#1workday Investor Presentation Q1 FY24#2Safe 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 upgrades to our existing applications or plans for future applications; any projections of revenues, gross margins, earnings, or other financial items; and any statements of expectation or belief. Forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements, and therefore you should not rely on any forward-looking statements that we may make. Further information on risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission which are available on the Workday investor relations webpage: www.workday.com/company/investor_relations.php Workday assumes no obligation for, and does not intend to update, any forward-looking statements. Any unreleased services, features, functionality or enhancements referenced in any Workday document, roadmap, blog, our website, press release or public statement that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.#3Use of Non-GAAP Measures In addition to financial results presented in accordance with generally accepted accounting principles (GAAP), this presentation includes certain non-GAAP financial measures of performance. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Workday's results of operations as determined in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in the Appendix to this presentation. The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to quantify share-based compensation expense, which is excluded from our non-GAAP operating margin, as it requires additional inputs such as the number of shares granted and market prices that are not ascertainable.#4Workday at a Glance#5Workday by the Numbers $125B+ Market Opportunity Enterprise Management Cloud For Finance, HR, Planning, Spend Management and Analytics 10,000+ Global Customers Operating across 175+ Countries $5.82B 22% YoY Growth Trailing Twelve Month Subscription Revenue¹ $9.79B 23% YoY Growth 24-Month Subscription Revenue Backlog² $1.49B 23% Margin Trailing Twelve Month Operating Cash Flow¹ Serving 50%+ of the Fortune 500 Including 70%+ of the top 50 Fortune 500 companies 60M+ Global Users 95%+ Customer Satisfaction³ 17,800+ Employees Worldwide 88 Offices in 30+ Countries 1 For the trailing twelve months ended 4.30.2023 2 As of 4.30.2023 3 Based on a survey conducted by Workday of Named Support Contacts in May 2022#6Workday Enterprise Management Cloud terprise Planning Adaptive Planning Management Procurement Inventory . • Security • Privacy Financial Management Core Accounting • Revenue Projects • Billing Discovery Boards OfficeConnect Analytic App Analytics & Reporting Human Capital Core HR Ta Workforce Intelligent Data Core FRAMEWORKS Analytics Artificial Intelligence W Org Hierarchy Machine Learning Compliance Process Business True Cloud Scale Elasticity Performance Availability Continuous Delivery of Innovation • Single Version#71 As of 4.30.2023 Workday Delivers Al and ML Differently Al-ML Data Quality and Quantity Unified data-model; 60M+ global users¹ Intelligent Data Management Platform Approach Embedded, not bolted on AI.ML Trustworthy Transparent and human-centric#8AON SCHWAB CardinalHealth charles Chevron Chiquita ChristianaCare™ Citi COMCAST CUSHMAN & WAKEFIELD DELL Etsy FedEx. FICO flex. gsk GlaxoSmithKline GOOD YEAR MORE DRIVEN. Hewlett Packard Enterprise GE hulu HyVee Serving Organizations of all Sizes and Across Industries LEVI STRAUSS & CO. ING J.B. HUNT Kimberly-Clark KOHL'S LAND LAKES INC. Linked in ... MassMutual Morgan Stanley INCR NETFLIX NORDSTROM Office DEPOT. Panera BREAD patagonia QANTAS Roche salesforce sanofi SHAKE SHACK SIEMENS THE DEPOT HOME Unilever VISA#9$125B+ Addressing a Large and Expanding Opportunity <5% Penetration HCM $52B Human Capital Management/ Workforce Management Talent Management Payroll FINS+ $73B Financial Management Spend Management Analytics Workforce Planning and People Analytics Employee Experience Financial Planning Platform Student Workday estimates based on IDC data as of 9.13.2022#10Driving Profitable Growth at Scale Annual Subscription Revenue 1 Non-GAAP Operating Margin 21% CAGR $6.56B FY24E $3.10B FY20 960 bps 13.4% FY202 95%+ 23.0% FY24E3 Gross Revenue Retention4 1 CAGR calculation is based on FY20 actual subscription revenue and the mid-point of our FY24 subscription revenue guidance as provided on 5.25.23 2 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix 3 FY24 Non-GAAP operating margin guidance as provided on 5.25.23 4 Measures the annual recurring revenue of our customers as of 4.30.22 that we have maintained as of 4.30.23, without giving credit for additional upsells or price and/or seats related changes. The metric captures only customer and product churn#11While Growing Responsibly and Inclusively VIBE Our Employees Our commitment to value inclusion, belonging, and equity for all Opportunity OnrampsⓇ Provide candidates from diverse, nontraditional backgrounds with training and job opportunities Investing in Training To help ensure we attract, recruit, hire, and advance employees of all backgrounds Our Customers Building Inclusive Solutions Investing to help organizations gain valuable insights about equity within their workforce Building Sustainable Solutions Helping customers improve sustainability and resilience of their supply chains Empowering our Ecosystem Workday's adaptable platform enables customers and partners to manage their emissions reduction strategy The World Around Us Net-Zero Carbon Footprint Achieved net-zero emissions in fiscal 2022 and match 100% of the electricity we use at our offices and data centers globally with clean, renewable sources Commitment to 1.5°C Science-based targets across our entire value chain Driving Policy Change Working to advance polices that support a skills-based approach to talent For More Information: Resource Pages: Sustainability and Reporting with Workday Download our 2021 Global Impact Report#12Financial Highlights and Guidance#13Total Revenue Subscription Revenue Q1 FY24 Financial Highlights Q1 FY24 Results $1.68B Increase (Decrease) YoY 17% $1.53B 20% Total Subscription Revenue Backlog $16.65B 32% 24-month Subscription Revenue Backlog $9.79B 23% GAAP Operating Margin (1.2)% 390 bps Non-GAAP Operating Margin¹ Operating Cash Flows 1 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix 23.5% 340 bps $277M (37)%#14Q1 FY24 Customer Wins and Expansions CLYDE&CO ⚫equinor DOLLAR TREE FIRST AMERICAN ibex. IFG Interpublic Group NORT ASTERN VERITAS VIRTUS 1/201 NIVERSIT iu GROUP JCORP Johor Corporation PIMA COUNTY Rio LAS VEGAS A MCLANEⓇ NISSAN Stevens Transport TOKIO MARINE NICHIDO#15Q1 FY24 Business Highlights • • • • Workday announced the appointment of Zane Rowe to chief financial officer. Workday Financial Management customer wins: Halifax Hospital Medical Center, Prometeia SpA, Green Yellow, Northeastern University, and Tokio Marine Management (Australasia) + others. Workday HCM customer wins: Dollar Tree, Johor Corporation, Equinor ASA, and McLane Company + others. Expanded partnership with Alight to deliver an integrated payroll experience. Workday and AWS created a native integration from Workday Extend to AWS to enable developers to leverage AWS services in their Extend applications. Al and ML innovation: Semantic search for Workday Peakon Employee Voice to help make employee feedback more accessible using Al Predictive Forecaster, a capability within Workday Adaptive Planning that creates ML-based forecasts with the ability to add additional regressors and data sets Workday's first set of ML APIs to enable Workday Extend customers to build extensions that leverage ML Workday joined Frontier, an advance market commitment to accelerate carbon removal. Workday was named one of the World's Most Ethical Companies by Ethisphere for the third consecutive year. 味#16Guidance Summary Q2 FY24 Total Revenue Subscription Revenue 24-month Subscription Revenue Backlog Non-GAAP Operating Margin GAAP Operating Margin Full Year FY24 Total Revenue Subscription Revenue Non-GAAP Operating Margin GAAP Operating Margin Non-GAAP Tax Rate Operating Cash Flows Capital Expenditures¹ As provided on Q1 FY24 Earnings Call on 5.25.2023 1 Capital expenditures include owned real estate projects $1.770B $1.773B $1.611B $1.613B Quarterly Guidance Increase (Decrease) YoY 15% 18% 20% 240 bps n/a n/a 22% ~22 points lower than non-GAAP Full Year Guidance $7.180B $7.225B $6.550B $6.575B 23% ~22 points lower than non-GAAP 19% $1.950B $300M Increase (Decrease) YoY 16% 18% 350 bps n/a n/a 18% (18%)#17Appendix#18Reconciliation of GAAP to Non-GAAP Data Three Months Ended April 30, 2023 (in thousands, except percentages and per share data) GAAP Costs and expenses: Share-Based Compensation Expenses Other Operating Expenses² Income Tax and Non-GAAP Dilution Effects³ Costs of subscription services $ 239,027 $ (29,262) $ (15,672) $ Costs of professional services 178,417 (30,040) (3,015) Product development 600,457 (169,934) (11,257) Sales and marketing 518,637 (80,123) (13,749) General and administrative 167,574 (60,101) (2,591) | | | | | $ 194,093 145,362 419,266 424,765 104,882 Operating income (loss) (19,800) 369,460 46,284 395,944 Operating margin (1.2)% 21.9 % 2.8 % % 23.5% Other income (expense), net 26,709 26,709 Income (loss) before provision for (benefit from) income taxes 6,909 369,460 46,284 422,653 Provision for (benefit from) income taxes 6,773 73,531 80,304 Net income (loss) Net income (loss) per share, basic¹ Net income (loss) per share, diluted¹ SSS $ 136 $ 369,460 $ $ 0.00 $ 0.00 $ 1.43 $ 46,284 0.18 $ $ (73,531) $ 342,349 (0.29) $ 1.32 1.41 $ 0.18 $ (0.28) $ 1.31 1. 2. 3. GAAP and non-GAAP net income per share are both calculated based upon 258,820 basic and 261,371 diluted weighted-average shares of common stock. Other operating expenses include employer payroll tax-related items on employee stock transactions of $25.1 million and amortization of acquisition-related intangible assets of $21.2 million. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2024, the non-GAAP tax rate is 19%.#19Reconciliation of GAAP to Non-GAAP Data Three Months Ended April 30, 2022 (in thousands, except percentages and per share data) GAAP Share-Based Compensation Expenses Other Operating Expenses² Income Tax and Non-GAAP Dilution Effects³ Costs and expenses: Costs of subscription services Costs of professional services Product development Sales and marketing General and administrative Operating income (loss) $ 232,922 $ (26,230) $ (16,326) $ 169,899 (27,584) (3,899) 541,509 (153,304) (13,011) 429,301 (59,169) (14,046) 133,869 (45,219) (2,613) | | | | | $ 190,366 138,416 375,194 (72,843) 311,506 49,895 356,086 86,037 288,558 Operating margin (5.1)% 21.7 % 3.5 % % 20.1 % Other income (expense), net (20,163) (20,163) Income (loss) before provision for (benefit from) (93,006) 311,506 49,895 268,395 income taxes Provision for (benefit from) income taxes 9,167 Net income (loss) $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ SSS (102,173) (0.41) $ (0.41) $ $ 1.24 311,506 $ 1.24 $ $ 0.20 49,895 $ 0.20 $ $ 41,828 (41,828) $ 50,995 217,400 6969 (0.17) $ 0.86 (0.20) $ 0.83 1. 2. 3. GAAP net loss per share is calculated based upon 251,743 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 251,743 basic and 263,473 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $1.3 million for after-tax interest expense on our convertible senior notes in accordance with the if-converted method. Other operating expenses include employer payroll tax-related items on employee stock transactions of $28.3 million and amortization of acquisition-related intangible assets of $21.6 million. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2023, the non-GAAP tax rate was 19%. Included in the per share amount is a dilution impact of $0.03 from the conversion of GAAP diluted net loss per share to non-GAAP diluted net income per share.#20Reconciliation of GAAP to Non-GAAP Data Year Ended January 31, 2020 Amortization of Debt (in thousands, except percentages and per share data) Share-Based GAAP Compensation Expenses Other Operating Expenses² Discount and Issuance Income Tax and Dilution Effects4 Non-GAAP Costs³ Costs and expenses: Costs of subscription services $ 488,513 (49,919) $ (40,326) $ Costs of professional services 576,745 (80,401) (6,440) Product development 1,549,906 (434,188) (30,684) Sales and marketing General and administrative Operating income (loss) Operating margin Other income (expense), net 1,146,548 (176,758) (40,774) 367,724 (118,614) (8,592) (502,230) 859,880 126,816 (13.8)% 23.7 % 3.5 % 19,783 54,034 Income (loss) before provision for (benefit from) income taxes (482,447) 859,880 126,816 54,034 │ │ │ │ │ | |ཎྜ ྃ Provision for (benefit from) income taxes (1,773) Net income (loss) $ (480,674) 69 $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ (2.12) $ (2.12) $ 859,880 $ 126,816 $ 3.78 $ 0.56 $ 3.78 $ 0.56 $ SA 398,268 489,904 1,085,034 929,016 240,518 484,466 % % 13.4 % 73,817 558,283 54,034 $ 96,681 (96,681) $ SA 0.24 $ (0.42) $ 0.24 $ (0.58) $ 94,908 463,375 2.04 1.88 1. 2. 3. 4. GAAP net loss per share is calculated based upon 227,185 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 227,185 basic and 247,013 diluted weighted-average shares of common stock. Other operating expenses include amortization of acquisition-related intangible assets of $71.8 million and employer payroll tax-related items on employee stock transactions of $55.0 million. Prior to the adoption of Accounting Standard Update No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), on February 1, 2021, we were required to separately account for liability (debt) and equity (conversion option) components of the convertible senior notes that were issued in private placements in June 2013 and September 2017. Accordingly, for GAAP purposes we were required to recognize the effective interest expense on our convertible senior notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense, and the amortization expense of issuance costs were excluded from management's assessment of our operating performance because management believed that these non-cash expenses were not indicative of ongoing operating performance. Management believed that the exclusion of the non-cash interest expense provided investors an enhanced view of Workday's operational performance. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2020, the non-GAAP tax rate was 17%. Included in the per share amount is a dilution impact of $0.15 from the conversion of basic and diluted net loss per share to diluted net income per share.#21About 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 income (loss), non-GAAP operating margin, and non-GAAP net income (loss) per share. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Non-GAAP operating income (loss) and non-GAAP operating margin differ from GAAP in that they exclude share-based compensation expenses, employer payroll tax-related items on employee stock transactions, and amortization expense for acquisition-related intangible assets. Non-GAAP net income (loss) per share differs from GAAP in that it excludes share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, and income tax effects. Workday's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Workday's financial performance. Management believes these non-GAAP financial measures reflect Workday's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Workday's business. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Workday's operating results and prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Management believes excluding the following items from the GAAP Condensed Consolidated Statements of Operations is useful to investors and others in assessing Workday's operating performance due to the following factors: Share-based compensation expenses. Although share-based compensation is an important aspect of the compensation of our employees and executives, management believes it is useful to exclude share-based compensation expenses to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. Share-based compensation expenses are determined using a number of factors, including our stock price, volatility, and forfeiture rates, that are beyond our control and generally unrelated to operational decisions and performance in any particular period. Further, share-based compensation expenses are not reflective of the value ultimately received by the grant recipients.#22About Non-GAAP Financial Measures (cont'd) Other operating expenses. Other operating expenses includes employer payroll tax-related items on employee stock transactions and amortization of acquisition-related intangible assets. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. Although we exclude the amortization of acquisition-related intangible assets from these non-GAAP measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Income tax effects. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a three-year financial projection that excludes the direct impact of share-based compensation and related employer payroll taxes, amortization of acquisition-related intangible assets, and amortization of debt discount and issuance costs. The projected rate considers other factors such as our current operating structure, existing tax positions in various jurisdictions, and key legislation in major jurisdictions where we operate. For fiscal 2024 and 2023, we determined the projected non-GAAP tax rate to be 19%, which reflects currently available information, as well as other factors and assumptions. We will periodically re-evaluate this tax rate, as necessary, for significant events, based on our ongoing analysis of the 2017 U.S. Tax Cuts and Jobs Act, relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions. The use of non-GAAP operating income (loss), non-GAAP operating margin, and non-GAAP net income (loss) per share measures have certain limitations as they do not reflect all items of expense that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.#23workday