Financial Data and Key Metrics Changes - Workday reported a 14% growth in subscription revenue, totaling $2,169 million for Q2 2026, with total revenue reaching $2,348 million, reflecting a 13% increase [28][29] - Non-GAAP operating margin stood at 29%, with non-GAAP operating income of $680 million [30][33] - Cash and marketable securities at the end of the quarter were $8,200 million, with operating cash flow of $616 million, an 8% growth [31][32] Business Line Data and Key Metrics Changes - Approximately 30% of net new deals were full suite offerings, with this number rising to over 50% in sectors like SLED and healthcare [10][12] - More than 70% of core customers are utilizing Workday Illuminate, with over 30% of customer-based deals including AI products [12][15] - The financial services sector saw significant expansions, including new relationships with Nationwide Insurance and others [12][13] Market Data and Key Metrics Changes - U.S. revenue increased by 13% to $1,760 million, while international revenue grew by 11% to $584 million [29] - The twelve-month subscription revenue backlog (CRPO) reached $7,910 million, up 16.4% year-over-year [29][30] - Strong performance was noted in EMEA, particularly in Germany and the UK, with notable wins in APAC, including a deal in Vietnam [24][122] Company Strategy and Development Direction - Workday is focusing on AI-driven solutions and expanding its platform capabilities, including the acquisition of Paradox to enhance its recruiting suite [16][78] - The company is investing in organic innovation and strategic acquisitions to strengthen its market position and deliver greater value to customers [16][21] - Workday Government was launched to cater specifically to the needs of the U.S. government, emphasizing a commitment to modernization and AI integration [14][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum, driven by AI innovation and a unified platform, while acknowledging macroeconomic challenges in certain sectors [25][56] - The company anticipates continued growth in subscription revenue, increasing its FY 2026 guidance to $8,815 million, reflecting a 14% growth [32][34] - Management highlighted the importance of customer trust in navigating AI transitions, positioning Workday as a key partner in this area [100][49] Other Important Information - Workday's headcount as of July 31 was approximately 19,500, with ongoing efforts to attract top talent [31][21] - The company is expanding its partner ecosystem, with over 20% of net new ACV sourced from partners in the last quarter [22] - Workday is actively pursuing growth opportunities in India, with plans to establish a local data center and expand its team [24][122] Q&A Session Summary Question: Market concerns regarding SaaS and AI startups - Management believes concerns about AI disruption to SaaS models are overblown, emphasizing Workday's strong market position and customer base [45][49] Question: Crosscurrents affecting growth - Management noted strong performance in Europe despite macroeconomic challenges, while observing some headwinds in the SLED market [56][58] Question: Workday Government subsidiary - The subsidiary was established to demonstrate commitment to the government sector and to provide a secure cloud environment [70][71] Question: Acquisition of Paradox - The acquisition is seen as a strategic move to enhance Workday's recruiting capabilities, with expected synergies and growth opportunities [78][84] Question: AI product engagement and win rates - Engagement with AI products is strong, with significant growth in adoption rates among customers [88][90] Question: International market performance - Management expressed satisfaction with growth in international markets, particularly in Europe and Japan, and highlighted plans for expansion in India [122][121]

Financial Data and Key Metrics Changes - Workday reported a 13% growth in subscription revenue, totaling $2,059 million for Q1 FY 2026, with total revenue reaching $2,240 million, also up 13% [28][30] - Non-GAAP operating margin for the quarter was 30.2%, while GAAP operating income was impacted by a $166 million restructuring charge, resulting in a GAAP operating income of $39 million [30][31] - The twelve-month subscription revenue backlog (CRPO) increased by 15.6% to $7,630 million, and total subscription revenue backlog rose by 19% to $24,620 million [29][30] Business Line Data and Key Metrics Changes - More than 30% of net new wins in Q1 were full suite, with over 50% in focused industries like healthcare and SLED [11][43] - New ACV from AI products more than doubled year-over-year, with approximately 25% of customer expansions including AI solutions [12][88] - Professional services revenue was $181 million, contributing to the overall revenue growth [28] Market Data and Key Metrics Changes - U.S. revenue in Q1 totaled $1,680 million, up 13%, while international revenue also grew by 13% to $559 million [28][29] - The company saw notable wins in EMEA and APAC, with significant expansions in various sectors including healthcare and manufacturing [24][25] Company Strategy and Development Direction - Workday is focusing on AI integration and innovation, with a strong emphasis on delivering ROI for customers [20][26] - The launch of Workday Go aims to accelerate deployment for medium enterprises, allowing implementations in as little as 30 to 60 days [14][51] - The company is investing heavily in AI and expanding its partner ecosystem to drive growth and innovation [21][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance despite macroeconomic uncertainties, citing strong customer demand and the value proposition of the Workday platform [40][42] - The company is closely monitoring specific markets like SLED and international business for potential impacts from the macro environment [25][108] - Management highlighted the importance of AI in driving customer engagement and future growth, with expectations for continued strong adoption [88][98] Other Important Information - Workday ended the quarter with $8 billion in cash and marketable securities and announced a new $1 billion open-ended buyback authorization [31] - The company is maintaining its FY 2026 operating cash flow outlook of $2,750 million and capital expenditures of approximately $250 million [35] Q&A Session Summary Question: Can you discuss the current macro environment and how it affects guidance? - Management noted that the Workday value proposition remains strong, with customers consolidating on the platform for better ROI and TCO, despite some headwinds in specific industries [40][41] Question: What is the potential impact of Workday Go on medium enterprises? - Workday Go is designed to accelerate deployment and improve pricing and packaging for medium enterprises, allowing for faster implementations [51][52] Question: How is the adoption of Xtend and XtendPro progressing? - Adoption of Xtend and XtendPro is increasing, with significant growth in partner applications and customer customizations [58][60] Question: What are the growth rates for HCM versus Financials? - Both HCM and Financials are performing well, with a strong sales motion for full suite offerings contributing to overall growth [62][64] Question: How is the company approaching capital allocation in the current environment? - The focus remains on organic growth and strategic investments, with a commitment to returning capital to shareholders through buybacks [84][85] Question: What is the outlook for AI product monetization? - Strong adoption of AI solutions is already being seen, with expectations for continued growth and monetization opportunities in the near future [98][99]

Financial Data and Key Metrics Changes - Workday reported a 13% growth in subscription revenue, totaling $2,059 million for Q1 2026, with a non-GAAP operating margin of 30% [6][27] - Total revenue for the quarter reached $2,240 million, also reflecting a 13% increase [27] - The twelve-month subscription revenue backlog (CRPO) was $7,630 million, up 15.6%, while total subscription revenue backlog increased by 19% to $24,620 million [28][29] - Non-GAAP operating income was $677 million, with a GAAP operating income of $39 million impacted by a $166 million restructuring charge [29][30] - Operating cash flow grew by 23% to $457 million [30] Business Line Data and Key Metrics Changes - More than 30% of new wins in Q1 were full suite, with over 50% in focused industries like healthcare [11] - New ACV across AI products more than doubled year over year, with approximately 25% of customer expansions including AI solutions [11][17] - Workday Go was launched to target medium enterprises, enabling faster implementations in as little as 30 to 60 days [12][13] Market Data and Key Metrics Changes - U.S. revenue totaled $1,680 million, up 13%, while international revenue also increased by 13% to $559 million [27][28] - The company saw notable wins in EMEA and APAC, with significant expansions in various sectors [22][23] Company Strategy and Development Direction - Workday's strategy focuses on leveraging AI to drive efficiencies and innovation for customers, positioning itself as a leader in the evolving future of work [25] - The company is investing heavily in AI and expanding its partner ecosystem to enhance its offerings [19][22] - Workday aims to capture growth opportunities in emerging and medium enterprises through initiatives like Workday Go [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties but expressed confidence in the company's value proposition and customer demand [24][40] - The company reiterated its subscription revenue guidance of $8,800 million for FY 2026, expecting continued growth in the second half of the year [32][44] - Management highlighted strong ROI and total cost of ownership as key selling points for customers navigating economic challenges [110][113] Other Important Information - Workday's AI solutions are seeing strong adoption, with a 100% year-over-year growth in AI-related sales [88][99] - The company has a new $1 billion open-ended buyback authorization, reflecting its commitment to returning capital to shareholders [31][84] Q&A Session Summary Question: Can you discuss the current environment and your confidence in maintaining guidance? - Management noted that the Workday value proposition resonates in both headwinds and tailwinds, with strong ROI driving customer consolidation on the platform [40][44] Question: What impact do you expect from Workday Go on medium enterprises? - Workday Go is designed to accelerate deployment and improve pricing and packaging for medium enterprises, with implementations now possible in as little as 60 days [50][52] Question: How is the adoption of Xtend and XtendPro progressing? - Xtend and XtendPro are seeing increased customer and partner engagement, with significant growth in applications being developed on the Workday platform [57][59] Question: What are the growth rates for HCM versus Financials? - Both HCM and Financials are performing well, with full suite wins being a strong sales motion, particularly in key markets [62][64] Question: How is the company approaching capital allocation in the current environment? - The focus remains on organic growth and strategic investments, with a high bar for any inorganic growth opportunities [83][84] Question: What is the timeline for monetization of AI products? - Strong adoption of AI solutions is already being seen, with significant growth expected as new agents are introduced [98][99]