those growth initiatives that you felt more bullish about after having gone, through the one-year review process, which are ones that could perhaps be potential sources of incremental growth in the future. Thank you so much. Yeah, thanks for the question, Brad. You know, we did pause and we looked at all of our growth initiatives.

Speaker Change: Color. If you will on what were some of the puts and takes what were some of those growth initiatives that you felt more bullish about after having gone through the one year review process, which are ones that could perhaps be.

Carl Eschenbach: What were some of those growth initiatives that you felt more bullish about after having gone. Through the one-year review process, which are ones that could perhaps be potential sources of incremental growth in the future. Thank you so much.

Potential sources of incremental growth for the future. Thank you so much.

Speaker Change: Thank you so much.

Carl Eschenbach: Yeah, thanks for the question, Brad. You know, we did pause, and we looked at all of our growth initiatives. Some of them I just articulated, answering the prior question from Brent. And I must admit, as we sat and looked at them, and as we sit here today, we think the growth initiatives we lean into are the right ones. The opportunity around financials, the international opportunity, we thought very hard about the investment we've made in financials, and we think that's the right one. The partner community is clearly paying off. So I don't think, at this time, when we look at those growth initiatives, we would have pulled back on any of them.

Speaker Change: Yes. Thanks for the question, Brad we did pause and we looked at all of our growth initiatives. Some of them might just articulated answering the prior question from Brent and I must admit as we sat and looked at them and as we sit here today, we think the growth initiatives, we lean into are the right ones the opportunity around financials.

Speaker Change: Yeah, thanks for the question, Brad.

Speaker Change: You know, we did pause and we looked at all of our growth initiatives.

Carl Eschenbach: Some of them might just articulate it, answering the prior question from Brent. And I must admit, as we sat and looked at them, and as we sit here today, we think the growth initiatives we lean into are the right ones. The opportunity around financials, the international opportunity, we thought very hard about the investment we've made in financials. And we think that's the right one. The partner community is clearly paying off. So I don't think at this time, when we look at those growth initiatives, we would have pulled back on any of them.

Speaker Change: Some of them I just articulated answering the prior question from Brent.

Speaker Change: And I must admit, as we sat and looked at them, and as we sit here today, we think the growth initiatives we lean into are the right ones.

Speaker Change: The opportunity around financials, the international opportunity, we thought very hard about the investment we've made in financials, and we think that's the right one.

Speaker Change: International opportunity, we thought very hard about the investment we've made in financials and we think that's the right. One the partner community is clearly paying off so I don't think at this time when we look at those growth initiatives, we would've pulled back on any of them were moderating how we're thinking about it going forward, but I think we have the right.

Speaker Change: The partner community is clearly paying off.

Speaker Change: So I don't think at this time, when we look at those growth initiatives, we would have pulled back on any of them.

Carl Eschenbach: We're moderating how we're thinking about it going forward. But I think we have the right investments in the growth opportunities. And that's what gives us confidence and conviction to go attack this big market opportunity. We have globally. So, again, I wouldn't pull back on any of them; though the right investments, they've already started to pay dividends throughout last year and this year, and we think we'll be able to lean into them even more as we go forward.

Speaker Change: We're moderating how we're thinking about it going forward, but I think we have the right investments in the growth opportunities.

Carl Eschenbach: We're moderating how we're thinking about it going forward, but I think we have the right investments in the growth opportunities. And that's what gives us confidence and conviction to go attack this big about market opportunity. We have globally. So again, I wouldn't pull back on any of them, though the right investments, they've already started to pay dividends throughout last year and this year. And we think we'll be able to lean into them even more as we go forward.

Speaker Change: Investments in the growth opportunities and Thats, what gives us confidence and conviction to go attack. This big about market opportunity we have globally.

Carl Eschenbach: One of the things that's really important, as we think about driving operating margin expansion by doing so and becoming more efficient, it allows us to continue to invest back into business across both technology, go to market and potential acquisitions.

Speaker Change: So again I wouldn't pull back on any of them. They are the right investments they've already started to pay dividends throughout last year and this year and we think we'll be able to lean into them even more as we go forward one of the things Thats really important as we think about driving operating margin expansion by doing so and becoming more efficient.

Carl Eschenbach: One of the things that's really important, as we think about driving operating margin expansion, by doing so, and becoming more efficient, it allows us to continue to invest back into business across both technology, go to market, and potential acquisitions. It all comes together through this durable growth that we're mapping out over the next few years.

Brad Sills: It allows us to continue to invest back in the business across both technology go to market and potential acquisitions. It all comes together to this durable growth that we're mapping out over the next few years, Hey, Brad I would just add Carl talked about the M&A component, we remain curious in the market, but over the last year.

Zane Rowe: It all comes together through this durable growth that we're mapping out over the next few years. Hey Brad, I would just add, you know, Karl talked about the M&A component. We remain curious in the market, but if it was the last year, you haven't seen significant M&A on our side driving any incremental growth either as you contemplate the updated outlook. So that's a component of it as well. Thanks so much, Karl. Thanks, Brad. Thank you.

Zane Rowe: Hey, Brad, I would just add, you know, Karl talked about the M&A component. We remain curious in the market, but if it was the last year, you haven't seen significant M&A on our side driving any incremental growth either as you contemplate the updated outlook. So that's a component of it as well. Thanks so much, Karl. Thanks, Brad. Thank you.

<unk> you Havent seen significant M&A on our side driving any incremental growth either as you contemplate the.

Brad Sills: The updated outlook, so that's a component of it as well.

Brad Sills: Thanks, so much Karl and Jean Thanks, Brad.

Speaker Change: Thank you. Our next question is from Michael <unk> with Wells Fargo. Please proceed with your question.

Michael Turrin: Now our next question is from Michael Turin with Wells Fargo. Please proceed with your question. Hey, great. Thanks very much. Appreciate you taking the question.

Michael Turrin: Now our next question is from Michael Turin with Wells Fargo. Please proceed with your question. Hey, great. Thanks very much. Appreciate you taking the question. I was hoping to go back to what drove the change in tone towards more margin here. I think it's what investors have been hoping for, but maybe you could speak to the thought process there and confidence you have in managing the trade-offs and giving a bit more margin here, but making sure you're still well positioned for any rebound.

Michael: Hey, great. Thanks, very much I appreciate you taking the question.

Unknown Executive: I was hoping to go back to what drove the change in tone towards more margin here. I think it's what investors have been hoping for, but maybe you could speak to the thought process there and confidence you have in managing the trade-offs and giving a bit more margin here, but making sure you're still well positioned for any rebound. Thanks. I think there's a couple of things. The current environment that we're selling into, we actually think that's the normal IT spend environment that we'll be seeing going forward. It's not something every quarter we're going to say, how does it compare to the last quarter?

Michael: I was hoping to go back to what drove the change in tone towards more margin here I think thats, what investors have been hoping for but maybe you could speak to the thought process, there and confidence you have in managing the trade offs, and giving a bit more margin here, but making sure you're still well positioned for any rebound.

Speaker Change: I think theres a couple of things.

Michael Turrin: Thanks. I think there's a couple of things. The current environment that we're selling into, we actually think that's the normal IT spend environment that we'll be seeing going forward. It's not something every quarter we're going to say how does it compare to the last quarter, how does it compare, you know, one quarter to the next year or year. We think this is now a normalized and the new norm of IT spend.

Speaker Change: The current environment that we're selling into we actually think thats the normal it spend environment that we'll be seeing going forward. It's not something every quarter, we're going to say how does it compare to last quarter.

Carl Eschenbach: How does it compare, you know, one quarter to the next year or a year? We think this is now a normalized and the new norm of IT spend that, on the back of some of the growth initiatives that we just talked about, we think this is what gives us conviction and confidence in the 15% growth profile going forward. We also think by driving more operating margin, it gives us more apex others to invest in these key growth initiatives as well. So we take, you know, we take a look at the market, we take a look at the opportunity, we take a look at how we're driving the business, our growth initiatives, and all of this came together for us to think about, you know what?

How does that compare one quarter to the next year year over year. We think this is now a normalized and a new norm of it spend.

Michael Turrin: That on the back of some of the growth initiatives that we just talked about, we think this is what gives us conviction and confidence in the 15% growth profile going forward. We also think by driving more operating margin, it gives us more apex others to invest in these key growth initiatives as well. We take a look at the market, we take a look at the opportunity, we take a look at how we're driving the business, our growth initiatives and all of this came together for us to think about, you know what?

Speaker Change: And that's what gives us confidence and conviction to go attack this big about market opportunity we have globally.

Speaker Change: That on the back of some of the growth initiatives that we just talked about we think this is what gives us conviction and confidence in this 15% growth profile going forward. We also think by driving more operating margin. It gives us more opex dollars to invest in these key growth initiatives as well so.

Speaker Change: So again, I wouldn't pull back on any of them, though the right investments, they've already started to pay dividends throughout last year and this year, and we think we'll be able to lean into them even more as we go forward.

Speaker Change: One of the things that's really important, as we think about driving operating margin expansion, by doing so and becoming more efficient, it allows us to continue to invest back into business across both technology, go to market and potential acquisitions.

Speaker Change: We take we take a look at the market we take a look at the opportunity we take a look at how we're driving the business our growth initiatives in all of this came together for us to think about you know what.

Zane Rowe: We can drive really durable growth over a long period of time, and we can do it profitably while all investing in the business.

Speaker Change: It all comes together through this durable growth that we're mapping out over the next few years.

Speaker Change: We can drive really durable growth over a long period of time and we can do it profitably while all investing in the business.

Michael Turrin: We can drive really durable growth over a long period of time and we can do it profitably while all investing in the business. Business. Yeah, I would just add, you know, we've come to better understanding as far as each of each of these areas of growth, what they cost, how we think about those returns over a multi-year period. Karl mentioned some that requires some upfront cost, but we're able to actually ramp a number of those initial investments over this multi-year period.

Zane Rowe: Dennis. Yeah, I would just add, you know, we've come to a better understanding as far as each of these areas of growth, what they cost, how we think about those returns over a multi-year period. Karl mentioned some that requires some upfront cost, but we're able to actually ramp a number of those initial investments over this multi-year period. And then there's just increased focus and discipline around spend across the company. We recognize we need to focus on efficiency systems, people, and process, and we're heavily involved in looking at all of those as we scale the business.

Speaker Change: Hey, Brad, I would just add, you know, Karl talked about the M&A component.

Speaker Change: Yes, I would just add we've come to a better understanding as far as each of each of these areas of growth what they cost how we think about those returns over a multiyear period call mentioned some that require some upfront cost, but we're able to actually ramp a number of those initial investments over this multiyear period and then there's just increased focus and.

Michael Turrin: And then there's just increased focus and discipline around spend across the company. We recognize we need to focus on efficiency systems, people and process, and we're heavily involved in looking at all of those as we scale the business. So we're excited about the future. We believe we can truly invest and innovate, and yet still drive margin improvement. And you've seen us do it over the last number of years, so we just want to continue that momentum. Thanks very clear, nice job. Thank you.

Alan: Alan around spend across the company, we recognize we need to focus on efficiencies systems people and process and we're heavily involved in looking at all of those as we scale. The business. So we're excited about the future. We believe we can truly invest and innovate and yet still drive margin improvement and you've seen us do it over the last number of years. So we just want to continue that mode.

Zane Rowe: So we're excited about the future. We believe we can truly invest and innovate, and yet still drive margin improvement. And you've seen us do it over the last number of years, so we just want to continue that momentum.

<unk>.

Unknown Executive: Thanks, very clear, nice job. Thank you.

Speaker Change: Thanks, very clear nice job.

Alan: Okay.

Alan: Thank you. Our next question is from Raimo <unk> with Barclays. Please proceed with your question.

Raimo Lenschow: Our next question is from Raymo Lenshaw with Barclays. Please proceed with your question. Hey, perfect. Thank you for the new long-term outlook from me as well. And Karl, if you think about the growth in the market, and I get it that you kind of, you know, what we see now is what we have in there.

Raimo Lenschow: Our next question is from Raymo Lenshaw with Barclays. Please proceed with your question. Hey, perfect.

Raimo: Okay perfect. Thank you for the long term outlook for me as well.

Raimo Lenschow: Thank you for the new long-term outlook from me as well. And Karl, if you think about the growth in the market, and I get it that you kind of, you know, what we see now is what we have in there. If you compare the current times and what you were assuming, you're planning a something to what we've seen in the past in terms of spending behaviors and take bubble the way, is this kind of what you think is kind of also long-term something that will continue like this, or is this like for the foreseeable future, let's kind of work with the planning assumption, but you know, there could be a better market at some point in the future.

Alan: Yes.

Speaker Change: If you think about the.

Speaker Change: The growth in the market.

Got it.

Speaker Change: What we see now it won't be happening here.

Carl Eschenbach: If you compare the current times and what you were assuming you're planning a something to what we've seen in the past in terms of spending behaviors and take bubble the way, is this kind of what you think is kind of also long-term, something that will continue like this, or is this like for the foreseeable future, let's kind of work with the planning assumptions. But, you know, there could be a better market at some point in the future. We don't know when, but at some point. Just trying to understand like it will have the market change towards kind of a different growth trajectory, or is it just like what we see in the economy at the moment.

Speaker Change: The current times and what you were assuming your planning assumptions.

Speaker Change: We're seeing in the past in terms of spending behaviors.

The way it did.

Speaker Change: Kind of what Youre seeing.

Speaker Change: Kind of ultra long term something that.

Speaker Change: Like this or is it like $40.

Speaker Change: But you are trail its kind of worked with the planning assumptions.

Speaker Change: But it could be a better market at some point in the future, we don't know when but at some point.

Raimo Lenschow: We don't know when, but at some point, just trying to understand like, you know, has the market changed towards kind of a different growth trajectory, or is it just like what we see in the economy at the moment? Yeah, as I said earlier, we think the current environment is the new norm, and that's what we're basing our medium-term outlook on. That being said, things could change in one direction or the other.

Speaker Change: Just trying to understand.

Market changes towards kind of a different growth trajectory or just like what we see in the economy at the moment.

Carl Eschenbach: Yeah, as I said earlier, we think the current environment is the new norm, and that's what we're basing our medium-term outlook on. That being said, things could change in one direction or the other. We could get tailwind, and we could get employment and headcount growth. We take a moderate approach when we look at headcount. We think people who are doing large transformations of their HR and their finance systems today, at times they pause and they think about it and they sweat their existing asset a bit longer. And when they do so, oh, by the way, those opportunities don't leave our pipeline at all.

Speaker Change: Yeah as I said earlier, we think the current environment is the new norm and that's what we're basing our medium term outlook on that being said things could change in one direction or the other we could get tailwind and we could get employment and head count growth. We've taken a moderate approach when we look at head count.

Speaker Change: We remain curious in the market, but if it was the last year, you haven't seen significant M&A on our side driving any incremental growth either as you contemplate the updated outlook.

Speaker Change: So that's a component of it as well.

Speaker Change: Thanks so much, Karl.

Raimo Lenschow: We could get tailwind, and we could get employment, and headcount growth. We take a moderated approach when we look at headcount. We think people who are doing large transformations of their HR in their finance systems, today at times they pause, and they think about it, and they sweat their existing asset a bit longer. And when they do so, oh by the way, those opportunities don't leave our pipeline at all. And in fact, a lot of times the customer chooses work day, and they just push it out a quarter or two.

Speaker Change: Thanks, Brad.

Speaker Change: We think people who are doing large transformations of their HR and finance systems today at times, they pause and they think about it in a sweat their existing asset a bit longer and when they do so oh by the way those opportunities don't leave our pipeline at all and in fact, a lot of times the customer chooses workday and they just.

Speaker Change: Thank you.

Speaker Change: Our next question is from Michael Turin with Wells Fargo.

Carl Eschenbach: And in fact, a lot of times the customer chooses Workday and they just push it out a quarter or two. Things like that could re-accelerate. So we think it is the new norm. Do we think things can change in the future? They potentially can. And if so, and we get more tailwind, we'll update our model as we think about the next few years. But right now we do think the current environment is consistent in what we'll see going forward.

Speaker Change: Please proceed with your question.

Speaker Change: Putting it out a quarter or two things like that could reaccelerate. So we think it is the new norm do we think things can change in the future they potentially can and if so and we get more tailwind we'll update our model as we think about the next few years, but right now we do think the current environment is consistent and what we'll see going forward.

Raimo Lenschow: Things like that could re-accelerate. So we think it is the new norm. Do we think things can change in the future? They potentially can, and if so, and we get more tailwind, we'll update our model as we think about, you know, the next few years. But right now, we do think the current environment is consistent in what we'll see going forward.

Speaker Change: Hey, great.

Speaker Change: Thanks very much.

Unknown Executive: Perfect.

Speaker Change: Appreciate you taking the question.

Speaker Change: I was hoping to go back to what drove the change in tone towards more margin here.

Speaker Change: I think it's what investors have been hoping for, but maybe you could speak to the thought process there and confidence you have in managing the trade-offs and giving a bit more margin here, but making sure you're still well positioned for any rebound.

Speaker Change: Thanks.

Speaker Change: I think there's a couple of things.

Speaker Change: Perfect and then a question.

Zane Rowe: Then the question for Zane, if you think about like work day historically has been probably over indexing on R&D and probably under indexing a little bit of sales and marketing as we think about the efficiencies going forward, et cetera. How do you think about that mix between those two major drivers? Thank you. Sure. Yeah, broadly I would say it is a mix, and there's always opportunity. We've looked at both innovation R&D spend and how AI can actually help those efforts. And we've got a terrific team. We're doing a lot of innovating, a lot of building out the product, and a lot of growing.

Speaker Change: The current environment that we're selling into, we actually think that's the normal IT spend environment that we'll be seeing going forward.

Zane Rowe: And then the question for Zane, if you think about like work day historically, have been probably over indexing on R&D, and probably under indexing a little bit of sales and marketing, as we think about the efficiency going forward, et cetera, how do you think about that mix between those two major drivers? Thank you. Sure. Yeah, broadly, I would say it is a mix, and there's always opportunity. We've looked at, you know, both innovation R&D spend, and how AI can actually help those efforts.

Speaker Change: If you think about like work they historically have been probably over indexing on R&D.

Speaker Change: Indexing, a little bit all of.

Speaker Change: Sales and marketing as we think about the efficiencies going forward et cetera, how do you think about that mix between those two metrics.

Speaker Change: It's not something every quarter we're going to say, how does it compare the last quarter?

Speaker Change: Thank you.

Speaker Change: Sure Yeah broadly I would say it is a mix and there is.

Speaker Change: How does it compare, you know, one quarter to the next year or a year?

Theres always opportunity we've looked at both innovation R&D spend and how AI can actually help those efforts and we've got a terrific team. We're doing a lot of innovating a lot of building out the product in a lot of growing so I would say look it's balanced across all areas.

Speaker Change: We think this is now a normalized and the new norm of IT spend.

Zane Rowe: And we've got a terrific team. We're doing a lot of innovating, a lot of building out the product, and a lot of growing. So I would say, look, it's balanced across all areas, you know, even on the G&A side, we all believe we can continue to not only innovate, but be more efficient and really think about as we grow around the globe, how we balance that growth with a workforce that's better represented around the globe as well. So I'd say, generally speaking, opportunities on both sides, but we're leveraging those investments we're making. We're all so excited about road maps and all the investments that we're making for the future as well.

Speaker Change: That, on the back of some of the growth initiatives that we just talked about, we think this is what gives us conviction and confidence in this 15% growth profile going forward. We also think by driving more operating margin, it gives us more apex others to invest in these key growth initiatives as well.

Unknown Executive: Thank you.

Speaker Change: So we take, you know, we take a look at the market, we take a look at the opportunity, we take a look at how we're driving the business, our growth initiatives, and all of this came together for us to think about, you know what?

Zane Rowe: So I would say, look, it's balanced across all areas. Even on the G&A side, we all believe we can continue to not only innovate but be more efficient and really think about, as we grow around the globe, how we balance that growth with a workforce that's better represented around the globe as well. So I'd say generally speaking, opportunities on both sides, but we're leveraging those investments we're making. We're all so excited about our road maps and all the investments that we're making for the future as well. Thank you.

Speaker Change: Even on the G&A side, we all believe we can continue to not only innovate but be more efficient and really think about as we grow around the globe, how we balance that growth with a workforce that's better represented around the globe as well so I'd say generally speaking opportunities on both sides, but we're leveraging those investments we're making we're also excited about our roadmaps and all that.

Speaker Change: We can drive really durable growth over a long period of time and we can do it profitably while all investing in the business.

Speaker Change: Dennis.

Speaker Change: Investments that were making for the future as well.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question is from Karl Keirstead with UBS. Please proceed with your question.

Karl Keirstead: Our next question is from Karl Keirstead with UBS. Please proceed with your question. So, you set your midterm free cash flow margin target at 25%, which was pretty well rate on top of your non-GAAP operating margin target. So given that you're raising the ladder by 500 bips to 30%.

Speaker Change: Yeah, I would just add, you know, we've come to better understanding as far as each of each of these areas of growth, what they cost, how we think about those returns over a multi-year period.

Karl Keirstead: Our next question is from Karl Keirstead with UBS. Please proceed with your question. You set your midterm free cash flow margin target at 25%, which was pretty well-rate on top of your non-gap operating margin target. So given that you're raising the ladder by 500 bips to 30%, I can imagine some people on the call will just raise the free cash flow margin up to 35 to keep that relationship solid. I don't know whether you want to comment on that or maybe punt to the investor day, but just on this call, is there any reason why that correlation between those two metrics might be different than what you were thinking a year ago? Thank you. Sure, Karl.

Karl Keirstead: So you set your midterm free cash flow margin target at 25%, which was pretty well right on top of your non-GAAP operating margin target. So given that you are raising the latter by 500 bps to 30% I can imagine some people on the call.

Zane Rowe: I can imagine, some people on the call will just raise the free cash flow margin up to 35 to keep that relationship solid. I don't know whether you want to comment on that or maybe punt to the investor day, but just on this call, is there any reason why that correlation between those two metrics might be different than what you were thinking a year ago? Thank you. Sure, Karl.

Speaker Change: Well just raise the free cash flow margin.

Speaker Change: <unk> to 35% to keep that relationship solid I don't know, whether you want to comment on that or maybe pump to the investor day, but just on this call is there any reason why that correlation between those two metrics might be different than what you were thinking a year ago. Thank you.

Speaker Change: Karl mentioned some that requires some upfront cost, but we're able to actually ramp the number of those initial investments over this multi-year period.

Speaker Change: Sure Yeah broadly speaking I would say, yes, but I don't want to give you all the answers because I'd still want to see you at Investor day in three five weeks I mean, I would point out that we're still ramping in a number of industries, where where the payments don't necessarily correlate with the revenue.

Zane Rowe: Yeah, broadly speaking, I would say yes, but I don't want to give you all the answers because I still want to see you at Investor Day in three and a half weeks. I mean, I would point out that we're still ramping in a number of industries where the payments don't actually correlate with the revenue. These are industries like EDU and other industries like federal, where we've seen good growth there. We're also a taxpayer in the U.S. now. So, you know, stay tuned for what will disclose in three and a half weeks.

Speaker Change: And then there's just increased focus and discipline around spend across the company.

Zane Rowe: Yeah, broadly speaking, I would say yes, but I don't want to give you all the answers because I still want to see you at investor day in three and a half weeks. I mean, I would point out that we're still ramping in a number of industries where the payments don't necessarily correlate with the revenue. These are industries like EDU and other industries like Federal, where we've seen good growth there. We're also a taxpayer in the US now. So, you know, stay tuned for what we'll disclose in three and a half weeks. I don't want to get ahead of myself, at least I'm not sure it'll for then. See you then. Thank you.

Speaker Change: We recognize we need to focus on efficiency systems, people and process.

Speaker Change: And we're heavily involved in looking at all of those as we scale the business.

Speaker Change: These are industries like edge you in other industries like federal where we've seen good growth. There were also a taxpayer.

Speaker Change: So we're excited about the future.

Speaker Change: In the U S. Now so stay tuned for.

Speaker Change: We believe we can truly invest and innovate and yet still drive margin improvement.

Speaker Change: And you've seen us do it over the last number of years, so we just want to continue that momentum.

Speaker Change: For what we'll disclose in three and a half weeks I only get ahead of myself at least got a hurdle for them.

Zane Rowe: I don't get ahead of myself; at least I'm not sure it'll prevent. See you then. Thank you.

Speaker Change: Thank you.

Alex Duke: Okay, our next question is from Alex Duke with Wolf Research. Please proceed with your question. Alex, is your line on mute? Hey, guys, sorry, it was on mute. Can you hear me out? Yeah, we hear you out. You guys, thanks for taking the question.

Alex Duke: Okay, our next question is from Alex Duke with Wolf Research. Please proceed with your question. Alex, does your line on mute? Hey, guys, sorry, it was on mute. Can you hear me out? Yeah, we hear you, Alex. Yeah, thanks for taking the question. I guess maybe for me, talk about a little bit about the vertical, what you're seeing from a pipeline perspective. Should we expect kind of the same vertical strength that we saw in the first half to drive, the booking strength in the second half?

Speaker Change: Our next question is from Alex Zukin with Wolfe Research. Please proceed with your question.

Speaker Change: Thanks for a clear and nice job.

Speaker Change: Thank you.

Speaker Change: Alex is your line on mute.

Speaker Change: Our next question is from Raymo Lenshaw with Barclays.

Hey, guys sorry, it was on mute can you hear me now.

Speaker Change: Please proceed with your question.

Speaker Change: Hey, perfect.

Speaker Change: Thank you for the new long-term outlook from me as well.

Speaker Change: Yes, we hear you Alex.

Alex Zukin: And Karl, if you think about the growth in the market and I get it that you kind of, you know, what we see now is what we have in there.

Alex Zukin: Hey, guys. Thanks for taking the question I guess maybe for me.

Carl Eschenbach: I guess maybe for me, talk a little bit about the vertical, what you're seeing from a pipeline perspective. Should we expect kind of the same vertical strength that we saw in the first half to drive the booking strength in the second half?

Alex Zukin: If you compare the current times and what you were assuming you're planning a something to what we've seen in the past in terms of spending behaviors and take bubble the way.

Alex Zukin: Can you talk about a little bit about the.

Vertical.

Speaker Change: Are you seeing from a pipeline perspective should we expect kind of the same verticals strength that we saw in the first half to drive.

Speaker Change: Is this kind of what you think is kind of also long-term something that will continue like this or is this like for the foreseeable future, let's kind of work with the planning assumption, but you know, there could be a better market at some point in the future.

Speaker Change: The booking strength in the second half and then on <unk>.

Zane Rowe: And then on the midterm targets, particularly on margins, should we expect that to be linear, should we expect that to be more back-loaded and M&A in the context that sound like there's no change to the kind of M&A strategy that you guys have conducted. I just want to be sure that's what you're applying in the term target setting.

Speaker Change: We don't know when, but at some point, just trying to understand like it will have the market change towards kind of a different growth trajectory or just like what we see in the economy at the moment.

Alex Duke: And then on the midterm targets, particularly on margins, should we expect that to be linear, should we expect that to be more back-end loaded and M&A in the context that sound like there's no change to the kind of M&A strategy that you guys have conducted. I just want to be sure that's what you're implying in the term target setting.

Speaker Change: Midterm targets, particularly on on margins.

Speaker Change: Should we expect that to be linear should we expect that to be more backend loaded and M&A in the context. It sounds like there is no change to the kind of M&A strategy that you guys have conducted I just want to be sure.

Speaker Change: Yeah, as I said earlier, we think the current environment is the new norm, and that's what we're basing on our medium-term outlook on.

Speaker Change: That being said, things could change in one direction or the other.

Speaker Change: We could get tailwind and we could get employment and headcount growth.

Speaker Change: Sure.

Speaker Change: The term target.

Speaker Change: Sure.

Doug Robinson: Jay, why don't you start? Take the last question. Sure, and I'll jump in there. Yeah, as we think about that growth, I'd say evenly balanced. Similar to what I mentioned, a car will give you a little bit more detail on that in three and a half weeks. But generally speaking, evenly balanced, maybe a little more scared towards FY27, but we've got a number of initiatives, and obviously we're pleased to see the growth that we've seen even this year. So, more to come on that front.

Jamie: Jamie why don't you start take the last question I will jump in as we think about that growth I'd say evenly balanced similar to what I mentioned of Carl will give you a little bit more detail on that.

Jamie: We take in a moderated approach when we look at headcount.

Zane Rowe: Zayn, why don't you start take the last question? Sure, and I'll jump in. Yeah, as we think about that growth, I'd say evenly balanced. Similar to what I mentioned, the car will give you a little bit more detail on that in three and a half weeks. But generally speaking evenly balanced, maybe a little more skewed towards FY27. But we've got a number of initiatives, and obviously we're pleased to see the growth that we've seen even this year. So more to come on that front.

Jamie: We think people who are doing large transformations of their HR in their finance systems, today at times they pause and they think about it and they sweat their existing asset a bit longer.

Carl: And three five weeks, but generally speaking evenly balanced maybe a little more skewed towards <unk>.

Karl Keirstead: 'twenty seven, but we've got a number of initiatives and obviously, we're pleased to see the growth that we've seen even this year so more to come on that front I'll hand, it over to Karl yes, and on the industry verticals, we highlighted some in the script, but I'd ask Doug to give a little bit more color on what we're seeing there.

Doug Robinson: Yeah, and then industry verticals, we highlighted some in the script, but I'd ask Doug to give a little bit more color on what we're seeing there. Hi, Alex. Doug here. My ears perked up when you asked about pipeline. So yeah, pipeline growth in the industries, you know, has to be strong in is where we're seeing continued strength. So this includes healthcare, of course, but also higher education. And we think both healthcare and higher education are multi-year opportunities for Workday for full suite. In addition to that, state and local, and increasingly the federal business, and hope to share more good news around the Fed business in the second half of the year with you.

Doug Robinson: I'll hand it over to Carl. Yeah, and industry verticals, we highlighted some in the script, but I'd ask Doug to give a little bit more color on what we're seeing there. Yeah, hi, Alex Doug here. My ears perked up when you asked about pipeline. So, yeah, pipeline growth in the industries you know has to be strong in is where we're seeing continued strength. So that includes healthcare, of course, but also higher education.

Doug: Hey, Alex Doug here My ears, Perked up when you asked about pipelines. So yeah pipeline growth in the in the industry. As you know is to be strong and is where we're seeing continued strength. So that includes health care of course, but also higher education, and we think both health care and higher education are multi year opportunities for <unk>.

Doug: And when they do so, oh, by the way, those opportunities don't leave our pipeline at all.

Doug: And in fact, a lot of times the customer chooses work day and they just push it out a quarter or two.

Doug: Things like that could re-accelerate.

Doug: So we think it is the new norm.

Doug Robinson: And we think both healthcare and higher education are multi-year opportunities for work day for full sweet. In addition to that, state and local, and increasingly the federal business and hope to share more good news around the Fed business in the second half of the year with you. Is it? Drusses, Perfect.

Speaker Change: Workday for full suite in.

Speaker Change: Do we think things can change in the future? They potentially can. And if so, and we get more tailwind, we'll update our model as we think about, you know, the next few years.

Speaker Change: In addition to that state and local and increasingly the federal business and hope to share more good news around the fed business in the second half of the year with you as it progresses.

Speaker Change: But right now we do think the current environment is consistent in what we'll see going forward.

Unknown Executive: Drusses, perfect.

Speaker Change: Perfect.

Speaker Change: Perfect and then maybe just if I sneak one more if I think about the construction.

Carl Eschenbach: Maybe just if I speak one more. If I think about the construction of the growth curve over the next couple of years, and we think about your success going down market versus some of the trends we're seeing in large enterprise, what percentage of, how do we think about that balance? We used to ask that question about financials versus HCM, but if we actually recast it more to the lower end of the market versus the higher end of the market, how would you characterize it?

Doug Robinson: Maybe just if I sneak one more. If I think about the construction of the growth curve over the next couple of years, and we think about your success going down market versus some of the trends we're seeing in large enterprise, what percentage of, how do we think about that balance? We used to ask that question about financials versus HCM, but if we actually recast it more to the lower end of the market versus the higher end of the market, how would you characterize it?

Speaker Change: The growth curve over the next year.

Speaker Change: A couple of years, when we think about your success going down market versus some of the trends we're seeing in large enterprise.

Speaker Change: And then the question for Zane, if you think about like work day historically has been probably over indexing on R&D and probably under indexing a little bit of sales and marketing, as we think about the efficiency is going forward, et cetera.

Speaker Change: What percentage.

Speaker Change: How do we think about that balance we used to ask that question about financials versus HCM, but if we actually recaptured more too.

Speaker Change: How do you think about that mix between those two major drivers?

The lower end of the market versus buyer in this market.

Speaker Change: Would you characterize it.

Speaker Change: Yes. So let me answer that question as you know we've had historically had a lot of success in large enterprise and in industries and verticals like Doug just mentioned and we've been pushing down into what we call the medium enterprise or the emerging enterprise quite aggressively one of the reasons. We're doing that is because we're having a lot of success.

Carl Eschenbach: Yeah, so let me answer that question. As you know, we've had historically had a lot of success in large enterprise and in industries and verticals like Doug just mentioned, and we've been pushing down into what we call the medium enterprise or the emerging enterprise quite aggressively. One of the reasons we're doing that is because we're having a lot of success selling full sweet or full platform deals, which is the combination of both financials as well as HCM. And we continue to see that as an area of strength for us going forward. We've modified our pricing and our packaging for those markets.

Speaker Change: Thank you.

Doug Robinson: Yeah, so let me answer that question. As you know, we've had historically had a lot of success in large enterprise and in industries and verticals like Doug just mentioned, and we've been pushing down into what we call the medium enterprise or the emerging enterprise quite aggressively. One of the reasons we're doing that is because we're having a lot of success selling full sweet or full platform deals, which is the combination of both financials, as well as HCM.

Speaker Change: Sure.

Doug Robinson: And we continue to see that as an area of strength for us going forward. We've modified our pricing and our packaging for those markets. We've also now have new delivery capabilities to accelerate deployment. So customers get better and faster value from from the medium enterprise market. And our partners are also leaning in and helping us drive faster adoption in that market as well. So the medium enterprise, both here in the US, we've taken a look at the market.

Speaker Change: Yeah, broadly, I would say it is a mix and there's always opportunity.

Speaker Change: Selling full suite or full platform deals, which is a combination of both financials as.

As well as HCM and we continue to see that as a area of strength for us going forward, we've modified our pricing and our packaging for those markets. We've also now have new delivery capabilities to accelerate deployment, so customers get better and faster value from from the medium enterprise market.

Speaker Change: We've looked at both innovation R&D spend and how AI can actually help those efforts.

Speaker Change: And we've got a terrific team.

Unknown Executive: We've also now have new delivery capabilities to accelerate deployment. So customers get better and faster value from the medium enterprise market, and our partners are also leaning in and helping us drive faster adoption in that market as well. So the medium enterprise both here in the US, we've taken a playbook from the US, we're pushing it globally. It's in the UK, and it's spreading throughout Europe, and we'll be doing the same in APAC. So it's an area of strength, it's an area of opportunity, and it's something we'll continue to lean into on the go to market side as well as the product side as we think about pricing and packaging.

Speaker Change: We're doing a lot of innovating, a lot of building out the product and a lot of growing.

Speaker Change: So I would say look, it's balanced across all areas, you know, even on the G&A side, we all believe we can continue to not only innovate but be more efficient and really think about as we grow around the globe, how we balance that growth with a workforce that's better represented around the globe as well.

Our partners are also leaning in and helping us drive faster adoption in that in that market as well. So the medium enterprise both here in the U S. We've taken a playbook from the U S. We're pushing it globally. It's in the it's in the U K and it's spreading throughout Europe, and we will be doing the same in APAC. So it's an area of strength, it's an area of opportunity and it's something we will.

Speaker Change: So I'd say generally speaking opportunities on both sides, but we're leveraging those investments we're making.

Doug Robinson: In the playbook from the US, we're pushing it globally. It's in the UK and it's spreading throughout Europe and we'll be doing the same in APAC. So it's an area of strength. It's an area of opportunity. And it's something we'll continue to lean into on the go to market side as well as the product side as we think about pricing and packaging.

Speaker Change: We're all so excited about road maps and all the investments that we're making for the future as well.

Speaker Change: Thank you.

Unknown Executive: We will now be taking two more questions.

Speaker Change: Our next question is from Karl Keirstead with UBS.

Speaker Change: Please proceed with your question.

Speaker Change: Continuing to lean into on the go to market side as well as the product side, as we think about pricing and packaging.

Unknown Executive: We will now be taking two more questions.

Speaker Change: You set your midterm free cash flow margin target at 25%, which was pretty well-rate on top of your non-gap operating margin target.

Speaker Change: We will now be taking two more questions.

Derek Wood: Our next question is from Derek Wood with TD Cowan. Please proceed with your question. Thanks. I guess for Zane, I know you called out pockets of slower headcount growth during renewals and Q1. So I'd be curious, A, are you seeing this brought in out to more verticals aside from the ones you called out last quarter and tech and retail. And B, are you able to quantify what the degree of change is like, what was average headcount growth historically, and what do you think of the new normal is, and did you adjust for these assumptions in your new medium term growth outlook.

Speaker Change: Our next question is from Derrick Wood with TD Cowen. Please proceed with your question.

Derek Wood: Our next question is from Derek Wood with TD Cowan. Please proceed with your question. Thanks. I guess for Zane, I know you called out pockets of slower headcount growth during renewals and Q1. So I'd be curious, A, are you seeing this broad enough to more verticals aside from the ones you called out last quarter and tech and retail? And B, are you able to quantify what the degree of change is, like what was average headcount growth historically?

Speaker Change: So given that you're raising the ladder by 500 or bips to 30%, I can imagine some people on the call will just raise the free cash flow margin up to 35 to keep that relationship solid.

Speaker Change: Thanks.

Derrick Wood: I don't know whether you want to comment on that or maybe punt to the investor day, but just on this call, is there any reason why that correlation between those two metrics might be different than what you were thinking a year ago?

Derrick Wood: I guess for Zane I know you called out pockets of slower head count growth during renewals in Q1, so I'd be curious.

Derrick Wood: Thank you.

Derrick Wood: Are you seeing this broaden out to more verticals aside from the ones you called out last quarter in tech and retail.

Speaker Change: And B are you able to quantify what the degree of changes like what was the average head count growth historically and what do you think in the new normal as in did you adjust for these assumptions in your and your new medium term growth outlook.

Speaker Change: Sure, Karl.

Speaker Change: Yeah, broadly speaking, I would say yes, but I don't want to give you all the answers because I still want to see you at investor day in three and a half weeks.

Speaker Change: I mean, I would point out that we're still ramping in a number of industries where the payments don't necessarily correlate with the revenue.

Derek Wood: And what do you think in the new normal is and did you adjust for these assumptions in your new medium term growth outlook? Hey, Derek. Yeah, this is a, we've, we look quarter to quarter. Our assumptions have been very similar to what they were in the first quarter that we extrapolated for the year. We've seen consistency there. We made the adjustment for the year. If you were a call last time, I think I mentioned it was approximately $17 million over the extent of the year.

Speaker Change: These are industries like EDU and other industries like Federal, where we've seen good growth there.

Zane Rowe: Hey, Derek. Yeah, this is a, we've, we look quarter to quarter; our assumptions have been very similar to what they were in the first quarter that we extrapolated for the year. We've seen consistency there. We made the adjustment for the year. If you were a call last time, I think I mentioned it was approximately $17 million over the extent of the year. So no significant change there. If anything on a quarter-to-quarter level, we believe the baseline has been about the same. So it's been consistent. We consider it the new norm. It's contemplated in both our FY25 guide as well as our mid-term guide.

Speaker Change: We're also a taxpayer in the U.S, now.

Speaker Change: Hey, Derrick this is zane.

Speaker Change: So, you know, stay tuned for, you know, for what we'll disclose in three and a half weeks.

Speaker Change: We've look quarter to quarter our.

Speaker Change: I don't get ahead of myself, at least I'm not sure it'll be helpful then.

Zane: See you then, and thank you.

Zane: Our assumptions have been very similar to what they were in the first quarter that we extrapolated for the year.

Zane: Okay.

Zane: We've seen consistency there we made the adjustment for the year. If you recall last time I think I mentioned it was approximately $17 million over the extent of the year. So no significant change there if anything on a quarter to quarter level. We believe the baseline spend about the same so it's been consistent we consider it the new norm it's contemplated.

Zane: Our next question is from Alex Dukin with Wolf Research.

Zane: Please proceed with your question.

Zane: Alex, does your line on mute?

Derek Wood: So no significant change there. If anything on a quarter to quarter level, we believe the baseline has been about the same. So it's been consistent. We consider it the new norm. It's contemplated in both our FY25 guide as well as our mid term guide. It's not a significant impact on, on revenue or bookings as we think about it today. Okay, thank you.

Zane: Hey, you guys, sorry, it was on mute.

Derek Wood: Thank you.

Zane: Can you hear me out?

Zane: We hear you, Alex.

Zane: You guys, thanks for taking the question.

Zane: And both our FY 'twenty five guide.

Zane: As well as our midterm guide, it's not a significant impact.

Zane Rowe: It's not a significant impact on revenue or bookings as we think about it today.

Zane: I guess maybe for me, you talked about a little bit about the vertical, what you're seeing from a pipeline perspective.

Zane: On revenue or bookings as we think about it today.

Unknown Executive: Okay. Thank you.

Speaker Change: Okay. Thank you. Thank you.

Thank you. Our last question is from Brad Zelnick with Deutsche Bank. Please proceed with your question.

Speaker Change: Should we expect kind of the same vertical strength that we saw in the first half to drive the booking strength in the second half?

Brad Selnick: Our last question is from Brad Selnick with Deutsche Bank. Please proceed with your question. Great, thanks so much.

Brad Selnick: Our last question is from Brad Selnick with Deutsche Bank. Please proceed with your question. Great, thanks so much. My question is for Karl or perhaps Doug. You know, curious if there are specific areas within Finns that you're particularly excited about? Because we still keep hearing great things about Accounting Center, not just in financial services, but across verticals and even down market. But what would you call out as particularly exciting that can compel customers to adopt and maybe even drive upside ahead?

Speaker Change: And then on the midterm targets, particularly on margins, should we expect that to be, you know, linear?

Brad Zelnick: Should we expect that to be more back-end loaded?

Brad Zelnick: Great. Thanks, So much my question is for Karl or perhaps Doug.

Doug Robinson: My question is for Carl or perhaps Doug. You know, curious if there are specific areas within Fins that you're particularly excited about, because we still keep hearing great things about Accounting Center, not just in financial services, but across verticals and even down market. But what would you call out as particularly exciting that can compel customers to adopt and maybe even drive upside ahead? Yeah, Doug, you want to take that? Yeah, I'll go first. Hi, Brad. Nice to hear from you. Yeah, you hit the first one I hit, which is Accounting Center, and what increasingly, as we've dedicated teams to vertical organizations and vertical selling by industry, each of them with solution consulting, have come up with really interesting and innovative use cases for Accounting Center across industry.

Brad Zelnick: And M&A, in the context, it sounds like there's no change to the kind of M&A strategy that you guys have conducted.

Brad Zelnick: I just want to be sure that's what you're implying in the term target setting.

Brad Zelnick: Curious if there are specific areas within sands that youre, particularly excited about because we still keep hearing great things about accounting center, not just in financial services, but across verticals and even down market, but what would you call out as particularly exciting.

Brad Zelnick: Zayn, why don't you start take the last question?

Speaker Change: Perl customers to adopt and maybe even drive upside ahead.

Speaker Change: Yeah, Doug do you want to take that ill go first hi, Brad Nice nice to hear from you.

Speaker Change: Sure.

Brad Selnick: Yeah, Doug, you want to take that? Yeah, I'll go first. Hi, Brad. Nice to hear from you. Yeah, you hit the first one I'd hit, which is Accounting Center and what increasingly as we've dedicated teams to vertical organizations and vertical selling by industry, each of them with solution consulting have come up with really interesting and innovative use cases for Accounting Center across industry. So while the original thesis of Accounting Center go back five, five years or so, five plus years was for FSI and to support that vertical.

Speaker Change: And I'll jump in.

Speaker Change: Yeah.

Speaker Change: As we think about that growth, I'd say evenly balanced.

Doug: Similar to what I mentioned, a car will give you a little bit more detail on that in three and a half weeks.

Doug: Hit the first one I'd hit which is accounting center and.

Speaker Change #100: But generally speaking evenly balanced, maybe a little more scared towards FY27.

Speaker Change #100: Increasingly as we've dedicated teams to vertical organizations and vertical selling by industry each of them with solution consulting have come up with really interesting and innovative use cases for accounting center across industry. So while the original thesis of accounting Center go back five five.

Doug Robinson: So, while the original thesis of Accounting Center go back five, five years or so, five plus years was for FSI and to support that vertical. It now is selling across industry, as you point out. The second one I'd point out is student. And so student changes the game in higher ed and can drive sort of not just full suite opportunities, but pull through that what you would consider operational ERP in the in that particular industry. So as I answered the earlier question around industries where we see strong pipeline growth, and I mentioned a multi-year opportunity for both healthcare and higher education.

Speaker Change #100: Years, or so five plus years was four <unk> and to support that vertical. It now is selling across industry. As you point out the second one I'd point out is students and so student changes the game in higher Ed and in can drive sort of not just full suite opportunities, but pull through that what you would consider operational ease.

Brad Selnick: It now is selling cross industry as you point out. The second one I'd point out is a student and so student changes the game in higher ed and can drive sort of not just full sweet opportunities, but pull through that what you would consider operational ERP in the in that particular industry. So as I answered the earlier question around industries where we see strong pipeline growth. And I mentioned a multi year opportunity for both healthcare and higher education.

Speaker Change #100: RP.

Speaker Change #101: In the in the in that particular industry. So as I answered. The earlier question around industries, where we see strong pipeline growth and I mentioned, a multi year opportunity for both health care and higher education. Those are too to get me excited and the other one Doug might be workforce planning.

Doug Robinson: Those are two that get me excited.

Brad Selnick: Those are two that get me excited. Another one, Doug, might be workforce planning. We think there's a tight correlation between our HCM platform and financials and workforce planning is something we continue to see momentum, which is an adapt the product that we got a few years ago.

Doug Robinson: Another one, Doug, might be Workforce Planning. We think there's a tight correlation between our HCM platform and financials, and workforce planning is something we continue to see momentum, which is an adaptive product that we got a few years ago. Awesome. Very helpful color. Keep up the good work. Thanks, guys. Thank you.

Doug: Think there's a tight correlation between our HCM platform and financials and workforce planning is something we continue to see momentum, which is and adapt the product that we got.

Speaker Change #101: A few years ago.

Speaker Change #102: Awesome very helpful color keep up the good work thanks guys.

Doug Robinson: Awesome, very helpful color. Keep up the good work. Thanks, guys. Thank you. Ladies and gentlemen, this concludes our question and answer session.

Speaker Change #102: Thank you.

Speaker Change #104: Thank you.

Unknown Executive: Ladies and gentlemen, this concludes our question-and-answer session.

Speaker Change #104: Ladies and gentlemen, this concludes our question and answer session I will now turn the call over to Mr. Eschenbach for closing comments.

Carl Eschenbach: I'll now turn the call over to Mr. Eschenbach for closing comments. Thank you, operator. And thank you again to everyone on the call today. Before we go, I'd like to give a special thanks to our workmates, customers, and partners around the world who continue to fuel work days' growth in success. We're heading into the second half of our fiscal year with strong customer momentum and exciting innovation on our roadmap, and we clearly have a strategy to support our durable growth at scale. Work days value preposition, I believe, and all of my workmates believe has never been stronger.

Carl Eschenbach: I'll now turn the call over to Mr. Eschenbach for closing comments. Thank you operator and thank you again to everyone on the call today. Before we go, I'd like to give a special thanks to our workmates, customers and partners around the world who continue to fuel work days growth in success. We're heading into the second half of our fiscal year with strong customer momentum and exciting innovation on our roadmap and we clearly have a strategy to support our durable growth at scale.

Mr. Eschenbach: Thank you operator, and thank you again to everyone on the call today before we go I'd like to give a special thanks to our workmates customers and partners around the world, who continue to fuel workdays growth and success, we're heading into the second half of our fiscal year with strong customer momentum.

Mr. Eschenbach: But we've got a number of initiatives, and obviously we're pleased to see the growth that we've seen even this year.

Mr. Eschenbach: So more to come on that front.

Mr. Eschenbach: An exciting innovation on our roadmap and we clearly have a strategy to support our durable growth at scale workdays value proposition I believe in all of my Workmates believe has never been stronger organizations of all sizes geographies and industries are turning to us to manage.

Mr. Eschenbach: Behind or over to Carl?

Carl Eschenbach: Work days value preposition, I believe, and all of my workmates believe has never been stronger. Organizations of all sizes, geographies and industries are turning to us to manage their most precious and most important assets. That's their people and their money and it's all on an AI-powered platform. And with the new innovations we're launching at rising, we've never been better positioned to lead them into the future. I look forward to seeing you at rising and financial analysts day in a couple weeks. Operator, we can now close the call and thank you again for everyone attending. This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Mr. Eschenbach: Yeah, and industry verticals, we highlighted some in the script, but I'd ask Doug to give a little bit more color on what we're seeing there.

Carl Eschenbach: Organizations of all sizes, geographies, and industries are turning to us to manage their most precious and most important assets. That's their people and their money. And it's all on an AI-powered platform. And with the new innovations we're launching at Rising, we've never been better positioned to lead them into the future.

Mr. Eschenbach: Their most precious and most important assets that's their people and their money and it's all on an AI powered platform and with the new innovations we're launching at rising we've never been better positioned to lead them into the future I look forward to seeing you at rising and financial analyst day.

Mr. Eschenbach: Yeah.

Mr. Eschenbach: Hi, Alex Doug here.

Carl Eschenbach: I look forward to seeing you at Rising and Financial Analysts Day in a couple weeks.

Mr. Eschenbach: My ears perked up when you asked about pipeline. So yeah, pipeline growth in the industries you know has to be strong in is where we're seeing continued strength.

Speaker Change #106: A couple of weeks operator, we can now close the call and thank you again for everyone attending.

Unknown Executive: Operator, we can now close the call and thank you again for everyone attending. This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Speaker Change #106: So that includes healthcare, of course, but also higher education.

Speaker Change #107: And we think both healthcare and higher education are multi-year opportunities for work day for full suite.

Speaker Change #107: This concludes today's conference you may disconnect your lines at this time. Thank you again for your participation.

Speaker Change #107: In addition to that, state and local, and increasingly the federal business and hope to share more good news around the Fed business in the second half of the year with you.

Speaker Change #107: Is it?

Speaker Change #107: Drusses, Perfect, then maybe just if I sneak one more and if I think about the construction of the growth curve over the next, you know, a couple of years and we think about, you know, your success going down market versus some of the trends we're seeing in large enterprise.

Speaker Change #107: What percentage of, how do we think about that balance?

Speaker Change #107: We used to have that question about, you know, financials versus HDM, but if we actually recast it more to the lower end of the market versus the higher end of the market, how would you characterize it?

Speaker Change #107: Yeah, so let me answer that question.

Speaker Change #107: As you know, we've had historically had a lot of success in large enterprise and in industries and verticals like Doug just mentioned and we've been pushing down into what we call the median enterprise or the emerging enterprise quite aggressively.

Speaker Change #107: One of the reasons we're doing that is because we're having a lot of success selling full sweet or full platform deals, which is the combination of both financials as well as HDM.

Speaker Change #107: And we continue to see that as an area of strength for us going forward.

Speaker Change #107: We've modified our pricing and our packaging for those markets.

Speaker Change #107: We've also now have new delivery capabilities to accelerate deployment.

Speaker Change #107: So customers get better and faster value from the median enterprise market and our partners are also leaning in and helping us drive faster adoption in that market as well.

Speaker Change #107: So the median enterprise, both here in the US, we've taken a playbook from the US.

Speaker Change #107: We're pushing it globally.

Speaker Change #107: It's in the UK and it's spreading throughout Europe and we'll be doing the same in APAC.

Speaker Change #107: So it's an area of strength. It's an area of opportunity and it's something we'll continue to lean into on the go to market side as well as the product side as we think about pricing and packaging.

Speaker Change #107: We will now be taking two more questions.

Speaker Change #107: Our next question is from Derek Wood with TD Cowan.

Speaker Change #107: Please proceed with your question.

Speaker Change #107: Thanks.

Speaker Change #107: I guess for Zane, I know you called out pockets of slower headcount growth during renewals and Q1.

Speaker Change #107: So I'd be curious, A, are you seeing this brought in out to more verticals aside from the ones you called out last quarter and tech and retail?

Speaker Change #107: And B, are you able to quantify what the degree of change is?

Speaker Change #107: Like what was average headcount growth historically?

Speaker Change #107: And what do you think in the new normal is?

Speaker Change #107: And did you adjust for these assumptions in your new median term growth outlook?

Speaker Change #107: Hey, Derek.

Speaker Change #107: Yeah, this is Zane.

Speaker Change #107: We've, we look quarter to quarter.

Speaker Change #107: Our assumptions have been very similar to what they were in the first quarter that we extrapolated for the year. We've seen consistency there.

Speaker Change #107: We made the adjustment for the year.

Speaker Change #107: If you were a call last time, I think I mentioned it was approximately $17 million over the extent of the year.

Speaker Change #107: So no significant change there.

Speaker Change #107: If anything on a quarter to quarter level we believe the baseline has been about the same. So it's been consistent.

Speaker Change #107: We consider it as a new norm.

Speaker Change #107: It's contemplated in both our FY25 guide as well as our mid term guide.

Speaker Change #107: It's not a significant impact on on revenue or bookings as we think about it today.

Speaker Change #107: Okay.

Speaker Change #107: Thank you.

Speaker Change #107: Alright, our last question is from Brad Selnick with Deutsche Bank.

Speaker Change #107: Please proceed with your question.

Speaker Change #107: Great, thanks so much.

Speaker Change #107: My question is for Karl or perhaps Doug.

Speaker Change #107: You know, curious, if there are specific areas within Finns that you're particularly excited about, because we still keep hearing great things about Accounting Center, not just in financial services, but across verticals and even down market.

Speaker Change #107: But what would you call out is particularly exciting that can compel customers to adopt and maybe even drive upside ahead?

Speaker Change #107: Yeah, Doug, you want to take that?

Speaker Change #107: Yeah, I'll go first.

Speaker Change #107: Hi, Brad.

Speaker Change #107: Nice to hear from you.

Speaker Change #107: Yeah, you hit the first one I'd hit, which is Accounting Center.

Speaker Change #107: And what increasingly as we've dedicated teams to vertical organizations and vertical selling by industry, each of them with solution consulting have come up with really interesting and innovative use cases for Accounting Center across industry.

Speaker Change #107: So while the original thesis of Accounting Center go back five, five years or so, five plus years was for FSI and to support that vertical.

Speaker Change #107: It now is selling cross industry as you point out.

Speaker Change #107: The second one I'd point out is a student.

Speaker Change #107: And so student changes the game in higher ed and can drive sort of not just full suite opportunities, but pull through that what you would consider operational ERP in the in that particular industry.

Speaker Change #107: So as I answered the earlier question around industries where we see strong pipeline growth and I mentioned a multi year opportunity for both healthcare and higher education.

Speaker Change #107: And those are two to get me excited.

Speaker Change #107: Another one, Doug, might be workforce planning.

Speaker Change #107: We think there's a tight correlation between our HCM platform and financials and workforce planning is something we continue to see momentum, which is an adaptive product that we got, you know, a few years ago.

Speaker Change #107: Awesome, very helpful color.

Speaker Change #107: Keep up the good work.

Speaker Change #107: Thanks, guys.

Speaker Change #107: Thank you.

Speaker Change #107: Ladies and gentlemen, this concludes our question and answer session.

Speaker Change #107: I'll now turn the call over to Mr. Eschenbach for closing comments.

Speaker Change #107: Thank you, operator.

Speaker Change #107: And thank you again to everyone on the call today.

Speaker Change #107: Before we go, I'd like to give a special thanks to our workmates, customers and partners around the world who continue to fuel work days growth in success.

Speaker Change #107: We're heading into the second half of our fiscal year with strong customer momentum and exciting innovation on our roadmap.

Speaker Change #107: And we clearly have a strategy to support our durable growth at scale.

Speaker Change #107: Work days value preposition.

Speaker Change #107: I believe in all of my workmates believe has never been stronger organizations of all sizes, geographies and industries are turning to us to manage their most precious and most important assets.

Speaker Change #107: That's their people and their money and it's all on an AI-powered platform.

Speaker Change #107: And with the new innovations we're launching at rising, we've never been better positioned to lead them into the future.

Speaker Change #107: I look forward to seeing you at rising and financial analysts day in a couple weeks.

Speaker Change #107: Operator, we can now close the call and thank you again for everyone attending.

Speaker Change #107: This concludes today's conference.

Speaker Change #107: You may disconnect your lines at this time.

Speaker Change #107: Thank you again for your participation.

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