Workday, Inc. · NASDAQ:WDAY
Workday — Investor Day (October 2019)
97 slides from Workday's investor day presentation, Oct 15, 2019
Slide 1: Financial Analyst Day
workday Financial Analyst Day October 15, 2019
Slide 2: Justin Furby
Justin Furby Senior Director, Investor Relations
Slide 3: Welcome & Intro
Welcome & Intro CEO Update Strategy Update Power of One GM Product Panel Break Broadening Our Go-to-Market Driving Growth at Scale Executive Panel Q&A Justin Furby Senior Director, Investor Relations Aneel Bhusri Co-Founder and CEO Leighanne Levensaler Senior VP, Corporate Strategy Managing Director
Slide 4: Safe Harbor Statement
Safe Harbor Statement This presentation may contain forward-looking statements for which there are risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, Workday’s business results and directions could differ materially from results implied by the forward-loo
Slide 5: Aneel Bhusri
Aneel Bhusri Co-Founder and CEO
Slide 6: Leighanne Levensaler
Leighanne Levensaler Senior Vice President, Corporate Strategy Managing Director and Co-Head, Workday Ventures
Slide 7: Our Approach to Strategy Development
Our Approach to Strategy Development Enabling companies to lead in the changing world. Business Trends \ ea Technology Innovation Strate egy Innovation Societal Issues Increase & a Competition TAM an Business Case: Organic Development or M&A? Innovating with and for our customers.
Slide 8: How can I leverage learning best practices
How can I leverage learning best practices to manage and retain talent? How can I drive How can | obtain a efficiencies and real-time view of global head count? streamline processes?
Slide 9: Office of the CHRO
Slide 10: How can I equip my team with data
How can | equip my team with data to make better and more informed decisions? Can my system keep up with change management? How do | adapt to new accounting standards?
Slide 11: One Cloud System for HR and Finance
One Cloud System for HR and Finance Office of the CHRO Office of the CFO Expenses Procurement Country Payrolls • U.S./Canada Grants • Third Party
Slide 12: Our Focus on Delivering Value Drives Strong HCM Share Gains
Our Focus on Delivering Value Drives Strong HCM Share Gains... >40% 17% _— F500 Share G2K Share 8% Total Customer G2K Share 2% Total Customer Share Share
Slide 13: ...and Continued FINS Momentum Upmarket
..and Continued FINS Momentum Upmarket... “10 Ve FINS customers 3 unum with >$5B in TELUS annual revenue
Slide 14: ...and Continued FINS Momentum Upmarket
..and Continued FINS Momentum Upmarket... Q2 FY20 CNA = gooey @is ¢> AdvocateAuroraHealth AMERICAN FAMILY FI NS custo Bias 2 Banner Health’ SPECTRUM HEALTH with >$5B in NETFLIX annual revenue unum TELUS: ull SSEEEANS V, 257 r CENTURY DO FOX _ (SLITHIA MOTORS, INC.
Slide 15: Enabled by a Relentless Focus on Customer Success
..Enabled by a Relentless Focus on Customer SUCCESS... More Than ~730 WEA 2,800+ HCM Customers HCM Customers FINS Customers MA eins customers
Slide 16: So DP
So DP ws “Fesavese tulutemon @¥ athletica VIS. A intuit NETFLIX Goodwill ebay aS FLAY aMessMutucl KOHIES te @ FICO PQ adobe Be oh is © canitionon citl DD avvscsune reeee vor SANOFI Chevron lenovo alll CUSHMAN & = @)Kimberly-Clark —‘F? « = iobile=
Slide 17: Customer Satisfaction Since IPO
/ Pd Customer Satisfaction | Since IPO Y
Slide 18: Ongoing Innovation Enhances Customer Value
Ongoing Innovation Enhances Customer Value... Office of the CFO im ( D Financial Mgmt. — Accounting v Consolidation Audit Revenue 2 & Sea Office of the CHRO ia) = HCM = Core v <] Talent Compensation a e Benefits Admin. Expenses Procurement Benefits Network Time Tracking Grants Country Payrolls U.S./
Slide 19: ...And Drives TAM Expansion
..And Drives TAM Expansion $88B 8 1% cAGR $58B $11B HCM $18B HCM sig basin oa 2019 Human Capital Management Applications from IDC WW & US HCM & Payroll Applications Forecast, 2019-2023 (June 2019) #US44179019 Payroll Applications from IDC WW & US HCM & Payroll Applications Forecast, 2019-2023 (June
Slide 20: Workday Student
Workday Student Workforce Planning People Analytics Transitions Talent Marketplace Workday Prism Analytics Workday Cloud Platform Sales Planning
Slide 21: Relentless Innovation: On the Horizon
Workday Student Relentless Innovation: On the Horizon ay Office of the CHRO Office of the CFO { J CAS HCM - Core Financial Memt. —' Accounting a Talent Consolidation Compensation =— m Revenue Benefits Admin. >» Expenses Procurement Benefits Network Time Tracking. Grants Inventory Recruring Learning’
Slide 22: Key Takeaways: Strategy
KEY TAKEAWAYS Strategy Leveraging Our Foundation to Drive HCM and FINS Market Share Gains Product Innovation Drives Digital Transformation and Opens New Revenue Streams Solid Foundation Enables Us to Rapidly Expand into Adjacencies Where People and Finance Matter
Slide 23: David Clarke
David Clarke Chief Technology Officer
Slide 24: Power of One Is Core to Our Technology
Power of One Is Core to Our Technology One Platform O Se Business Process Object Reporting and Framework Data Model Analytics () 5) Security Machine Integration Leaming Cloud
Slide 25: Power of One Accelerates Our Innovation
Power of One Accelerates Our Innovation Platform Investments Drive Power of Weekly One Efficiency Product Release Cycle Investment Process & Portfolio Analysis Rapid Application Delivery on the Platform Quickly Expands/Accesses WAM
Slide 26: Externalizing the Power of One via Workday Cloud Platform
Externalizing the Power of One via Workday Cloud Platform © 0 Of: &) Application Custom Isv Extensions Applications Applications Workday Cloud Platform
Slide 27: Architecture
Architecture Platform Applications Developer Tooling Platform APIs Workday Applications Platform Services & Components Application Lifecycle Management Customer Applications Marketplace Applications Business Analyst App Creator Core Configuration Professional Developer Workday Cloud Platform IDE Wor
Slide 28: Current, Future, and Third-Party Apps Benefit from the Power of One
Current, Future, and Third-Party Apps Benefit from the Power of One...
Slide 29: GM Product Panel
GM Product Panel
Slide 30: Moderator and Panelists
Moderator David Clarke Chief Technology Officer Panelists James Cross VP, Product Strategy Bhaskar Himatsingka GM, Product, Planning Business Unit Barbara Larson GM, Financial Management Barbry McGann GM, Workforce Management Pete Schlampp GM, Analytics & Reporting
Slide 31: Financial Analyst Day
workday Financial Analyst Day October 15, 2019
Slide 32: Chano Fernandez
Chano Fernandez Co-President
Slide 33: Broadening Our Go-to-Market
Broadening Our Go-to-Market Positioning for Global Growth Driving FINS Momentum Through Vertical Investment a) Consistent Strength in the Medium Enterprise 2 2 Expanding Our Footprint ae Within the Customer Base
Slide 34: Broadening Our Go-to-Market: Positioning for Global Growth
Broadening Our Go-to-Market Positioning for Global Growth
Slide 35: Strong Success in North America...
Strong Success in North America... Ft: 4 3 5s 6% 2,200+, 38% f Revenue Customers Workday G2K HCM Penetration
Slide 36: ...With Continued Growth Opportunities
Data ..With Continued Growth Opportunities SUCCESSES Fortune 500 >40% HCM penetration Fortune 100 ~50% HCM penetration Medium Enterprise is as of 07.31.19 and based on Workday internal estimates OPPORTUNITIES Continued HR Share Gains Large Enterprise Medium Enterprise FINS: Vertical Strategy New & E
Slide 37: Significant Long-Term Runway in Rest of World...
Significant Long-Term Runway in Rest of World... oO} . 4°) day “G2it h Penetration 24% Of Revenue Revenue mix includes all countries outside of the U.S. for the three months ended 07.31.19 Customer count includes all countries outside of the U.S. as of 07.31.19 Global 2000 Penetration is based on Wo
Slide 38: ...Driven by Deeper Penetration in Emerging Markets
..Driven by Deeper Penetration in Emerging Markets Medium Enterprise FINS+ Products EMEA Vertical Strategy Australia/New Zealand
Slide 39: Still Early Days of Global TAM Penetration
Still Early Days of Global TAM Penetration Global 2000 Penetration is as of 07.31.19 and based on Workday internal estimates
Slide 40: Still Early Days of Global TAM Penetration
Still Early Days of Global TAM Penetration Global 2000 Penetration is as of 07.31.19 , excluding China and India and based on Workday internal estimates
Slide 41: Driving FINS Momentum Through Vertical Investment
Broadening Our Go-to-Market Driving FINS Momentum Through Vertical Investment
Slide 42: FINS by the Numbers
FINS by the Numbers Q2 19 TTM Q2 20 TTM “170 FINS “220 FINS Customers Added 7 2 5 — Customers Added “130 Platform Deals Total FINS ~160 Platform Deals ~25 Add-On Deals Customers ~35 Add-On Deals ~15 FINS First Deals ~25 FINS First Deals
Slide 43: FINS Requires a Vertical Approach
FINS Requires a Vertical Approach Dedicated Sales Supports Partner Alignment Focused Business Context and FINS Enablement Customer Dedicated Services Accelerates Deployment » Drives Customer Value
Slide 44: Initial Vertical Investment Is Paying Off
Initial Vertical Investment Is Paying Off Banner Health as €> AdvocateAurora Gainesville. P en CITY OF ar ORLANDO
Slide 45: Initial Vertical Investment Is Paying Off
Initial Vertical Investment Is Paying Off ~ ; aS (\ Adventist a =, €> AdvocateAurora HealthCare Banner Health
Slide 46: Initial Vertical Investment Is Paying Off
Initial Vertical Investment Is Paying Off Healthcare ~ ; aS , —— AN Adventist A €>AdvocateAurora HealthCare Banner Health Platform Deals ~ 70% ay eae = (FINS + HCM) © Pipeline or FINS Only
Slide 47: Expanding Investments in Key Verticals
Expanding Investments in Key Verticals CUSHMAN & WAKEFIELD DENVER Pe ressiies ar CITY OF fas ORLANDO
Slide 48: with Future Vertical Opportunities
with Future Vertical Opportunities Financial Services Technology & Media E&G Professional Services Retail & Hospitality _ Gainesville. fe Bla nera “Si CITY OF ORLANDO SHAKE SHACK
Slide 49: Consistent Strength in the Medium Enterprise
Broadening Our Go-to-Market = Consistent Strength in the 7 Z Medium Enterprise
Slide 50: Consistent Strength in the Medium Enterprise
Consistent Strength in the Medium Enterprise ASP Growth Up ~30% in FY19 Data Is as of 07.31.19
Slide 51: Consistent Strength in the Medium Enterprise
Consistent Strength in the Medium Enterprise North America: Rest of World: Hitting Stride Ramping Launch Drives ~35% Presence in UK, Germany, Reduction in Average France, Switzerland, Deployment Costs Netherlands, Nordics ASP Growth Up ~40% Sales Rep Growth ~30% in FY19
Slide 52: Expanding Our Footprint Within the Customer Base
Broadening Our Go-to-Market a2 Expanding Our Footprint ee Within the Customer Base
Slide 53: Strong Retention Rates Lay the Foundation
Strong Retention Rates Lay the Foundation 45% 95%+ \Revee | 100%+ Purchases (4) Within One Net Year of Go-Live Retention Rate Gross Retention Rate (2)
Slide 54: Product Attach Rates Continue to Increase
Product Attach Rates Continue to Increase ~«@ FY18 28% Recruiting i 2 3 Payroll Workday Workday Procurement Human Capital Financial 12% Management Management Time Tracking Expenses 58% 1% Learning Planning Represents product penetration across Workday installed base as of 07.31.17
Slide 55: Product Attach Rates Continue to Increase
Product Attach Rates Continue to Increase 70% 33% FY20 Recruiting 19 Expenses 61% 22% 20 Payroll Procurement Workday Workday Human Capital Financial Management Management 63% 9% 34% 18% Time Tracking Prism Learning Planning Represents product penetration across Workday installed base as of 07.31.19
Slide 56: Customer Base Is an Important Future Growth Driver
Customer Base Is an Important Future Growth Driver Add-On Sales @ @ 20% Qe of net new = ACV from 0 (=)
Slide 57: Customer Base Is an Important Future Growth Driver
Customer Base Is an Important Future Growth Driver 3 OO, Biggest Near-Term Add-on Opportunities “20% eeee Financials Planning Prism Learning of net new Medium-Term Add-on Opportunities ACV from Add-On Sales People Accounting Analytics Center Answers % of net new ACV driven by add-on sales In FY2019
Slide 58: Key Takeaways: Broadening Our Go-to-Market
KEY TAKEAWAYS Broadening Our Go-to-Market Well Positioned for Significant Long-Term Global Opportunity Expanding Our Vertical Investments to Drive Increased FINS Penetration and Growth Innovation and Customer Success Drive Substantial Add-On Opportunities
Slide 59: Robynne Sisco
Robynne Sisco Co-President and Chief Financial Officer
Slide 60: Driving Growth at Scale
Driving Growth at Scale ti Multiple Growth Vectors Subscription Revenue Backlog Marching Toward Target Margins
Slide 61: Driving Growth at Scale: Multiple Growth Vectors
Driving Growth at Scale “A Multiple Growth A Vectors
Slide 62: Strong Subscription Revenue Growth
Strong Subscription Revenue Growth ME AGVIGAGREGIEE = -------- In Millions $ FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E Annual figures prior to FY2016 do not reflect adoption of ASC 605 FY20E reflects the high end of subscription revenue guidance provided on 08.29.19
Slide 63: Growth Composition Is Changing Across Segments...
Growth Composition Is Changing Across Segments... Net New ACV Bookings Mix (+) 35%, 29% t 27% 18% Rest of World Rest of World U.S. Verticals
Slide 64: ...and Our Broadening Product Portfolio Spotlights Opportunity
..and Our Broadening Product Portfolio Spotlights Opportunity... Subscription Revenue Mix
Slide 65: ...Resulting in Multiple Growth Vectors
... Resulting in Multiple Growth Vectors HCM Continued North American share gains Rest of World HCM cloud adoption Medium enterprise Strong retention/ up-sell rates FINS+ Verticalization drives increasing penetration Continued push upmarket Planning/analytics provide other gateways into the CFO New
Slide 66: Multiple Growth Vectors
Multiple Growth Vectors HCM Continued North American share gains Rest of World HCM cloud adoption Medium Enterprise Strong retention/ up-sell rates
Slide 67: HCM: Strong Leadership with Remaining U.S. Large Enterprise Opportunity
HCM: Strong Leadership with Remaining U.S. Large Enterprise Opportunity... Workday Market Share 40% of Fortune 500 7 2 5% other cloud HR vendors 7 3 5% remaining opportunity Data as of 07.31.19 and based on Workday internal estimates
Slide 68: ...While Global Adoption Still in Early Stages
. While Global Adoption Still in Early Stages Workday Market Share ™~ 47% of Global 2000 7 13% other cloud HR vendors ~70% remaining opportunity
Slide 69: Multiple Growth Vectors
Multiple Growth Vectors FINS+ Verticalization drives increasing penetration Continued push upmarket Planning/analytics provide other gateways into the CFO
Slide 70: FINS Cloud Migration Provides Long Runway for Growth
FINS Cloud Migration Provides Long Runway for Growth 2025 Core FINS Core FINS Global Spend Global Spend
Slide 71: Financials Opportunity Extends Well Beyond Core FINS
Financials Opportunity Extends Well Beyond Core FINS Represented on a per product basis 1x Core FIN >2x + Project Billing Planning Grants Management Procurement Projects Inventory Prism Core FIN s}2NpOld JAy}0 — >3X
Slide 72: Attach Rates on Core FINS
Attach Rates on Core FINS 50% FY18 @~ Projects . Expenses Inventory Workday Financial Management 24% Project Billing Planning Represents product penetration rkday Core FINS customers as of 07.31.17
Slide 73: Attach Rates on Core FINS
Attach Rates on Core FINS 57% 89% FY20 Projects 19 Expenses 20% 85% 20 Inventory Procurement Workday Financial Management 17% 32% 51% Prism Project Billing Planning Represents product penetration across Workday Core FINS customers as of 07.31.19
Slide 74: Attach Rates on Core FINS
Attach Rates on n Core FINS FY20 | Projects et Procurement Workday Financial Management 17% Planning Represents product penetration across Workday Core FINS customers as of 07.31.19
Slide 75: Comparing HCM and FINS Adoption Cycles
Comparing HCM and FINS Adoption Cycles: The First 725 Customers HCM FINS Horizontal adoption Industry adoption varies by vertical Higher mix of large enterprise Higher mix of medium enterprise adoption relative to FINS adoption relative to HCM Meaningful mix of first 725 ~50% fewer $1M+ FINS+ ACV cu
Slide 76: Multiple Growth Vectors
Multiple Growth Vectors New Innovations New revenue stream opportunities (e.g., Workday Cloud Platform, People Analytics, Accounting Center, Answers) Accelerate market position/ TAM via M&A
Slide 77: Seeding Future Growth: Innovation/M&A
Seeding Future Growth: Innovation/M&A INNOVATION Workday Cloud Platform People Analytics Accounting Center Answers Sales/Ops planning M&A Expand TAM across areas strategic to CHRO/CFO Accelerate market positioning Ability to leverage our enterprise sales footprint Culture alignment
Slide 78: Growth Contributors
Growth Contributors HCM FINS+ New Innovations Al 7
Slide 79: Driving Growth at Scale: Subscription Revenue Backlog
Driving Growth at Scale Subscription Revenue Backlog
Slide 80: Subscription Revenue Backlog Supports Enduring Growth
Slide 81: ve eee ee
ve eee ee
Slide 82: Calculated Bookings Pitfalls
Calculated Bookings Pitfalls +45% -39% Delta between new ACV Caused by timing of Trailing 12 Month bookings and calculated renewals, ramped deals, calculated bookings are subscription bookings and duration changes amore relevant metric can be significant Calculations reflect difference in growth bet
Slide 83: Marching Toward Target Margins
Driving Growth at Scale Marching Toward Target Margins
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Slide 95: Appendix
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Slide 97: Operating Margin GAAP to Non-GAAP Reconciliation