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

So I don't think you need an introduction of Carl Eschenbach at all.

Or you, Kash.

Carl's been a COO, been a -- how many of you know somebody who's been a -- who is the CEO and has been a COO and a CFO and a venture capitalist? Anybody who knows anybody? No. That's okay. So there you go. That is truly unique about you. I just thought about it, how many people have won these multiple hats? It's only one person that I know.

I don't know if that's a good thing or a bad thing, but I have done a lot. I'm very fortunate and had a blessed career, and I'm super excited to be here with you, Kash and Gili. Thanks for having me.

Thank you.

So if you had Zane, the CFO of the company -- and my boss has been a CFO. Zane is sitting in the audience somewhere here, but -- there he is.

Yes. He hid in the back but I'd say if you have any questions for me that I want to deflect, they're all going to Zane.

I really want to talk to Zane.

He can sit as far back as he wants, you're still going to get him.

Exactly. But free cash flow margin to non-GAAP operating margin percentage bridge, no, we will not talk about.

So he should be okay.

Yes. So Carl, thank you so much, and congratulations. I think we met many, many years back. I think it was 2007. Your -- it was the IPO of VMware, and Aneel had started Workday in 2005. Did you ever know -- do you ever think you could be running an application software company when you're running the business operations at VMware?

No, I probably didn't, right? And I didn't -- I knew of Aneel, obviously, from his PeopleSoft days and all of the success he had and then the launching of Workday. I was very familiar with it. In fact, speaking of CFOs, Aneel, who I love dearly and is my partner now, sold at the time my CFO, my Chief Accounting Officer and my Investor Relations person, all within 2 weeks, to take Workday public. So that was -- that's, unfortunately, how I became CFO for a while when they went public. And I was upset with them but not -- no more. He's a great partner, and I'm great to be on the journey with him.

And he stole his future CEO as well from VMware, it sounds like.

Yes, that's probably true. I don't know.

That's great. Aneel, if you're listening, it's all good stuff. This is fantastic. So Carl, you've been on this journey before. You're no stranger to technology. But Workday is an application software company. How do you look at this company 5 years from now? Let's say, come back to the 2028 Goldman Sachs conference, and we'll put you on the -- this is a beautiful stage by the way. Some clients asked me, so how come Carl is not on the bigger stage? We'll definitely get you on the bigger stage. So what does the company look like 5 years from now? What do you want it to look like 5 years from now?

Yes. So let me start with why I'm excited, maybe, Kash, and why I jumped back in after an amazing 7-year journey at Sequoia. And what I learned in those 7 years, and combine that with my 30 years of operating experience before I went into, if you will, Sequoia -- I actually think the transition from VMware, too, Sequoia was a good one, I think I'm a better operator, a more skilled executive and leader at this point. And I have really enjoyed my first 9 months here at Workday. I'm not new to Workday in the sense that I was on the Board for 5 years. I spent 5 years on the Board. So I knew the company. Obviously, I knew Aneel. I knew a lot of the leadership team. A lot of them worked with me in the past. And then I was always part of helping recruit some new leaders to the company. So I -- it's not like it was new to me. And I will tell you the one thing that attracted me to Workday, and still is very much attractive to me now 9 months later, is the culture. Aneel and Dave built an amazing culture at Workday over the last 18 years, and it's one that I always thought was powerful and the foundation for everything Workday does. And indeed now, 9 months later, I can tell you that it is true. And now having this experience both on the venture side and the operational side, I think about Workday in 3 different categories. Number one, the strategy of the company, to your question, where are we going. I think about innovation and how we continue to innovate, if we're not innovating every single day, both organically, inorganically and on the go-to-market side, right? I always say if the world is innovating faster than you are outside your company, then you are inside your company, death is near. So we need to always be innovating. And then lastly, we need to execute. And execution is very simply defined as a discipline of getting things done, and I think we're executing very well. And if I look out 5 years from now, I think the vision we have to be the digital enterprise backbone, right, that supports the company's 2 most important assets, their people and their finance, through a full-platform approach, being able to do planning, execute and analyze it all under the same architecture, I think that's where we're going to differentiate ourselves, both today and in the future. So I think we're very well positioned in both good times and bad despite whether you have a headwind or a tailwind. I think Workday is very, very much positioned and in a good place at this point and going forward. We're very unique in that the business is highly resilient. It's a highly resilient business. We have over 5,000 core customers. We have 10,000 in total when you combine it with our planning product. We have a great go-to-market motion in landing net new customers with a nice balance of selling back into that installed base, so it's highly resilient because of the diversity of the business. And if we can continue this motion we have today by becoming that full platform for the enterprise to support those 2 mission-critical assets, I think the future is quite bright.

Great. And people tell me, and this does not surprise me the least at all, it's a fresh breath of energy at Workday. It's like, all of a sudden, some new clarity, some new energy and people are fired up, really fired up, even more. I mean Aneel fired people up as well, but now they're even more fired up. My question for you was, despite all the macro pressures, you are one of the very few companies that actually did not have to lower your guide and whatnot. Is it just the execution under the Carl Eschenbach effect? Or is there something else to the Workday product portfolio and how important you are that it's allowed you to be a more consistent performer than many others who had to take down their guidance and down the numbers?

First, Kash, it's not the Carl Eschenbach effect. Hopefully, I have some impact in partnering with Aneel. But Workday is way bigger than any individual at this point. There's no doubt, I know enough about myself, I'm probably energetic and optimistic about everything and really focused on driving energy. I think energy and enthusiasm are contagious. So I do like to operate in that way. But there's no way our company at Workday is performing at the level because of one person. I'll say that right upfront. It's because of my 18,000 workmates around the world and my partnership with Aneel. And I'll go back to why I think it's resilient. I say we're highly resilient because we have a diversified customer base, a diversified go-to-market. And that is extremely durable. If you look at our retention rates, you look at our upsell, cross-sell capabilities back into our customer base and then yet landing net new customers, it's one of a kind in the software industry today. And I think, despite some of those headwinds that you're talking about, our value proposition is only strengthening. Why? Because people are focused on creating a new level of productivity through their employees, giving them a different experience. And if you do that, I think ultimately, what happens, you have lower attrition. So your people stay with you longer, they're much more loyal and your productivity continues to rise. At the same time, when you're dealing with an uncertain macro, there's a lot of changes that someone like Zane or other CFOs have to deal with, and having a platform that will allow you to run scenarios and do planning regardless of what's happening in the economy, is something that's highly valuable. And as people now start to think about their financials that traditionally have been on-premises, and now moving to the cloud, I think that gives us a unique market opportunity, too. And then the last thing I'd say is, as we continue to work with customers, both existing customers and new customers, they're not looking for Workday to deliver a solution, they want a platform. And what I mean by that is we are more and more selling full platform, both HCM and Financials, at time of sale to customers and wrapping planning around it. And that's definitely something that we see picking up momentum in the market.

And on that very thought, right, so Workday has got a lot of products, many of them organically developed, some through acquisitions, how do you simplify the product portfolio and make it so tangible for the customer that you remove more and more of the friction as one might naturally introduce, as you expand the product portfolio, which is more reasons for the customers to stay? No, maybe this maybe or maybe not that. How do you simplify that kind of process?

Yes, it's a great question, Kash. I'll answer in two different ways. First, traditionally we branded with an HCM product or an app, you called it an app or Financials as an app. But I think more and more, we're being seen as a platform company. And more and more people are taking a lot of those best-of-breed solutions they bought over the last 3 to 5 years, when you saw this hyper growth in new products, new offerings from the start-up community, and now they're consolidating them on this platform that we have, whether it's Financials or HCM. So there's a consolidation happening, and I think we have a strong total cost of ownership message for our customers, both existing customers and new. Now to answer your question, we do have a lot of SKUs, and we sell them as a one-off SKU every single time. And we're going through an exercise internally right now to figure out how can we remove the friction between our sales organization, our channel and our customers to be able to sell more suites, sell more holistic platform solutions as opposed to one-off SKUs. Now if you're an existing customer, one of the things we have going for us right now, we have this notion of selling back into the base. We have two different sales force. We have a sales force that lands net new customers. And then once it's landed, it's passed over to a customer base team, and they drive additional SKUs. So the customer base team is very quickly driving a significant uplift in our customer base through selling them these additional SKUs. But it's still one at a time, and we're going to move to suites and packaging in the next 12 to 18 months to reduce the friction between us and the customers.

Got it. Gili?

Yes. I mean, touching on that, Carl, thanks so much for spending the time with us today. I think we'll talk about HR definitely a lot today. But one of the questions I actually had was around ERP and that full platform that you were just talking about. I think that, that ERP has been a laggard in penetration to cloud and that migration and especially now with the digital transformation and tight IT budget. What do you see as being the unlock and allowing customers to really be ready to make that step and choose Workday and doing so?

Yes, it is a great observation. We just went through a study where we looked at the percentage of ERP or FINS that's still on-premises versus the cloud. And right now, we estimate -- both our estimation and the industry as a whole estimate somewhere only between 20% and 25% of workloads have moved to the cloud, so that just shows you the size and scope of the opportunity. And listen, I think rightfully so, CFOs are conservative, right? They're not open as much as people in the HR community to take a system of record and port it to the cloud.

I think that's Zane.

Zane is the best, yes. He's conservative, but he's great. I'm so lucky he's here. Thank you. But I think they are conservative when it comes to moving Financials, a system of record, to the cloud. So I think we're in the early days of this shift to the cloud. And to be frank, our competition is helping us in the sense that they're asking their customers to move off-premises and move into the cloud. And when that happens, we get a seat at the table to have a discussion with those potential prospects to deploy the Workday, if you will, financial platform. If they're an existing HCM customer from Workday, there's even a higher propensity for us to sell a full platform, to your point, in wrapping planning around it. So we're in the early days of this financial movement, which is why we, as a company, are investing quite heavily on the go-to-market side and building out a sizable FINS direct sales force, incremental to the other people who sell everything.

So interesting. And I guess the second is a question around generative AI. And when we think about the opportunity in front of Workday and the pure amount of data that you have around the workforce and the knowledge workers all around the world, how is that helping you both within HR and ERP and the go-to-market motion that you're just talking about?

So listen, this is a revolutionary technology, right? It's a major tectonic shift, probably like we haven't seen in the last 30, 40 years. And I think, first, people need to lean into it. But they also want to lean into something that's safe, that's ethical and responsible as well. And when I think about this AI movement, I think about what is the output of generative AI or AI or machine learning, and I think it's only as good as the input. And I think this is where we have a really big differentiation. We have over 60 million contracted users on our platform, and we're processing last year, 600 million, right, transactions a year through our platform. So when people talk about a large language model, I call ours an enterprise large language model that no one else has in a multi-tenant cloud, same architecture, same code base all the time. So we have the ability to train off of a very large LLM that others don't have. And we can drive business outcomes for our customers like skills, we focus on how do we look at skills as opposed to jobs or job recs, how do we do talent optimization, how do we give people journey. So we have all of this AI/ML deeply built into the platform for the last 10 years. At the same time, we also have announced via our Extend product, what we call, an ML gateway, a machine learning gateway. So if people want to take an outside LLM, integrate it into Workday, we'll allow them to do it so, whether it's from one of the hyperscalers or OpenAI or anyone else. So we are leaning into it. We think, quite frankly, we're already monetizing. I know a lot of people ask the question is how do you monetize generative AI, what are you going to do. We believe we're already monetizing it. We look at it through our competitive win rates versus our competition. We look at it through our renewal rates. We look at it through customer satisfaction. And all of those are at company historic levels right now because we have it built in from day 1. Now that doesn't mean we're not going to bring new SKUs, if you will, or offerings to market and we're going to monetize them, but we're not going to do it every single time. What we don't want to do to our customers is nickel-and-dime them and say every time we add some additional capabilities around AI or generative AI, we're going to charge them. They do pay us a subscription fee every year. They pay us an innovation index uplift at the time of renewal. So we want to make sure we're giving to our customers. Now if it's going to take away from our compute capacity or impact the OpEx on our end, like bringing in an outside LLM, we will find a way to monetize that. So we're going to really think through the monetization strategy. But I would say we're already monetizing it, if you look at some of the areas that I've talked about, competitive win rates, renewal rates and customer satisfaction on the Workday platform. But we're unique. We have a large data set that no one else has. Our competition has on-premise. They have in the cloud. They have single tenant, right, some multi-tenant. They have hybrid. We have a multi-tenant cloud, everyone on the same code base that we've been training all for years, and that number only expands. The 600 million transactions I talked about this year, that's up from 450 million last year, a pretty good data set to train from.

Definitely.

So if you're on-prem, you don't need a copilot, right? I mean if you're in the cloud, you need a copilot. I was just trying to be funny, guys, come on. Copilot, on-prem, it doesn't make sense, right, okay. That was good.

I know, yes. Sorry, it was good. Yes, we're in the cloud. We're going to the cloud.

You're going to the cloud, you need a copilot. So there are different software companies that have announced pricing for AI, some of them like 60% uplift; the other companies, $30 per user per month. Those seem quite high. I really wish all these companies are able to get that price realized by the marketplace. But what you're talking about is a different way of monetizing. So how do you get paid? I know that your customers expect you to provide some level of AI functionality in the product itself. Are we to see a reconstituting of the product line and you have Financials AI plus version or Financials without AI? Or do you just say, if you want Financials, it's going to come with XYZ, and the price is this, whereas the previous price, it's not a comparison because it's apples and oranges. How are you thinking about how you get paid?

Yes. I think, Kash, what I was trying to articulate, it's a combination of both, right? We believe we owe our customers some innovation in the platform like the team and Aneel and Sayan, who runs product and technology, he's done it for the last 18 years. And they do pay us and they pay us an increase every year for that innovation. So we will monetize it through what I was articulating earlier. At the same time, if we see opportunities, for example, we have a product called Talent Optimization, right, that is based on our Skills Cloud, and that's 100% AI/ML driven. It's a new SKU. We've optimized for it. We're charging for it. It's one of the fastest SKUs we've ever had. So it's going to be a balance of both. But you're not going to just see us come out and say, "Point blank, here's a FINS plus or HCM plus, and here's a big uplift on one product or the other." We're going to be smart about it. And we'll share a little bit more about the innovation around AI and generative AI at our Rising Conference in 3 weeks from today here at San Francisco.

If you're going to plug, you should tell me.

Yes, there you go.

So when is Rising, you said 3 weeks from now?

Three weeks from today, we kick off Rising in Moscone.

Excellent, yes. Thank you for getting the conference here.

We expect to have 15,000 of our closest friends and partners who trust us with their most precious data in town.

That's great. I'm looking forward to it. It's not -- we've not had Rising in San Francisco for a while due to the pandemic.

Yes. Obviously, COVID, yes.

Yes, exactly. I wanted to get your thoughts on -- I could go in multiple directions. It's such a fascinating conversation. But HR, there is a view that it's mature. Do you have a different view on maybe what's the definition of maturity as maybe there's more innovation to come from Workday? How do you define it?

It's a great question, Kash. And to be honest, when I was thinking about taking Aneel up on the amazing offer to partner with him and serve here at Workday, a lot of people said, "Workday? Aren't they mature? Aren't they grown? Is there growth? Is there opportunity?" One of the things that excites me most about Workday as we sit here today is that opportunity, right? We're less than 10% penetrated even on HCM in the market. And if you go international, it's less than 5%. And I think what people do is a lot of times they look at Workday, we have more 50...

That's based on number of seats, right?

Yes, exactly. If you look at Workday, we have 50% of the Fortune 500, right? And we have 25% of the Global 2000. So people say the market's sold out. And I remind people, that's 2,500 accounts in the world. And one has 50% opportunity. That's the other at 75%. If you look at the incremental opportunity, especially in some of the verticals we're going after, state and local government, 13 states across the U.S. have made decisions to go full platform transformation. That's a lot of opportunity. You look at our penetration in health care. If you look at our penetration in retail and hospitality, which just became our second $1 billion ARR vertical after Financials, it's huge. And then you look at two other areas that we're investing heavily in. It's our international opportunity. We get 25% of our revenue outside of the U.S., including Canada; 75% is from right here in the U.S. And that kind of goes along with the Fortune 500 and the Global 2000 penetration. But we have a tremendous opportunity internationally. And then we also have a really unique opportunity that's playing out quite well, that the company has focused on, and we call it the medium enterprise. We have the large enterprise, if you will, segment; and then we have the medium enterprise segment as we've gone down market, and that is one of our fastest-growing market segments. It was started and launched here in the U.S. Based on the success we have here in the U.S., we're taking and replicating that across into international markets. So we're really excited about that as we've gone down market, not into the SMB but the medium enterprise. And the interesting thing there, Kash, is we've gone down market into the medium enterprise. Those customers have a tendency to buy full platform. And I'm not talking full platform HCM or full platform FINS, they bought 2 full platforms, and they wrapped planning around it. That's a huge opportunity for us as well. So when people say, is there opportunity, I just share some of that. It gets me excited. That's what gets the company excited. It gets our partners excited. There's plenty of runway for us to find growth. Now listen, a lot of the initiatives we're putting in place like new partner programs to leverage partners more than we ever have, the international build-out, focus on the medium enterprise, incremental resources to go after the FINS, these things don't play out in the first 6 months of this year, right? But we're starting to see signs and evidence of our pipeline in these certain areas that's starting to grow, which tells us, let's keep leaning into some of the hiring we're doing. So there's opportunity.

Yes. You have this habit of reading my question. The next question is going to be hiring. Yes, so you finished up hiring. And I wanted to ask you two things. So when you look at your customers and they've got 60 million people on the payroll, are you noticing any trends where hiring industry, tech industry, went through layoffs and such, are we at a point where your customers are feeling, you know what, maybe Jan Hatzius is the Chief Economist of Goldman Sachs, he's been right all along and he's been saying, well, recession, not so sure about that, maybe you should have listened to them and started to invest in strategic initiatives and maybe -- or I'm just making this up. But this is the truth, right? Where do you see your customers? And where do you see yourself? If you have customers starting to hire, would you also consider ramping up hiring? I mean that would be a very non-consensus thing because the industry is like, oh, we got to show profits and -- which is good, right? But then, if growth were to come back, do you have enough people? Do you need to start hiring?

So I'll go backwards just because it's top of mind on hiring. We continue to hire at Workday. Specifically, we're focused on two areas, right, that's our product and technology organization. Especially when it comes to AI and ML, Aneel and Sayan are doing an amazing job of recruiting there. At the same time, we are investing in go to market. Because of some of those opportunities that I spoke about earlier, we are investing in the go-to-market side, quota capacity bearing people we continue to invest in, especially around FINS. So we are hiring where we see opportunity. We're being smart about it, right? We're being measured, we're not going to over-hire. But we are continuing to hire, and we're attracting amazing talent. If I can say so, Kash, I feel like right now at Workday, we're a little bit of a magnet for great talent. We can attract people like Zane; a brand-new CMO, Emma, who is now leading -- Emma Chalwin came from Salesforce, ran all marketing, field marketing globally for them in demand. We've hired a whole bunch.

I hear they were able to attract the CEO as well.

Yes. Exactly. I don't know. I'm super grateful to be here. But we are hiring. And I feel like we're a magnet. We have people boomeranging, coming back. So we're doubling down because we see the opportunity. And we're just getting some amazing talent, people to run operations; people like a new CIO we hired, Rani. This lady is amazing. We hired new people to run our federal business and services. So we're getting world-class talent to join us. So we are hiring. As far as what we're seeing from our customers, we did see -- we have a recruiting tool on top of Workday, so we can kind of gauge what's going on. We saw a slight slowdown in hiring from Q1 to Q2. And our recruiting platform, in the U.S. alone, we actually recruited 22% of all jobs in the U.S. in the May time frame. That's how active our platform is. So we get a good insight on what's going on in the market. I think what people are really trying to do is not focus on just recruiting, right, but they're focusing on getting the people with the right skills to work on projects. People are focused on projects and outcomes. And to do that, you don't recruit based on a job rec, you recruit based on the skills that are required, right, to fulfill against the project scope that you have to find. And I think that's what we're doing with AI/ML and our Skills Cloud. So people are looking to re-skill and up-skill their workforce to get a step function change in productivity, and that's what we're seeing people really focus on. And we're at the forefront of that. No one else has a skills platform like that. There's a re-skilling of the workforce taking place that gives us a lot of optimism about the hiring going forward. That being said, it's a competitive world, as we know.

The lulling you saw, is that getting better? Are you seeing any improvement in your customers hiring for positions?

We'll see how it plays out in Q3. Q1 to Q2, I'd say we saw a slight slowdown. We'll see how it plays out here in Q3. The summer months for most people are always a little bit slower, so I can't comment until we get to the end of the quarter what we're seeing.

So I agree with you on re-skilling. Gili and I are learning generative AI. We're learning LLMs and things that we didn't know how to...

Copilot.

Copilot, yes, LLMs and vector databases. I mean people ask me, so what do you think of vector databases. I'll get back to you. And I studied it and like this is brand-new stuff, right? Just mind-blowing. So I'm going to do a quick pulse check. It's standing-room only here, which is great. Thank you so much. If you have a question, please raise your hand, we'll get to you.

While people are warming up, maybe I'll ask the question. And then we'll come back to the crowd.

Yes, please. Gili, back to you.

I just had one or two if the crowd is quiet. When it comes -- you talked a lot about international and mid-market and the cross-selling and up-selling opportunities. You also talked about being the digital enterprise backbone, which I think is like a great tagline for that, in the model, for what Workday is looking to do. How do you determine and observe or evaluate opportunities in front of you and determine which ones to build or buy or even partner as you sometimes do internationally?

Yes. So we think about, if you will, innovation in three different areas: organic innovation on the technology front, and we're doing really well there. We continue to bring new solutions, new SKUs, new products to market that run on top of our platform. We also continue to innovate on the go-to-market side with new channel programs. Like I said, we see the FINS opportunity. We're building out there, so we continue to innovate there as well. And then we also listen to our customers and our partners, and we seek their advice as to what they would like to see from Workday when it comes to technology. And we would always love to innovate organically ourselves, right? We'd love to build it. If we can't, we will think inorganically about how do we go out and find this technology that's strongly adjacent to our platform that we can acquire that will allow us to accelerate our growth going forward. So we do all three today. On the M&A front, specifically, what we're talking about, we look at three different dimensions, whether we would acquire a company. First, culture. I talked about culture. The very first thing I mentioned on stage, I was talking about culture. They have to be a cultural fit. Number two, they have to have a strong adjacency or a technology fit that we can integrate into our platform, 1 of our 2 platforms. And then third, does it snap nicely in our go to market and distribution strategy. And if we find those three, right, and there's customer demand or partners are saying, "Workday, you should think about this," we will look at M&A. We're inquisitive. We're always looking in the market. We have a really strong capital position. But we're never going to be -- I think Aneel and I are so locked in on this together. We're never going to be the company going out and doing that massive M&A. We're much more technology tuck-in and accelerate their growth through our distribution channel, and it's got to tightly align to our culture and the technology integration. So that's how we think about it.

Thank you. And I think we have a question right here.

This is my colleague who covers European software.

Carl, when you speak to system integrators, they obviously praise the architectural elegance of the Workday suite. You talked about shifting to platforms. But one of the areas that's being cited is the functional capabilities, particularly on the financial side and addressing many international markets. And also from a vertical standpoint, you have the kind of services industry heritage. So where are you in terms of like the capabilities on the manufacturing side and the international side on the core financials that you challenge, SAP or Oracle, more or less.

Yes, it's a great question. And as you know, there are certain industries or verticals that we have not focused on with our Financials platform. One of them would be in, if you will, manufacturing. At this time, we're focused on the industries where we know we can win and we can actually drive a full platform decision, whether it's services, whether it's health care, whether it's state and local government. We're landing some of those bigger companies, right, to run on our Financials. We have launched products like Accounting Center, one of our fastest products, right, we've ever taken to market, that Chief Accounting Officers want, think about how to do accounting. We have Prism Analytics that allows you to do more analytics. So when we think about it, we think about how do you plan, how do you execute and then how do you analyze across the Financials platform. But there are certain verticals like manufacturing where we haven't leaned into as aggressively as maybe people would want us to, but we have enough opportunity in other key markets. We don't want to get distracted.

As we wrap up, I have two quick things I want to ask you. One is, as you've talked to CIOs and CEOs, what are your thoughts on where their heads are at the calendar '24 budgets? And how are they approaching tech investments, that sort of thing? And then finally, to wrap it up, what do you think are the key challenges faced by Workday in the next 5, 7 years?

Yes. So to your first question, we've said for the last 3 quarters, we haven't really seen any big change in the macro, especially large transformational deals like HCM or Financials. Listen, they're getting extra levels of scrutiny. There's extra levels of approval that's needed. CFOs are absolutely in a lot more conversations than they were a year ago. That being said, since the environment remained quite consistent, we couldn't be more proud of our teams on the go-to-market side. We have a strong value proposition, a strong total cost of ownership message, and people are absolutely consolidating from best-of-breed to best-of-suite or best-of-platform. So I'm so proud of our teams, in how they've executed over the last 3 or 4 quarters and how we got to keep it going, Kash. As far as our challenges going forward, like I'll go back to innovation. We need to continue to think about how we innovate, how do we disrupt ourselves, leveraging new technologies like AI, generative AI, to bring automation more and more to our customers; how do we continue to foster that notion of a platform. People talk about the back office. Listen, we're a front-office company. We're supporting your financials and your people. They face off to your customers. We're a front-office platform that allows people to be very much on their toes and not the heels of their foot, and we're going to continue to lean into that. But I think innovation is probably the biggest challenge in how do we disrupt ourselves before others do. And then the last I'd say is making sure we maintain the culture. The culture is special. We need to maintain it from this day forward. Aneel and Dave built a special company. I feel like a huge responsibility is to continue to push that forward while still finding growth, but never at the expense of the culture of this company. And then last, recruit, retain the industry's best talent because, Kash, there is no substitution for great people.

That's right. Yes. Well said. With that, let's give a round of applause for the man who is a CEO, a former CFO, a former COO and a venture capitalist, one of a kind. Thank you so much, Carl.

Yes, appreciate it. Thanks, Kash.