Workday, Inc. (WDAY) Earnings Call Transcript & Summary

Welcome, everybody, to the last session of the conference. Delighted to be closing out the conference here with Workday. We're very fortunate to have Pete Schlampp, Chief Strategy Officer, with us today. Pete, thanks for joining us. Look forward to the conversation and look forward to a good session. I've got some questions I'll go through, and we'll open it up to you all. [Operator Instructions] Justin Furby, who's Vice President of Investor Relations, is also on the line. He's on the line. So I just want to acknowledge that. Hey, Justin. Can you hear us?

Yes, Brad. Can you hear me?

Good. Yes, absolutely. There you are.

Hey, Justin. Hey, Brad. Great to see you. Thank you for inviting us.

Absolutely.

I didn't know that we were the last session. So thank you all for sticking around for the last session.

This is it. No, we're very fortunate to be closing it out with you today. So thanks, Pete. Why don't we just start with your role, your background and how long you've been with the company and areas of responsibility?

Yes. Sounds great. Yes. So I'm Chief Strategy Officer at Workday. I joined Workday a little over 6 years ago via the acquisition of a company called Platfora. Platfora was an analytics company, and Workday acquired Platfora to get into the analytics space. After that, I ran -- I was the General Manager of our analytics business. And so if you follow Workday, you hear us talk about products like Prism Analytics and Accounting Center and People Analytics and a couple of other things. So I built those products from scratch. After that, I went on to be our Head of Global Product Development. So all product development at Workday, all of our office of CHRO products as well as our office of CFO products. I did that for 2.5 years. One of the things that I did there, and I'm sure we'll get into this a little bit as we're talking, is Workday's business is becoming bigger. We've -- we have 2 main buying centers, and we have a bunch of different SKUs in each one of those buying centers. And one of the things that we needed to do is put in place a structure as we had grown to think about how we're investing in those different areas of product. And so did that. And then most recently, now in December, Brad, I took this job as Chief Strategy Officer. I think about that as helping us chart our course over the next few years, like of all of the decisions that we have, of all the opportunities that we have, how do we choose the best ones with the best returns, what markets do we go into. It also is M&A. So it's all of our acquisitions that we've done. It's our ventures portfolio and marketing, too. So it's a fun job.

That's great. That's great. Congratulations on the expanded role. It sounds exciting. Since you have the background and the context for analytics, why don't we start there? I think analytics is becoming more to the forefront in applications, and it's becoming more real as to embedded analytics into frontline applications and back-office applications. Maybe you could just talk about the state of analytics at Workday. And where is it in the product? And what are some of the benefits that customers are getting out of it?

Yes. Great question. So a lot of credit to Aneel Bhusri, our Founder and Co-CEO -- Co-Founder and Co-CEO, who a few years ago had this vision for what Workday was becoming. And that is this enterprise management cloud that pulls together planning, execution and analysis, all in one system. So plan, execute, analyze. And the thinking goes, every company goes through that process every day, right? You're planning on what you're going to do. You execute on that plan. You analyze what you did. And then you go back to the process over and over. And this vision was if we can do it all together in a single platform, where all of the data is together, where if you come up with a plan and you want to execute that plan, you can do that literally in the same -- with -- in a couple of clicks away, that would give our customers increased agility in their ability to maneuver, better visibility into data, making -- allowing them to make better decisions. And so that was the vision. And so what we did -- and by the way, I'll also say Workday, a 17-year-old company but really the only company that has built an ERP and human capital management system from the ground up on new technology over the last 15 years. And that's a big investment in building a technology. And it was always the idea to have a single system of record with all the data together where you could do the analysis there. So what we did is we took this external product that we acquired, Platfora, that allowed us to bring in more data. At the end of the day, it allowed us to be -- to bring in operational data from around the business. And then we acquired also a company by the name of Adaptive Insights, and that was the planning system. And so this -- we have gotten to this point where we've realized having all of the execution system, all of the planning system, all of the analysis together in one product. And we're -- I think we're at a point where customers are starting to realize that value. Now from a pure financial standpoint, you think about the business, what do we sell, we sell Prism Analytics, which allows our customers to bring in data. We sell People Analytics, which -- by the way, we just announced that we have over 500 customers now on People Analytics, which is sold into our human capital management base, which is a huge win for us. And this -- also this new product called Accounting Center. You'll hear us talking about Accounting Center. And that's been a transformative product for us, especially in the financial services industry. We'll probably talk about that in a little while. But we're just at a point where we're getting more and more data into the system. Customers are realizing more value, and they're able to make better decisions because that data is in the system.

That's great. That's great. And since you mentioned planning, it's one of the things we've heard from the channel as seeing some real momentum lately. You've been calling it out in the earnings calls last 2 quarters. What's behind that momentum? Has something changed there? Has there been some catalyst in that business that's underneath the covers?

Well, the idea to acquire Adaptive Insights that is now 3-plus years ago -- actually, more than that, 4-plus years ago. Time flies. The idea was to get a planning system into that core system of record. And we spent a considerable amount of time integrating it in, so it feels like it's a first-class part of the platform. The -- over the course of the past few years, we've definitely seen increased demand for planning products because of -- because people -- because basically, the world is changing. The world is changing fast for our customers, and they want to be able to look at different scenarios, different plans and choose which way to go. This is a stat that we shared last year, but I still think it's really illustrative of what's going on here, is in the beginning of COVID, we saw our customers -- when customers use a planning product, they create something called a scenario. And imagine a scenario is like one version of the world, of one way that the world is going to -- going to -- may transpire ahead of you. We saw our customers' number of scenarios increase by 30-fold at the beginning of COVID, from 1 month to another month, which is amazing, right? What -- the story there is people started planning more. They started thinking about what are the different scenarios that their business might go through. And I will say that it's not still 30x, it did come down from those early days, but it has maintained a significant increase above where it was before. And so ultimately, it gets to -- that's what's happening with our planning business. We have 2 main areas that we sell our planning business. We sell financial planning, which is typically to the office of the CFO and inside the FP&A team. We also sell Workforce Planning, which goes to -- actually, quite often the FP&A team still runs that, but the end customer is the HR team. And there's a bunch of other areas of planning as well that we cover as well. But those are the main ways we go to market there, and it's been a great business for us.

That's great. That's great to hear. And while we're on the topic of planning and financials, why don't we just kind of start there. That cycle, how do you -- where are we in the -- in that cycle? I know that the company has, in some ways, kind of pivoted a bit away from rather trying to go displace the legacy ERP transactional system, let's win planning, let's win procurement, let's win accounting center, perhaps, surround the account in 1 or 2 of these systems, and then you can knock out potentially the transactional ERP. Is that kind of -- is that the right way to articulate that? Is that -- maybe if you could just explain a little bit more around that.

Sure. So Workday's core financial system, you can kind of think of this as the core accounting and general ledger system that we sell to our customers. It is -- we've been developing that for a number of years. And what we realized is that CFOs don't come in every day and say, "Hey, I want to swap out the GL." It's a big deal, typically. It is truly a digital transformation. You're going from this old on-premises system that's probably sitting in your closet or sitting in your data center with processes that were encoded into that system 20 years ago when you originally implemented that ERP system into a cloud-based system that is more flexible, easier to change, et cetera. But still, the CFO, with their CFO hat on, thinks like what's my return here and how long is it going to take me to get there. And so we have come at this market in a bunch of different ways. And one of the things that we have done differently in the last 5 years is this concept of surrounding the core, meeting CFOs where they are. And that might be, hey, I need a planning system. I need to be able to look at more scenarios in my business. I need to be ready for what's next. So start with planning, move to core financials later. Another one is strategic sourcing. And so a couple of years ago, we acquired a company by the name of Scout RFP. And that is a product that allows procurement teams typically to go out and look at all of their supply chain and their vendors, put out RFPs, make it really easy to automate the process of putting out RFPs and then selecting the best vendors based upon a bunch of different criteria they put in those RFPs. It might be price. It might be ability to get supply, which certainly matters today in this economy. And so we put this kind of string around general ledger and now with accounting center and these other pieces, allowing our customers to choose their on-ramp, basically. And it's been successful for us. We know that we have about a 20-point incremental win rate when we are already in a customer that is buying another component of ours. So it's paying off. And there's more -- I think there's more opportunity there as well as we go forward.

Absolutely. No, that's great. And a lot of the thinking around Workday as a platform company is that with the position you have already in HCM, that provides a real advantage in ERP. Could you articulate to the audience how that does translate to the business? Do you see that there is that essentially warm lead in an account if they're already an HCM customer that you say you're able to bridge that gap to the finance department?

Absolutely, there is. And the -- I think it's important to think about whenever we talk about financials, it's important to think about industry. Whereas when we sell human capital management, it's broadly a horizontal play, and we sell to every industry when we sell human capital management. And by the way, we sell to every industry when we sell planning and when we sell sourcing as well. However, when you sell financials, we get into a world where there are industry-specific requirements. And we are focused on the finance -- the core financial side, we're focused on service-based industries. Now service-based industries, their main thing that they care about are people and human capital. And so having a system where the human -- HCM system is -- together directly with the financial system is a really big benefit. When you want to know what's driving my costs, I can click over and I can find the exact teams within the same system that are driving my cost or where am I seeing more attrition, what have you. So it is quite a benefit to put those 2 things together. Since we're talking about industry, I'll just talk a little bit more about that.

That's going to be my next -- the next question. Yes.

I'll just go right into it, which is industry matters a lot for us. And we have been -- over the past few years, we've been investing more and more in industry specialization specifically for our core financials products. And so you look at, for instance, health care. In health care, we have supply chain capabilities for health care. Inside the financial services industry, we've built Accounting Center, which I'd love to talk more about. But that has had a huge impact on our FSI win rates, actually. Inside of state and local government, we've got specialized grants capabilities. Inside our professional business services industry, we have projects and projects billing. And we now have a new -- through an acquisition we made in a company called Zimit, we've got a new configure price quote system for -- specialized for services, which automates the process of putting together a quote to provide services to companies, and that integrates directly into the GL as well. So we've been building more and more industry specialization into the financial side. And what we see is quite interesting. Again, like the data is where it's at. And being able to go in and see how our investments in product, our investments in R&D are translating to higher win rates in those industries where we have more industry specialization is great, right? It gives us, I think, a pretty good handle on the business.

Absolutely. ERP is not a one-size-fits-all when it comes to financials, probably more so for HCM, but certainly not for accounting and general ledger, and rev rec models across the industry is very different. I guess how far -- how well developed are the verticals? Do you feel like the work has been done at this point and now it's just a question of let's go sell it? Is that an ongoing effort? Yes.

I think we've got really great coverage of core financials. And within all of our L3 through L5 industries, so many of those that I just mentioned and a couple more, we can go and can sell core financials to any of those industries. We continue to invest in the industry specialization for those industries as well and more so on what we would call an L5 industry versus an L3 industry. So we'll continue there as well. But the -- but I'll also say that there is more opportunity. I hope later we'll talk about wallet share, and we'll talk about the ability to sell more products to our existing customers. But that is certainly a factor inside the office of CFO business for us as well. So even though we have the general ledger, and we've got all these specific industry specializations and planning and sourcing, there's more that we can sell to those business as well by adding more SKUs into the picture as well.

Sure. Well, maybe we can articulate on that. I think that would be a nice segue. Accounting Center is one that you alluded to earlier.

Let's talk about Accounting Center. I think -- so I mentioned Accounting Center being very important for us. So Accounting Center is the ability for our customers to take data from their operational systems and bring it into the -- into Workday and next to the general ledger. I always like to use the idea of -- the example of insurance when I explain this because everybody's got an insurance policy, and you can imagine what an insurance business is. An insurance business has their GL, but they also have a policy system, and they've got a claims system. We're selling policies. We're taking in claims. Those are operational systems across their business. Now Workday doesn't sell a policy and claims system. They're very specialized. But what a typical business would do with an ERP system is they would take the data from those operational systems. They'd summarize it down. And they'd say, okay, we sold 100 policies today. It's worth this amount. And then they would take that, and they would move that piece of data over into their ERP system. That would be a manual process. There'd be an accountant that went in, and they make a general ledger entry because of that move. And then if you ever wanted -- if you're the CFO, if you ever wanted to know what's happening in my business, you've kind of got this lossy amount of data in between your GL and your operational systems of your business. What Accounting Center does is it brings in all of the detailed data from the operational systems directly into Workday, and then we automate the process of creating the accounting on that operational data. So humans don't have to be involved. So it's more accurate, saving costs for the CFO. And then finally, when you want to go and do analytics and planning on that, you want to say, hey, why did all of a sudden we have these losses in, I'll just say again, insurance in the Mid-Atlantic, during this time? Oh, it happens to be a bad storm at that time, right? You can go -- you can drill all the way from the general ledger back to the -- that core detailed data, right? So that Accounting Center -- and I gave you the example of insurance across FSI, across banking. It's helped drive our business for customers like KeyBank and Fannie Mae and most recently, U.S. Bank, which is a great win that we had in Q4, which was an Accounting Center customer. It's really -- it has significantly impacted our win rates in the FSI business because of this added value that CFOs can see out of it. And then finally, like I'll just mention that, that is our first of what I would call a data-infused app. Like we have, I think, a lot of opportunity going forward to build more data-infused apps by bringing data into the system. I think ESG is going to be a fantastic opportunity in that area. But yes, there's a lot of going forward business for us in data.

That's great. That's great. At the Analyst Day last year, you disclosed the 40% attach for FINS to net new deals. So great results there. Does that imply that FINS is typically sold as part of a broader footprint with HCM? Or is it typically a customer kind of coming in with just -- with FINS, would you say?

Yes, great question. Years ago, it started with we would be selling FINS back into our base, back into the HCM base. And then it moved to we are doing large deals where it's HCM and FINS as net new. More and more frequently now, Brad, we are doing FINS-only deals, which I think is really interesting. I think that's a sign of maturity of that product that you don't -- people don't need to come to us and know us as simply the HCM company anymore. We are the financials, capital management planning company today, right? And so more and more frequently, it's going FINS first.

That's great. That's great. And at the Analyst Day, you outlined a $10 billion revenue target over the longer term. As part of that $3 billion for FINS, which by our math is roughly 10% share of ERP, what could drive this cycle such that you could exceed that type of target? Obviously, this is a gradual cycle. Firms, big firms aren't going to rip out their European financial systems overnight. And you're embarking on this steady upgrade cycle that you've been executing so well on. What would it take to see results where you actually exceed that type of -- right.

Well, I think the -- it's important to know where we're at in a market and where we're at in the transformation of the market, whereas when Aneel and Dave started Workday 17 years ago, the idea of putting your HR data in the cloud was that was a little crazy at the time, right? And -- but quickly, HR leaders moved and said, "Okay, this is okay. I can start putting my people data in the cloud. It's a good idea." Financial leaders have been slower on that transition. Whereas the majority of the HCM business has moved to the cloud, the majority of the financial core financials business has not moved to the cloud yet. So we've still got the better part of that market still to happen, and it has happened slower than HCM or later, I guess, I would say, later than HCM. And so really -- and by the way, it is very much differential based upon your industry, your region and the size of business that you are. And so when you start to put all that together in a cube, you can look and you can say, here's where the market's moving, right? The -- to answer your question simply, like what can change -- what is the upside, it's really the rate of digital transformation. It's how fast companies will do their digital transformation from that on-premises system to a modern cloud-based system. And by the way, I'll just say one more thing, which is lift and shift to the cloud, meaning take your existing system that's running on-premises in your closet and go run that same system in the cloud is not digital transformation. That is -- that's a convenience of not having to air condition your closet anymore, right? It is -- but the benefits of getting digital transformation are going to happen when you decide to go truly do that move. And so the upside is that transformation will be faster.

That's great. That's great. Why don't we switch over to HCM? Maybe just to outline, what are you excited about at HCM now? Where would you classify penetration today, market share? And where is the incremental win coming, from enterprise and mid-market for HCM?

Yes. Yes. So on the HCM side of the business, we have over 50% of the Fortune 500 now, which is fantastic. The way I look at that is we have 50% more to go. So I'm super excited about that opportunity. But there's other areas that are moving quite fast. So our midsized enterprise business is growing quite fast. We had a great Q1 when it came to the ME. We also have a big opportunity of selling back to our base. And so I'd like to give this analogy or give this example, which is we've been building human capital management systems for 17 years. We have -- on the OCHRO side of our business, we have over 20 SKUs for HCM, in the HCM space. Over half of those SKUs have been created or they've gone general GA in the last 4 years. So think about that for a second. More than half of our products on the HCM side were created in the last 4 years. And the penetration of those products into our existing customer base is still quite low. They're just starting out, right? Like I mentioned, People Analytics just crossed 500. But we've got -- I don't know the exact number. Justin will have to come in and correct me. Over 3,000, close to 4,000 HCM customers, core HCM customers. So there's a ton of opportunity left to sell those products back into the base, right? So really big opportunity, and we're going to continue to innovate in that area as well, right? We'll continue to add new products so that we can -- so we can take more share of market, more share of wallet.

Great. And when you say share of wallet, is that just a matter of selling more of the modules around HCM, learning, performance, recruiting, payroll, et cetera? There's a lot in that suite.

That's right.

I guess is that -- when you say share of wallet, is that...

That's right. Yes. Yes. That's exactly right. And so the -- there's core human capital management, but it's payroll, and it's recruiting. And those 3 SKUs are typically -- they're kind of the highest penetration SKUs. But then you have learning, talent management, people analytics, messaging, workforce planning. I know I'm going to miss them all because I can't rattle off 20-plus SKUs off the top of my head, but there's -- that's the opportunity that's there. And I think you also have to think about our business as we go out and we land -- actually, we go out 3 ways, but I'll start with we land and we sell a few -- a handful of SKUs. But then we also sell back to the base. So we have a team that is taking those SKUs and selling back into the existing base. That's happening at renewal time. It's happening -- our deals are typically, on average, they're 3 years, but there's a lot of variance. Some are more. Some are 5. Some are 10, believe it or not. And so there's definitely an opportunity to sell back when we are renewing, but there's also an opportunity to come back every year or even more frequently than that and sell. Last thing I'll mention is some of our new businesses. So we have -- in the last few years, we've acquired a company by the name of Peakon. Peakon is about employee experience and measuring the employee voice. Incredibly topical right now on the minds of every CEO as well as a company by the name of VNDLY. And VNDLY is extended enterprise. So it's your extended employment team. So here's what -- I don't know if you know this, but here in the United States, 46% of the Fortune 500 workforce is non-FTE. 46% is non-FTE, and that is rapidly growing. So what else are they? It's contract, temp, statement of work, employees on statement of work. It's gig employees. And that has -- that is a trend that we are on the right side of. Employers came out of the pandemic and said, "I want more flexibility in my ability in my -- the way that I employ people." And employees came out of the pandemic and said, "I want more flexibility in the way that I work." And so VNDLY is a platform that we are integrated into Workday that allows our customers to manage that entire part of the business as well, which wasn't previously part of Workday.

Absolutely. And that's great. And the company continues to hire sales and marketing at a pretty steady pace this year. You've outlined a path for a similar rate as to last year. Where is the incremental investment for sales and marketing? You've got so much in the stack just within HCM, FINS. Mid-market is a new -- is an area of focus, enterprise. Can you just help unpack for us a little bit what you...

Yes. In a few different areas. I'll start with -- on the sales side, on a few different areas. Certainly, international is an area that we are investing in sales. We're making targeted investments. We're really choosing the regions where we feel we're going to get the most immediate returns. So U.K., France, Australia being -- Germany being areas that we are investing. We're investing in the midsized enterprise teams. We're investing in customer base sales teams. This last year, for the first time, we invested in a new team that we call the land team. And that is -- so that is planning, scout or sourcing, Peakon Employee Voice and VNDLY. So those -- all 4 of those products, by the way, are products that you can sell without selling anything else at Workday. And so we think of that as a new way to go out and acquire customers, which, by the way, are shorter sales cycles, faster to implement, typically lower cost to get into and then an opportunity for us to go out and sell both our human capital management and financial management back into that base as well. So we've been investing in that area from a sales standpoint. From a marketing standpoint, I don't know if you all have been watching TV lately, but there's more Workday ads out there. If you've been maybe watching the Memorial Tournament last weekend, which was great, the MBA, et cetera. So we've been certainly investing in brand and awareness. I mean we've been doing that internationally. I think that that's a really important call-out. With the intent of raising the awareness of who Workday is and especially who Workday is as a financials business -- a financial management business internationally in all the regions that we're in. So increased differential investment in those areas.

Great. Thank you for that, Pete. Last quarter, you called out some deals pushing. Maybe if you can elaborate a little bit on what was the cause of that. And what are you seeing in different regions from a macro standpoint given all the moving parts in Europe, with the Russia war, China slowdown in Asia, risk of recession in the U.S.? Maybe we can just start with the deals pushing in Q1 and just if you could help understand -- help us understand a bit more the environment and what you see from that.

Well, I'll start with what can maybe -- could get missed in the Q1 news is we had a great quarter when it came to our revenue. We -- revenue increased. Sub rev increased 23%, which was an acceleration, which is great. We had a good quarter internationally. We had a good quarter with our midsized enterprise business, a good quarter selling back in the base. Another thing that I want to make sure wasn't missed, and this gets to kind of macro and like what's coming in from a macro standpoint, is we had a good quarter from pipeline generation. So new prospects coming into the pipeline in Q1, it was a good quarter for them. Now like you said, a couple of deals did push. We -- they pushed out to later in the year. And the way to think about that is it was a couple specific deals that were big enough that we were obviously very close to and kept our eyes on. And as we were close to it and intellectually honest, we said, "Why exactly did those "push? And when you look at them, it wasn't because we saw a particular overarching macro condition. They were very specific circumstances in those deals. And so -- and because we're so close to those, we also feel confident about being able to close those deals later this year as well. The other thing that I would say is we mentioned in -- also on the call that in May, which is the first month of Q2 for us, we had a good May. So I think that -- all that together, you put all that together, that gives us optimism about executing on FY '23 in the way that we wanted and the way that we've said we will. It feels -- makes us feel good about the business. I'll add one more thing. You asked about Europe. Actually, I was just mentioning to you before we got up on stage, I traveled to Europe a few weeks ago. I went over to go to the Davos conference. Unfortunately, I got COVID halfway through, which was a bummer, and I spent a week plus in a hotel in Prague. But before that, I actually had the opportunity to go visit a bunch of different regional areas in Europe. And we started -- we kicked back off our Elevate conferences, which are prospects coming in. And we had standing-room-only rooms. In Madrid, standing room-only room, people are talking about doing new business. So it is not -- it was not the setting where people were saying, "Hey, we're stopping." And I'll also say, I did get a chance to participate in a lot of the Davos conference virtually. And although there is a lot of questions about macro, is a recession going to happen, is it going to start in Europe first, what's going on in the geopolitical side. There was also the other side, which is stronger U.S.-European relations, potentially economic benefit there, et cetera. There's good guys and bad guys there, so to speak. And from all that put together and bringing it back to Workday, we continue to be in a place that we feel good about FY '23. We continue to feel good about what we've said in terms of our 20% plus growth rates for the next few years until we hit $10 billion. We're -- I think we're in a good place. And based upon our business and what we deliver to customers in a changing world, which is agility, which is ability to hold on to your talent, know your business better, those are all things that are really, really important no matter what the external macro environment.

That's great to hear. Thanks, Pete. Maybe we don't have much more time. But maybe just for one question. If there's a question from the audience, please feel free to raise your hand, and we'll get a mic over to you.

It's been really interesting to hear the strength in planning and also in procurement, Scout RFP in recent quarters. And I'm trying to compare and contrast that to what we're seeing from best-of-breed tool providers like Coupa in procurement, like Anaplan in the planning side. To what do you attribute that differentiation? Is it the platform versus, in their case, being a mere tool provider? So that would be kind of the first question, if you could help us square that circle. And then secondly, if you could talk about another company competitively that's doing very, very well on an organic basis, is ServiceNow. And they're automating a variety of workflows, in some cases, in the employee realm, in some cases, building on top of Workday. And oftentimes, I wonder why aren't those Workday's workflows to automate. Why isn't that something that you all are building? And does their success -- while I understand there's a bit of coopetition and partnership there, does their success perhaps forestall an enterprise need to digitally transform and hop off the fence and implement FINS or HCM and they -- buys them time to kind of kick that can down the road? So I guess in your new seat as Chief Strategy Officer, and you're trying to kind of have line of sight over the medium term, where do you see that competitive line going? Is that an enabler or becoming more of a threat?

Yes. Great, insightful questions. I'll start with the planning and the sourcing business and when you compare them to stand-alone best-of-breed products, how to think about that. First thing I would say is both those products compete stand-alone, best-of-breed. They have to, right? And we have a business, talked about the land business, which is going out and selling both those products without any other Workday, right? And so that's a good measure of those businesses if you compare them apples-to-apples. But I think you see more strength from Workday. One area that you'd see more strength from Workday is the ability to sell those into a net new deal that's already happening, for instance. If we're already going out and we're selling human capital management and financial management, being able to throw that into the basket is -- gives us some added benefit as well as going back to a customer as they're renewing. So it just gives us more options, more abilities, channels basically to sell those products that a best-of-breed alone company doesn't have. Second question about Workflow and ServiceNow, who I would say is a partner of ours and know them quite well. And in fact, one of the big deals that we announced in Q1 was a joint deal with ServiceNow in the picture that when we showed how you could do Workday Financial -- Workday Human Capital Management and alongside of what you could do with HCM workflows from ServiceNow, that convinced the CIO that, yes, this is what I want. I want the digital transformation, and I want this external workflow tool that allows me to connect to other systems outside of Workday, right? The -- so I look at them as a partner. I think sometimes the messaging might get confused. It's hard to kind of pull all these things apart. But they're a partner.

Great question. Pete, unfortunately, we're out of time here. Thank you so much for joining us. It was very informative. Really appreciate you being here and learned a lot. Thanks, everybody, for sticking with us through the 3 days. We had a great 3-day conference here. Look forward to having another great conference next year. Thanks, everyone, for joining us.

Thanks.