Workday, Inc. · NASDAQ:WDAY
Workday — Investor Day (September 2023)
108 slides from Workday's investor day presentation, Sep 27, 2023
Slide 1: Financial Analyst Day
Financial Analyst Day September 27, 2023
Slide 2: Agenda
Agenda Co-CEO Fireside Aneel Bhusri – Co-Founder, Co-CEO, and Chair Carl Eschenbach – Co-CEO Emma Chalwin – CMO Innovating with Generative AI Sayan Chakraborty – Co-President Aashna Kircher – GM, Workday Talent Products Our Enhanced Go-To-Market Doug Robinson – Co-President Break Our Durable Financi
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 strategies or plans for future operations; any statements concerning new features, enhancements or
Slide 4: Co-CEO Fireside Chat: Unlocking Long-Term Growth
Co-CEO Fireside Chat Unlocking Long-Term Growth Aneel Bhusri Co-Founder, Co-CEO, and Chair Carl Eschenbach Co-CEO Emma Chalwin CMO
Slide 5: Financial Analyst Day
fo workday. Financial Analyst Day
Slide 6: Innovating with Generative AI
Innovating with Generative AI Sayan Chakraborty Co-President
Slide 7: Generative AI Era
Generative AI Era Workday’s Position Where We Are Headed
Slide 8: Generative AI Era
Generative AI Era Workday’s Position Where We Are Headed
Slide 9: Why Is This Happening Now?
Why Is This Happening Now? 175B parameters 1.5B parameters 117M parameters 10 1K 60M parameters parameters parameters 1962 2006 2009 2012 2015 2017 2018 2019 2020 2022 2023
Slide 10: What Is Generative AI Uniquely Good At?
What Is Generative AI Uniquely Good At?
Slide 11: Generative AI Era for HR and Finance
Generative AI Era for HR and Finance HR Finance Finding Content Summarizing Content Creating Content Completing Tasks Interacting with Users
Slide 12: Key Risks
Key Risks Misinformation Undesirable Outcomes Cost Financial, Societal, Environmental Intellectual Property Winners and Losers
Slide 13: Generative AI Era
Generative AI Era Workday’s Position Where We Are Headed
Slide 14: Workday's Position
Generative AI Era Workday’s Position Where We Are Headed
Slide 15: Our Data and Scale
Our Data and Scale (1) 65M+ 600B+ 11B+ (2) Users Under Contract Annual Transactions Files Under Management 3,000+ 50M+ 1M+ (3) Customers Opted in to Daily ML Inference Job Applications per Sharing Data for ML Requests Processed Working Day Models (1) As of 7.31.23 unless otherwise stated (2) For the
Slide 16: Our Platform
Our Platform 1 1 0 1 Responsible AI 0 0 1 1 0 1 1 1 Federated Models 1 1 0 0 1 1 0 0 1 0 Customer Control 0 0 Hybrid, of Data 1 0 Ensemble Models 01 0 1 1 0 0 0 0 1 Ability to Ground Domain-Specific Our Models 1 1 0 1 0 0 1 1 Models 0 1 1 0 1 0
Slide 17: Our Relationship
Our Relationship Technology Customers
Slide 18: Ecosystem
1 1 0 1 0 0 1 1 0 1 1 1 1 0 1 1 1 0 1 0 0 0 0 0 Ecosystem 0 1 01 0 1 1 0 0 0 1 0 1 1 0 1 0 0 1 1 0 1 1 1 0 0
Slide 19: Leverage
Leverage
Slide 20: Monetization
Monetization Win and New Renewal Partners SKUs Rates
Slide 21: Generative AI Era
Generative AI Era Workday’s Position Where We Are Headed
Slide 22: Where We Are Headed
Generative AI Era Workday’s Position Where We Are Headed
Slide 23: Four Key Focus Areas
Four Key Focus Areas Delivery of AI and Incorporation of AI and Generative AI Generative AI in Our Product Internally at Workday Expansion of the Continued Engagement Ecosystem with Regulatory Agencies Revenue Cost
Slide 24: Product Demo
Product Demo Aashna Kircher General Manager, Workday Talent Products
Slide 25: Workday AI Design Principles
Workday AI Design Principles Build Trust Design for Keep the User Through Simplicity in Control Transparency
Slide 26: Thank you!
Thank you! oCHRO: oCFO: oCIO: Employee Growth Contract Analysis App Builder Plan
Slide 27: Our Enhanced Go-To-Market
Our Enhanced Go-To-Market Doug Robinson Co-President
Slide 28: Land Expand Invest
Land Expand Invest
Slide 29: Land
Land Expand Invest
Slide 30: Land Is a Critical Growth Driver
Land Is a Critical Growth Driver . . . ~ 50% ~50% Land Expand Represents the mix of new ACV bookings for the Trailing Twelve Months (TTM) ended 7.31.23
Slide 31: That Has Propelled Our Business Forward
. . .That Has Propelled Our Business Forward . . . 5,000+ Core Customers Represents Core Workday Human Capital Management and Workday Financial Management customers as of 7.31.23
Slide 32: With Significant Opportunity Ahead
. . . with Significant Opportunity Ahead 5,000+ 40,000+ Core Customers Core Customer Opportunity 40,000+ opportunity shown is targeted companies for core Workday Human Capital Management and Workday Financial Management in our CRM and includes our existing 5,000+ core customers
Slide 33: Strong Traction Landing Large Enterprises: Customer Penetration
49 1 4 Strong Traction Landing Large Enterprises Customer Penetration 50%+ 25 %+ Fortune 500 Global 2000 As of 7.31.23
Slide 34: Remaining Land Opportunity
4 64 Strong Traction Landing Large Enterprises Remaining Land Opportunity ~50% ~75 % Fortune 500 Global 2000 As of 7.31.23
Slide 35: Fortune 500 Discounts the Industry Opportunity
Fortune 500 Discounts the Industry Opportunity Education Healthcare Government Only 9 Companies in the Fortune 500 Based on Workday’s industry definitions and Fortune 500 data as of 7.31.23
Slide 36: U.S. Medium Enterprise: Important Land Driver
U.S. Medium Enterprise: Important Land Driver >50% of U.S. Land ACV Coming from ME For TTM ended 7.31.23
Slide 37: Taking Our Medium Enterprise Playbook Global
Taking Our Medium Enterprise Playbook Global UK France Germany Canada Australia
Slide 38: Scaling Our Industry Presence
Scaling Our Industry Presence Financial Retail and Services Hospitality $1B+ ARR $1B+ ARR Technology Professional Public Healthcare Education and Media Services Sector As of 7.31.23
Slide 39: Industry Verticals
Technology Financial Public Healthcare and Media Services Sector Retail and Professional Education Hospitality Services
Slide 40: Land Expand Invest
Land Expand Invest
Slide 41: Expand
Land Expand Invest
Slide 42: Expand Drives Durable Growth
Expand Drives Durable Growth ~ 50% ~50% Land Expand Represents the mix of new ACV bookings for the TTM ended 7.31.23
Slide 43: Expand Drives Durable Growth
Expand Drives Durable Growth ~ 50% ~50% Land Expand Represents the mix of new ACV bookings for the TTM ended 7.31.23
Slide 44: Compelling Customer Base
Compelling Customer Base . . . 50%+ 25%+ Fortune 500 Global 2000 As of 7.31.23
Slide 45: Compelling Customer Base
Compelling Customer Base . . . 50%+ Fortune 500 25%+ Global 2000 5K+ 4,850+ Core Customers 1,700+ FINS HCM 10K+ Total Customers As of 7.31.23
Slide 46: Compelling Platform Opportunity
. . . and Compelling Platform Opportunity Product Attach Rates(1) 75% 68% 1,000 63% BPS Expansion(2) 52% 45% 37% 33% 34% 27% 27% Each Has <10% Attach Rate 16% 12% 13% 14% 14% 14% es er t g n ng g ng s g ng ng on g s ls nd LY t s lp l en ol en ey tin io ic ic in lin in ia nt He ns ci te ak yr D gi ni
Slide 47: Significant Whitespace within Our Top Accounts
Significant Whitespace. . .within Our Top 100 Accounts. . . $2B+ Incremental ARR Opportunity Represents estimated remaining ARR opportunity within Workday's Top 100 customers as of 9.27.23
Slide 48: Digital AE Team Focused on Capturing the Long Tail
Digital AE Team Focused on Capturing the Long Tail
Slide 49: Digital AE Team Focused on Capturing the Long Tail
Digital AE Team Focused on Capturing the Long Tail Workday Adaptive Planning Workday Peakon Employee Voice Workday Messaging Candidate Engagement Journeys
Slide 50: Land Expand Invest
Land Expand Invest
Slide 51: Invest
Land Expand Invest
Slide 52: Significant FINS Replacement Opportunity
Significant FINS Replacement Opportunity 75%–80% of the Overall Current 20%–25% of the Overall Current FINS Market is On-Premise FINS Market is in the Cloud Based on Workday estimates and third-party data
Slide 53: Potential for Entire FINS Market to Move to the Cloud
Potential for Entire FINS Market to Move to the Cloud Longer-Term 75%-80% of the FINS market 20%-25% of the FINS market
Slide 54: FINS Investments Showing Early Signs of Impact
FINS Investments Showing Early Signs of Impact FINS Pipeline(1) FINS Unit Growth(2) Full Platform Deals(2) (1) For the 7-month period ended 8.31.23 compared with the prior year period (2) TTM 7.31.23 vs 7.31.22
Slide 55: Focused on International Acceleration
Focused on International Acceleration 25% >50% of Workday of Workday Revenue TAM(2) Mix(1) (1) Revenue mix for the quarter ended 7.31.23 (2) TAM estimates based on Workday and third-party data as of 9.27.23
Slide 56: Bolstering Our Leadership
Bolstering Our Leadership Angelique De Vries – Schipperijn President, EMEA - Global Field Sales
Slide 57: Bolstering Our Leadership
Bolstering Our Leadership Daniel Pell Vice President, UKI 20+ Years of Experience Chris Knoerr Vice President, DACH 20+ Years of Experience
Slide 58: Bolstering Our Leadership
Bolstering Our Leadership Daniel Pell Vice President, UKI 20+ Years of Experience Chris Knoerr Vice President, DACH 20+ Years of Experience
Slide 59: Elevating Japan to Tier 1 Region
Elevating Japan to Tier 1 Region • Accelerating Product and Go-To-Market Investments • Significant TAM with Key Anchor Accounts
Slide 60: Bolstering Our Leadership
Bolstering Our Leadership Simon Tate President, APAC 25+ Years of Experience
Slide 61: Taking Our Medium Enterprise Playbook Global
Taking Our Medium Enterprise Playbook Global Partner TBA Launch Deployment Key Investing in Launch to U.S. Market Success Globally
Slide 62: Partners Amplify Our Global Reach
Partners Amplify Our Global Reach . . . 19,500+ 95%+ (1) (2) Certified Deployment On Time Deployments Resources (1) Certified deployment resources inclusive of Workday’s Professional Services Organization (2) For the fiscal year ended 1.31.23
Slide 63: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity <3% Partner-Sourced ACV Data is estimated based on the average of last two fiscal years of historical data sourced from Workday’s CRM system of record
Slide 64: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity <3% Partner-Sourced ACV <25% Partner-Impacted ACV Data is estimated based on the average of last two fiscal years of historical data sourced from Workday’s CRM system of record
Slide 65: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity <3% Partner-Sourced ACV <25% Partner-Impacted ACV Data is estimated based on the average of last two fiscal years of historical data sourced from Workday’s CRM system of record
Slide 66: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity <3% Partner-Sourced ACV Sales Partners Innovation Partners <25% Partner-Impacted ACV Services Partners
Slide 67: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity 80+ Referral Partners 15 Co-Sell Partners Sales Partners Signed Globally(1) Signed Globally(1) Innovation Partners ~$70M AWS Co-sell & Services Partners Marketplace Wins (2) (1) As of 7.31.23 (2) Represents total contract value as of 9.27.23
Slide 68: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity 300+ Solutions as Part of New Sales Partners Marketplace Launch Innovation Partners Connecting Buyers with Services Partners Partner Innovations As of 9.27.23
Slide 69: Compelling Strategic Opportunity
. . . and Also Provide a Compelling Strategic Opportunity Sales Partners Driving Co-Innovation Innovation Partners Services Partners
Slide 70: Break
“oN workday. BREAK
Slide 71: Our Durable Financial Model and Value Creation Framework
Our Durable Financial Model and Value Creation Framework Zane Rowe CFO
Slide 72: Durable Platform Built for Scale
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 73: Durable Platform Built for Scale
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 74: Meaningful Market Opportunity
Meaningful Market Opportunity . . . HCM $58B Human Capital Management/ Workforce Planning Workforce Management and People Analytics $142B+ Talent Management Employee Experience Payroll Addressing One of the Largest Markets FINS+ $84B in Enterprise Software Financial Management Financial Planning Spe
Slide 75: With Healthy TAM Growth
. . . with Healthy TAM Growth 16% CAGR $142B+ TAM(3) $125B+ TAM(2) • Growth in Core Markets $105B+ TAM(1) • Bolstered by Organic Innovation and Strategic M&A • Platform Enhances Market Growth 7.31.20 2021 7.31.21 2022 TTM 2023 (1) Workday estimates and third-party data as of 9.21.21 (2) Workday esti
Slide 76: Leader in the Cloud
Leader in the Cloud Workday Largest Market Share in 2022 21.0% Other for ERP Worldwide SaaS 54.4% revenue at 21%, According to Oracle 11.5% Gartner® Research SAP 13.1% SaaS ERP Total Worldwide Revenue Market Share, 2021-2022 (Millions of U.S. Dollar) Charts/graphics created by Workday based on Gartn
Slide 77: HCM and FINS Provide Core Tenants for Durable Growth
HCM and FINS Provide Core Tenants for Durable Growth Full Platform Opportunity Enhances Durability HCM Subscription Revenue(1) FINS+ Subscription Revenue(2) (TTM) (TTM) 20% CAGR 26% $3.80B $4.54B CAGR $1.54B $3.15B $1.24B 19% $0.97B 24% YoY YoY Q2’22 TTM 7.31.20 Q2’23 TTM 7.31.21 Q2’24 Q2’22 TTM 7.3
Slide 78: Immense Land and Expand Opportunity
Immense Land and Expand Opportunity Leveraging Current Mix of Sales ~50% ~50% Land Expand Represents the mix of new ACV bookings for the TTM ended 7.31.23
Slide 79: Immense Land and Expand Opportunity
Immense Land and Expand Opportunity Leveraging Current Mix of Sales ~ 50% ~ 50% Land Expand Represents the mix of new ACV bookings for the TTM ended 7.31.23
Slide 80: Immense Land Opportunity
Immense Land Opportunity Large Enterprise Incremental Core Customer Opportunity Current Core Customers Medium Enterprise 40,000+ Core Customer Opportunity 40,000+ opportunity shown is targeted companies for core Workday Human Capital Management and Workday Financial Management in our CRM and include
Slide 81: Immense Expand Opportunity
Immense Expand Opportunity ~$10B ARR Incremental Customer-Base Opportunity Incremental Customer-Base Opportunity Current Workday Spend Large Enterprise Medium Enterprise Customer-Base Customer-Base Penetration $ Penetration $ $10 billion ARR customer opportunity as of 9.27.23 and incorporates a prod
Slide 82: Strong Retention Dynamics
Strong Retention Dynamics as We Lean into Our Customer-Base Opportunity 100%+ 98% Net Revenue Average Gross Revenue Retention Rate(1) Retention Rate(2) (1) NRR is a measure of total ARR retention from existing customers on a trailing 12-month basis, including add-ons, expansion, contraction and chur
Slide 83: High Retention Rates Contribute to Strong Backlog
High Retention Rates Contribute to Strong Backlog Renewals Early Renewals Expand Existing Customers Land New Customers Duration
Slide 84: Illustrative Early Renewal Impact to Backlog
Illustrative Early Renewal Impact to Backlog $1M ARR Contract with 9 Months Remaining • Customers’ Commitment to Early 3-Year Renewal w/ $0.25M Expansion Workday’s Platform Drives Early Renewal & Expansion Opportunities $2.5M Expansion Backlog • Backlog Growth Rate Tends to $0.5M Outpace Revenue Gro
Slide 85: Durable Growth in 12- and 24-Month Backlog
Durable Growth in 12- and 24-Month Backlog Intend to Provide Both 12- and 24-Month Backlog Going Forward $10.27B $9.68B $9.79B $8.62B $5.51B $5.60B $5.85B $4.96B 20% 21% 20% 21% 21% 23% 21% 23% YoY YoY YoY YoY YoY YoY YoY YoY Q3'23 Q4'23 Q1'24 Q2'24 12-Month Backlog 24-Month Backlog See appendix for
Slide 86: Value Creation Framework
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 87: Value Creation Framework
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 88: Durable Long-Term Growth
Durable Long-Term Growth FY27 Target 17%–19% • Durability Expected to Enable Sustainable Growth Over 3-year Horizon Consistent with Our FY24 Guidance Target Annual Subscription Revenue Growth(1) • Mission-Critical Platform with Core Data Asset Drives Strong Customer Commitment • Our Key Investments
Slide 89: Balancing Growth and Margins
Balancing Growth and Margins FY27 Target 17%–19% • Focused Go-To-Market Investments Target Annual Subscription Revenue Growth(1) Expected to Drive Long-Term Value 25%+ • R&D Investments Will Grow Efficiently and Take Advantage of AI and ML Non-GAAP Operating • Operational Efficiencies and Focus on M
Slide 90: Strong Cash Flow Generation
Strong Cash Flow Generation FY27 Target 17%–19% • Cash Flow Strength from Operating Target Annual Subscription Revenue Growth(1) Dynamics and High Retention 25%+ • Expected Industry Mix Influences Non-GAAP Operating Margin(1) Duration and Timing of Cash Flows ~30% Operating Cash Flow Margin • Busine
Slide 91: Managing SBC
Managing SBC FY27 Target 17%–19% • SBC Aligns Employee Interest with Target Annual Subscription Revenue Growth(1) Long-Term Value Creation 25%+ Non-GAAP Operating Margin(1) • Targeted Equity Allocation Expected ~30% to Reduce SBC as a % of Revenue Operating Cash Flow Margin • Expect to Deliver 100bp
Slide 92: Durable Business Model Enables Sustainable Value Creation
Durable Business Model Enables Sustainable Value Creation Target Annual Subscription 17%–19% Revenue Growth(1) 25%+ Non-GAAP Operating Margin (2) ~30% FY27 Target Operating Cash Flow Margin ~25% Free Cash Flow Margin(3) Stock-Based Compensation ~15% as % Revenue (1) Represents annual subscription re
Slide 93: Investing in Our Growth Levers
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 94: Investing in Our Growth Levers
Durable Platform Built for Scale Value Creation Framework Investing in Our Growth Levers
Slide 95: Unlocking Meaningful Growth Opportunities
Unlocking Meaningful Growth Opportunities Int’l Partners FINS AI and ML M&A
Slide 96: Compelling International Opportunity
Compelling International Opportunity $1.49B • International TAM Opportunity of ~$80B Tier 1 (1) • ~2x Investment into Tier 1 Countries in Last Three Years, with Focused Investment Continuing Ahead of Growth Other • Investments Include Localizations, Strategic International Partnerships, and Go-To-Ma
Slide 97: Investing Across Our Partner Ecosystem
Investing Across Our Partner Ecosystem • Strengthening Services Ecosystem by Driving Services Partners More Deployments to Partners • Accelerating Co-Innovation on the Platform • Strategic Partnerships with Accenture, AWS, Innovation Partners ADP, and Alight • Targeting 100+ Referral Partners and 15
Slide 98: Winning in FINS Across Industries and Segments
Winning in FINS Across Industries and Segments ME LE Education Financial Services Healthcare Professional Services Public Sector Retail and Hospitality Technology and Media
Slide 99: Positioning to Capitalize on the FINS Opportunity
Positioning to Capitalize on the FINS Opportunity • Broadening and Deepening Our FINS Industry Footprint Through Innovations such as Workday Accounting Center and Workday Services CPQ 35%+ of New Customers • Driving Joint Go-To-Market Targeting oCFO with Key Partners like Accenture • Focused on Conv
Slide 100: AI and ML Differentiates and Expands Our Opportunity
AI and ML Differentiates and Expands Our Opportunity • 65M+ Users Under Contract(1) Enables 80%+ Differentiated and Targeted LLMs (1) • 40+ ML Use Cases in Production and YoY ARR Growth 12 Generative AI Use Cases Announced Talent Optimization • Economic Benefits Through CSAT and Value/Pricing and Pa
Slide 101: Successful M&A Track Record
Successful M&A Track Record 2014 2016 2018 2020 2022 HR Services Predictive Analytics Planning CPQ Analytics Embedded Employee Extend Worksheets Skills ML Engagement Workforce
Slide 102: Accelerating Our Opportunity Through Strategic M&A
Accelerating Our Opportunity Through Strategic M&A • Successful Acquisitions Have Contributed to Our Strong Portfolio • M&A Will Enhance Our Platform and Accelerate Our Market Position • Future Tuck-Ins Expected to Provide Opportunity to Build Out Talented Teams in Cutting-Edge Technologies • Workda
Slide 103: Strong Foundation and Targeted Investments Enable Durable Long-Term Growth
Strong Foundation and Targeted Investments Enable . . . Durable Long-Term Growth Further Investments to Drive Incremental Value Scale and Strength of Platform
Slide 104: Q&A
Q&A
Slide 105: Thanks for joining us.
Thanks for joining us. Please take 2 minutes to fill out our survey.
Slide 106: Appendix
“oN workday. Appendix
Slide 107: 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 108: Durable Growth in 12- and 24-Month Backlog
Durable Growth in 12- and 24-Month Backlog $10.27B $9.68B $9.79B $8.37B $8.62B $7.98B $7.97B $7.12B $5.60B $5.85B $5.51B $4.83B $4.96B $4.60B $4.61B $4.13B Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 12-Month Backlog 24-Month Backlog