Workday FY 1Q17 Earnings Call Notes

Aneel Bhusri

Increased emphasis on medium sized companies

“Going forward, we plan to put more emphasis on selling and servicing medium-sized companies on the heels of the development of lower-cost deployment technologies that we’ve built for the segment of the marketplace. ”

The hiring market is more attractive now as the draw from startups is not what it was a year or two ago

“We were behind in some pockets but in general I think we’re pretty much caught up and I suspect we’ll continue to hire well, I actually think the hiring environment is pretty attractive right now, the draw for many of the startups in Silicon Valley is not what it was just a year or two years ago.”

Competitors still don’t have a true cloud offering for financials

” when we look at the landscape SAP still does not have a cloud offering for financials. Their strategy is S/4HANA, HANA’s a database, HANA does not equal cloud and far as I can tell they don’t have a multitenant true cloud offering what’s even underway for financials, so that’s a big win for us. And from the oracle perspective, I think they claim Hyperion hosted as cloud. So we just see a lot of run rate, a lot of opportunity and that two comes out in the same cycle.”

Security officers have come to the conclusion that the cloud is far more secure than anything being done on premise

“When you sit down with Chief Security Officer at a Fortune 500 company, they’re so-so sensitive on the loss of any employee data. And finance data has a time value to it, it’s valuable for only a short amount of time and in many cases it’s not even, it’s not even that useful in the hands of other people, but people’s self-security numbers and personal information, are things that are near and dear to the hearts of every Chief Security Officer and there’re frankly privacy and security rules again around it. And I think what’s happened in that marketplace is they’ve come to a conclusion, there’s cloud actually far more secure and private than anything that was being done on premise and I think the same thing is happening with finance.”

Many economies OUS are mid-market economies

” When you look outside the U.S. many of the large economies are frankly mid-market economies, Germany as an example is full of mid-market sized companies.”

In some cases deployments have been too expensive for mid-market companies

“So, this new approach to deployment has paced off hugely across the globally, not just in the U.S. mid-market, so I think it opens up a significant chunk of our market both for HR and financials across the globe. And it’s not like we haven’t been successful there, it just that we tend to be successful with Silicon Valley high growth company that expects to be a large company and they’re willing to pay a little extra for Workday, but if it’s a mid-market company that’s largely going to stay a mid-market company. In some cases the deployments have been too expensive and this addresses that issue. And the other part that we’ve seen with the mid-market is that they do like the platform purchases and that frankly reduces the sales and marketing costs as you can sell the platform them.”