Workday, Inc. · NASDAQ:WDAY
Workday — Investor Day (September 2024)
74 slides from Workday's investor day presentation, Sep 17, 2024
Slide 1: Financial Analyst Day
Financial Analyst Day September 17, 2024
Slide 2: Agenda
Our Platform Opportunity Agenda Carl Eschenbach • CEO AI and Innovation Ali Fuller • SVP, Experience Full Suite Success David Somers • Chief Product Officer International and Partner Momentum Doug Robinson • Co-President Financial Framework Zane Rowe • CFO Q&A
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation may contain forward-looking statements for which there are risks, uncertainties, and assumptions. Forward-looking statements may include any statements regarding our strategies or plans for future operations; growth and opportunities; new features, enhancement
Slide 4: Carl Eschenbach, CEO
Carl Eschenbach CEO
Slide 5: Workday Rising
w | RISING
Slide 6: Showcasing the Power of the Workday Platform
Showcasing the Power of the Workday Platform Illuminate Agents User Experience + AI Assistant Evisort Acquisition
Slide 7: Workday + Evisort: AI-powered document intelligence
Leader in AI-powered document intelligence Unlocks value of unstructured business data Workday + Evisort: AI-powered document intelligence solutions across Workday’s suite of applications
Slide 8: Our Journey
Our Journey $8.4B 2024 2 Total Revenue 19,900+ 95%+ employees gross revenue worldwide retention1 10,500+ 70M+ 2020 global customers users under contract $4.3B 60%+ 30+ 2016 of the F500 offices use Workday worldwide $1.6B 2020 Workday 2012 Extend $274M 2013 AI 2006 2008 2005 Workday Workday Workday F
Slide 9: Diversity = Durable Growth
Diversity = Durable Growth 2024 FY27 and beyond Segmentations Industries Geographies Platform Ecosystem 2024 $8.4B 1 1Represents the midpoint of our guidance for FY25 Total Revenue total revenue.
Slide 10: Value Creation
Value Creation CUSTOMERS * = AT&T BANK OF AMERICA @ ag Oy “ Advent Health il City of Philadelphia
Slide 11: Value Creation
Value Creation CUSTOMERS PARTNERS
Slide 12: Value Creation
Value Creation CUSTOMERS PARTNERS WORKDAY
Slide 13: Value Creation
Value Creation CUSTOMERS PARTNERS WORKDAY Shareholders
Slide 14: The Workday Platform
The Workday Customers’ Workday Marketplace Industry Ecosystem Platform Extensibility and Interoperability Workday Extend Workday Integration Cloud Experience Conversational AI Web Omni-Channel Mobile The Workday Suite HR Finance Planning • Industry Solutions • Analytics Workday Illuminate Intelligen
Slide 15: HCM FINS+
HCM FINS+
Slide 16: $160B TAM: HCM and FINS+
$160B FINS+ HCM TAM TAM estimates based on Workday and third-party data as of 9.17.24.
Slide 17: Medium-Term Outlook
Medium-Term Outlook FY26 and FY27 FY27 ~ 15% Annual 30% Non-GAAP Subscription Operating Margin1 Revenue Growth 1Refer to the Appendix - About Non-GAAP Measures for further details.
Slide 18: Platform Supports Durable Growth: AI
Platform Supports Durable Growth AI • Platform with Data and Context Advantage • Functionality Driving Strong Win Rates • Transformational Areas Expand TAM
Slide 19: Platform Supports Durable Growth: FINS
Platform Supports Durable Growth FINS Full Suite • Financials Focus • Increased TAM and Win Rates • Focus Industries and Medium Enterprise Driving Growth
Slide 20: Platform Supports Durable Growth: International
Platform Supports Durable Growth International • Deployed in 175+ Countries1 • ~50% of TAM is Outside the U.S. 2 • 25% of Current Total Revenue3 1As of 7.31.24. 2TAM estimates based on Workday and third-party data as of 9.17.24. 3For the Trailing Twelve Month (TTM) period ended 7.31.24.
Slide 21: Platform Supports Durable Growth: Partners
Platform Supports Durable Growth Partners • 500+ Sales Partners: 5x Increase1 • ~400 Innovation Partners: 2x Increase2 • Strategic Partnerships Expand TAM 1Increase is based on 9.17.24 relative to 9.27.23. 2Increase is relative to data as of 18 months ago.
Slide 22: Platform Supports Durable Growth
Platform Supports Durable Growth AI FINS International Partners Full Suite
Slide 23: Platform Supports Durable Growth
Platform Supports Durable Growth AI FINS International Partners Emerging Full Suite Growth Areas
Slide 24: Platform Supports Durable Growth: Emerging Growth Areas
Platform Supports Durable Growth Emerging • U.S. Federal Government Growth Areas • Japan • Student • Emerging Enterprise
Slide 25: Platform Supports Durable Growth
Platform Supports Durable Growth AI FINS International Partners Emerging Full Suite Growth Areas
Slide 26: Leadership Team
® Leadership Team dV aii Vat Sm 6m mn Bin 6ou eae VX. Yan WA
Slide 27: Growth Drivers Update
Growth Drivers Update Ali Fuller SVP, Experience David Somers Chief Product Officer Doug Robinson Co-President
Slide 28: Ali Fuller: AI and Innovation
A I A N D I N N O V A T I O N Ali Fuller SVP, Experience
Slide 29: Workday's Unique Positioning
Data and Context Workday’s Unique Platform Approach Positioning Experience 3x Innovation Value Centric Approach
Slide 30: Workday Illuminate
Workday Illuminate AI that fundamentally transforms your business. TRANSFORM Adapts, Learns, and Optimizes Key ASSIST Business Processes ACCELERATE Reduces Cognitive Automates Load for Users to Simplify Routine Tasks nt estme on Inv Return
Slide 31: Workday Illuminate Accelerate
Workday Illuminate Accelerate Getting current work done faster SIMPLIFIED CONTENT CREATION Create easily. Refine intelligently. Create, summarize, and extract information using learned patterns from existing data.
Slide 32: Workday Illuminate Assist
Workday Illuminate Assist Reduces cognitive load DISCOVER AND ACTION Natural language companion through the entire experience. Conversational search and natural language interaction that makes it easy to find what you’re looking for. Generative AI-powered guidance helps complete tasks faster and wit
Slide 33: Workday Illuminate Transform
Manage Foster Equitable Attract the Assigned JRs Process Right Talent Workday Illuminate Identify Job Opps Transform Manage Recruiter Transforms critical business processes Candidates Worker Apply for Job AI AGENTS & ORCHESTRATION AI Partner with Orchestration Interview Hiring Team for Job Autonomou
Slide 34: A Glimpse into Our Recruiter AI Agent
A Glimpse into Our Recruiter AI Agent 25% 1 Increase in Recruiter Capacity You have 3 referral candidates for Req 1245 awaiting your review for over 5 days. View Referrals 1Represents the increase in the average number of requisitions per month in the 10 months after implementing Recruiter AI Agent
Slide 35: A Glimpse into Empowering Managers with AI
A Glimpse into Empowering Managers with AI Great news! Your req is posted! 31% You can copy the following link to share it on your 1 professional networks: www.externalposting.com Open Tasks Reduction in Time-to-Offer Below are your open tasks to ensure your job is filled as quickly as possible with
Slide 36: David Somers: FINS / Full Suite
F I N S / F U L L S U I T E David Somers Chief Product Officer
Slide 37: Driving Growth Across Our Core Markets
Driving Growth Across Our Core Markets HCM FINS+
Slide 38: Full Suite Driving Growth
Full Suite Driving Growth FINS+ HCM Full Suite
Slide 39: FINS/Full Suite: Doubles our TAM
FINS/Full Suite: Doubles our TAM Why It Matters Higher Win Rates Furthers our AI Advantage The Way Many Industries Buy
Slide 40: FINS/Full Suite: Momentum in the Full Suite
FINS/Full Suite: >1/3 of New Deals are Momentum in the Full Suite1 Last Year Built Foundation of FINS Sellers Medium Enterprise and Industry Driving Growth 1Full Suite defined as customers with both Core HCM and Core Financials. Represents the % of core land deals that were Full Suite over the TTM e
Slide 41: Industry: Closer Look at SLED & Healthcare
Industry: Closer Look at SLED & Healthcare Healthcare State and Local Higher Ed ~60% ~60% ~80% of Customers of Customers of Customers Full Suite Full Suite Full Suite 5,000+ 4,000+ 3,000+ Customer Customer Customer Opportunity Opportunity Opportunity As of 7.31.2024.
Slide 42: Medium Enterprise
Medium Enterprise LE ~50% ME of Our Opportunity Based on Workday estimates.
Slide 43: Medium Enterprise
Medium Enterprise Legacy ERP1 LE Fragmented ME FINS Market Other Vendors 1Legacy ERP refers to Oracle (excl. NetSuite) and SAP. Represents the mix of incumbent financials providers for Workday medium enterprise net new and add-on financials wins for the TTM 7.31.24.
Slide 44: FINS/Full Suite: Where Are We Headed?
FINS/Full Suite: Deepening Industry Footprint Where Are We Headed? Medium Enterprise / Accelerate International Localization Partners Accelerate Innovation AI: Connecting HCM + FINS
Slide 45: Doug Robinson: International and Partners
I N T E R N A T I O N A L P A R T N E R S Doug Robinson Co-President
Slide 46: International: Why It Matters
International: Why It Matters ~50% of our TAM1 Global Source of Truth Across HCM and Finance Significant Source of Workday Talent 1TAM estimates based on Workday and third-party data as of 9.17.24.
Slide 47: International: Leadership
International: Leadership Momentum in the Last Year
Slide 48: International: Increasing Win Rates
International: Increasing Win Rates Momentum in the Last Year Based on Workday’s win rate data for the TTM 7.31.24 compared with the TTM 7.31.23.
Slide 49: International: Partner Selling
International: Partner Selling Momentum in the Last Year 15% of EMEA’s net new ACV 16% of APAC’s net new ACV Represents the partner contribution to net new ACV for the quarter ended 7.31.24.
Slide 50: International: Payroll Partners
International: Payroll Partners Momentum in the Last Year
Slide 51: International: Japan
International: Japan Momentum in the Last Year
Slide 52: International: Federal
International: Federal Momentum in the Last Year
Slide 53: International: FINS
International: FINS Momentum in the Last Year >25% FINS New Customer Growth For the TTM 7.31.24 compared to the TTM 7.31.23.
Slide 54: International: Where Are We Headed?
International: Global Payroll Connect Where Are We Headed? FINS Continued Build-out Partners Accelerate Go-to- Market and Innovation New Geographies
Slide 55: Partners: Why It Matters
Partners: Deliver: 95%+ of Why It Matters Deployments on Time1 Grow: Accelerate our Go-to-Market Engine Build: Accelerate our Innovation 1For the fiscal year ended 1.31.24.
Slide 56: Partners: Momentum in the Last Year
500+ 1 Partners: Partners creating new opportunities Momentum in the Last Year 9% 2 Partner contribution to <3% net-new ACV in Q2’25 25%+ 3 Partner deployment resources 2x 4 Innovation partners Strategic partners 1As of 09.17.24. 2Partner contribution to net-new ACV for the quarter ended 7.31.24. 3A
Slide 57: Partners: Where Are We Headed?
Partners: GROWTH Where Are We Headed? LEVERAGE INNOVATION
Slide 58: Zane Rowe, CFO
Zane Rowe CFO
Slide 59: Balanced Growth Formula
Balanced Growth Formula Annual Subscription ~15% Net New Revenue Growth1 FY26, FY27 Non-GAAP 30% Customer Base Operating Margin FY27 1Represents annual subscription revenue growth target for FY26 and FY27.
Slide 60: Balanced Growth Formula: Net New Customer Base
Balanced Growth Formula Net New Emerging FINS / Partner Medium AI Int’l Growth Full Suite Ecosystem Enterprise Areas AI innovation >1/3 of new 25% of 9% of net- ~50% of net- Federal drives strong customers revenue2 new ACV new ACV from win rates land full suite1 from ME2 Student ~50% TAM3 partners4
Slide 61: Balanced Growth Formula: Customer Base Attach Rates
Balanced Growth Formula Customer Base Employee FINS / Partner Experience & AI Int’l Full Suite Ecosystem Workforce Management 54% Talent 36% Core FINS Ramping Workday 19% Help Optimization customer base Marketplace 36% Financial sales capacity 19% Peakon 17% Extend / Planning Industry Extend Pro1 Ac
Slide 62: Core Markets Support Durable Growth
Core Markets Support Durable Growth HCM 1 FINS+ 2 17% 21% Subscription revenue Subscription revenue growth3 growth3 1HCM includes Workday Human Capital Management, Recruiting, Time Tracking, Payroll, Learning, Talent Optimization, Workforce Planning, People Analytics, Peakon, Help/Journeys, VNDLY, S
Slide 63: Core Markets Support Durable Growth
Core Markets Support Durable Growth HCM FINS+ Full Suite Driving Growth
Slide 64: Driving Margin Expansion
Driving Margin Expansion Annual Subscription Revenue Growth ~15% • Targeted growth investments / FY26 FY27 ROI 30% • Efficiency through scale across Non-GAAP people / processes / systems Operating Margin1 FY27 • Leveraging AI across the company • Partner innovation on platform • Partner go-to-market
Slide 65: Strong Cash Flow Generation
Strong Cash Flow Generation Annual Subscription Revenue Growth ~15% • Strong working capital benefits FY26 FY27 supports healthy cash flow growth Non-GAAP Operating Margin 30% • Efficient capital spending FY27 • Free cash flow generation Operating Cash Flow Margin ~34%FY27 supports our priorities of
Slide 66: Focused on Managing SBC/Dilution
Focused on Managing SBC/Dilution Annual Subscription Revenue Growth ~15% • Expect SBC to represent ~15% of FY26 FY27 revenue in FY27 and focused on driving lower over the long term Non-GAAP Operating Margin 30% FY27 • Targeting net dilution of ~1% Operating Cash Flow Margin ~34% annually1 FY27 • Fra
Slide 67: Q&A
Q&A
Slide 68: We want your feedback
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Slide 69: Appendix
— Appendix
Slide 70: About Non-GAAP Financial Measures
About Non-GAAP Financial Measures To provide investors and others with additional information regarding Workday’s results, we have disclosed the following non-GAAP financial measures: non-GAAP operating margin and free cash flow margin. Workday’s management uses these non-GAAP financial measures to
Slide 71: Other Business Metrics
Other Business Metrics Gross Revenue Retention Rates Gross revenue retention rates measure the percentage of recurring revenue retained from existing customers. The metric takes into account recurring revenues lost to product or customer churn, and does not account for additional revenue earned from
Slide 72: Updated Product Attach Rates
Updated Product Attach Rates Mature Products (6+ Post GA) 77% 69% 63% 55% 36% 36% 38% 28% 30% 15% Workforce Planning Proc urem ent Prism Ana lytics Fina ncial Planning Core F inancials Expenses Le arning Payroll Time Trac king Recruit ing Maturing Products (0-6 Years Post GA) 54% Each Has <5% Each H
Slide 73: Core Markets Support Durable Growth
Core Markets Support Durable Growth HCM Subscription Revenue1 FINS+ Subscription Revenue (including (TTM) Extend and Prism Analytics)2 (TTM) 18% 23% CAGR CAGR $1.86B $5.31B $1.54B $4.54B $1.24B $3.80B 17% 21% YoY YoY Q2’23 TTM 7.31.20 Q2’24 TTM 7.31.21 Q2’25 Q2’23 TTM 7.31.20 Q2’24 TTM 7.31.21 Q2’25
Slide 74: Core Markets Support Durable Growth
Core Markets Support Durable Growth US Subscription Revenue International Subscription Revenue (TTM) (TTM) 19% 19% CAGR CAGR $1.78B $5.39B $1.49B $4.59B $1.27B $3.77B 17% 20% YoY YoY Q2’23 TTM 7.31.20 Q2’24 TTM 7.31.21 Q2’25 Q2’23 TTM 7.31.20 Q2’24 TTM 7.31.21 Q2’25