#1workday Investor Presentation Q2 FY23#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 financial 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 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 financial measures are contained in the Appendix to this presentation. A reconciliation of our forward outlook for non-GAAP operating margin with our forward-looking GAAP operating margin is not available without unreasonable efforts as the quantification of share- based compensation expense, which is excluded from our non-GAAP operating margin, 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 $105B+ Market Opportunity Enterprise Management Cloud For Finance, HR, Planning, Spend Management and Analytics 9,500+ Global Customers Operating across 175+ Countries $5.04B 22% YoY Growth Trailing Twelve Month Subscription Revenue¹ $8.37B 22% YoY Growth 24-Month Subscription Revenue Backlog² $1.55B 27% 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 16,900+ Employees Worldwide ⑧-8 Offices in 30+ Countries 1 For the trailing twelve months ended 7.31.2022 2 As of 7.31.2022 3 Based on a survey conducted by Workday of Named Support Contacts in May 2022#6Workday Enterprise Management Cloud Enterprise Planning Adaptive Planning Management Procurement Inventory Discovery Boards ⚫ OfficeConnect Analytic App Analytics & Reporting Human Capital Core HR Tale Workforce Financial Management Core Accounting • Revenue Projects • Billing Intelligent Data Core FRAMEWORKS Analytics Org Hierarchy • Security Machine Learning • (M W Compliance Process Business True Cloud Scale Elasticity Performance • Availability ⚫ Continuous Delivery of Innovation • Single Version •#7AON Cardinal Health charles SCHWAB Chevron Chiquita ChristianaCare™ Citi COMCAST CUSHMAN & WAKEFIELD DELL Etsy FedEx. FICO flex. gsk GlaxoSmithKline GOOD YEAR MORE DRIVEN. Hewlett Packard Enterprise 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 HOME DEPOT Unilever VISA#8Addressing a Large and Expanding TAM $39B Total Addressable Market In 2012 at IPO1 New Markets Have Expanded TAM HCM Opportunity $38B Core HCM Payroll and Workforce Management Talent Management Employee Experience FINS+ Opportunity $67B Financial Management • Spend Management ⚫ FIN-Planning ⚫ Industry Solutions • Platform ⚫ Accounting Center • Analytics and Reporting $105B+ Total Addressable Market Current² IDC and Workday Estimates 1 TAM as of 8.30.2012 2 TAM as of 9.21.2021#9With a Leading Position in HCM ~$38B HCM Market Opportunity HCM Provides Significant Runway 000 International Expanding Share of Wallet Medium Enterprise U.S. Federal Future Innovation M&A IDC and Workday estimates. Includes core HCM, Payroll, Recruiting, Benefits, Workforce Analytics, Compensation, Employee Engagement Surveys, Help, Journeys, Learning, Performance, Scheduling, Time Tracking, and Workforce Planning#10And a Broadening Footprint in FINS+ ~$67B FINS+ Market Opportunity FINS+ Unlocks a Massive Opportunity 000 New Landing Points Expanding into Our HCM Base Medium Enterprise Deepening Our Industry Presence Future Innovation M&A IDC and Workday estimates. Includes Financial Management, Accounting Center, Analytics, Financial Planning, Spend Management, Expenses, Integration/Platform, Projects, and Industry Solutions#11Driving Profitable Growth at Scale Annual Subscription Revenue 1 Non-GAAP Operating Margin² 21% CAGR $3.1B FY20 900 bps $4.5B FY22 22.4% FY22 95%+ Gross Revenue Retention³ 1 CAGR calculations are based on FY20-FY22 results 2 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix 13.4% FY20 3 Measures the annual recurring revenue of our customers as of 7.31.21 that we have maintained as of 7.31.22, without giving credit for additional upsells or price and/or seats related changes. The metric captures only customer and product churn#12While Growing Responsibly and Inclusively ESG and Our Employees VIBE 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 ESG and 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 ESG and the World Around Us Net-Zero Carbon Footprint Achieved net-zero emissions in 2020 and lifetime net-zero carbon footprint in 2021 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, and aid in the transition to a low-carbon economy For More Information: Visit our ESG Resource Page: Sustainability and Reporting with Workday Read our Blog: Our Commitments to ESG at Workday Download our 2021 Global Impact Report#13Q2 FY23 Highlights and Guidance#14Total Revenue Subscription Revenue Q2 FY23 Financial Highlights Q2 FY23 Results $1.54B Increase (Decrease) YoY 22% $1.37B 23% $13.47B 27% Total Subscription Revenue Backlog 24-month Subscription Revenue Backlog $8.37B GAAP Operating Margin Non-GAAP Operating Margin¹ Operating Cash Flows 1 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix 22% (2.2)% (210 bps) 19.6% (360 bps) $114M (42)%#15Q2 FY23 Customer Wins and Expansions RAYMOND JAMES h. Carle Electrolux EXPRESS AMERICAN ELECTRIC POWER APEX VERMONT ExxonMobil salesforce DAVE& BUSTER'S ninja neighborly * BANCARD NorthAmerican embark KOREAN AIR#16Q2 FY23 Business Highlights Workday achieved FedRAMP Authorized status at the Moderate security impact level, marking the company's official entry into the U.S. federal government market. Workday was positioned by GartnerⓇ in the Leaders quadrant of the inaugural 2022 GartnerⓇ Magic QuadrantT for Cloud ERP for Service-Centric Enterprises based on completeness of vision and ability to execute. Workday announced that Wayne A.I. Frederick, M.D., president of Howard University, has been elected to its board of directors as an independent director. Workday was included in JUST Capital's 2022 Workforce Equity and Mobility Ranking, which highlights companies that perform best on key disclosure and performance metrics that address racial equity and advance workforce opportunity and mobility. TM % Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises, John Van Decker, Denis Torii, Tim Faith, Sam Grinter, Patrick Connaughton, 12 July 2022 Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER and Magic Quadrant are registered trademarks and service marks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. +#17Guidance Summary Q3 FY23 Total Revenue Subscription Revenue 24-month Subscription Revenue Backlog Non-GAAP Operating Margin GAAP Operating Margin Full Year FY23 Total Revenue Subscription Revenue Non-GAAP Operating Margin GAAP Operating Margin Non-GAAP Tax Rate Operating Cash Flows $1.582B $1.584B $1.418B $1.420B Quarterly Guidance Increase (Decrease) YoY 19% 21% 19% (700bps) n/a n/a 18% ~22 points lower than non-GAAP Full Year Guidance $6.187B $6.207B $5.537B $5.557B 19% ~23 points lower than non-GAAP 19% $1.640B Increase (Decrease) YoY 20-21% 22% (340 bps) n/a n/a (1%) As provided on Q2 FY23 Earnings Call on 8.25.22#18Appendix#19Reconciliation of GAAP to Non-GAAP Data Three Months Ended July 31, 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) $ 244,982 $ (25,090) $ (14,596) $ 178,103 (25,838) (775) 547,835 (147,181) (2,236) 458,701 (59,878) (9,388) 140,255 (50,020) (628) (34,078) 308,007 27,623 Operating margin (2.2)% 20.1 % 1.7 % Other income (expense), net (32,789) Income (loss) before provision for (benefit from) income taxes (66,867) 308,007 27,623 | | | | | │ $ 205,296 151,490 398,418 % 389,435 89,607 301,552 19.6 % (32,789) 268,763 Provision for (benefit from) income taxes (2,709) 53,773 51,064 Net income (loss) $ (64,158) $ 308,007 Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ (0.25) $ (0.25) $ 1.21 1.21 $ $ SSS $ 0.11 27,623 0.11 $ $ $ (53,773) $ 217,699 (0.21) $ 0.86 (0.24) $ 0.83 1. 2. 3. GAAP net loss per share is calculated based upon 254,355 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 254,355 basic and 262,931 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 amortization of acquisition-related intangible assets of $21.5 million and employer payroll tax-related items on employee stock transactions of $6.1 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 is 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 Three Months Ended July 31, 2021 (in thousands, except percentages and per share data) GAAP Share-Based Compensation Expenses Other Operating Expenses² Income Tax Effects³ Non-GAAP Costs and expenses: Costs of subscription services Costs of professional services Product development Sales and marketing General and administrative $ 192,738 $ 152,783 (20,421) $ (13,132) $ (26,534) (1,215) 444,251 (129,892) (3,161) 358,157 (52,168) (9,764) 113,552 (35,704) (933) | | | | | $ 159,185 125,034 311,198 Operating income (loss) (1,120) 264,719 28,205 296,225 76,915 291,804 Operating margin (0.1)% 21.0 % 2.3 % ― % 23.2% Other income (expense), net 102,985 102,985 Income (loss) before provision for (benefit from) income taxes 101,865 264,719 28,205 394,789 Provision for (benefit from) income taxes Net income (loss) $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ 555 0.41 (3,871) 105,736 $ 0.43 $ $ 264,719 $ 1. 2. 3. 1.29 1.23 GAAP and non-GAAP net income per share are both calculated based upon 246,943 basic and 260,016 diluted weighted-average shares of common stock. The numerator used to compute GAAP and non-GAAP diluted net income per share was increased by $1.6 million and $1.3 million, respectively, for after-tax interest expense on our convertible senior notes in accordance with the if-converted method. Other operating expenses include amortization of acquisition-related intangible assets of $19.8 million and employer payroll tax-related items on employee stock transactions of $8.4 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 2022, the non-GAAP tax rate was 19%. 1.02 1.07 $ $ SASS 28,205 $ 0.11 $ 0.11 $ 78,881 (78,881) (0.32) $ 75,010 $ 319,779 SA (0.31) $#21Reconciliation of GAAP to Non-GAAP Data Six Months Ended July 31, 2022 (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 $ Costs of professional services 477,904 $ 348,002 (51,320) $ (30,922) $ (53,422) (4,674) Product development 1,089,344 (300,485) (15,247) Sales and marketing 888,002 (119,047) (23,434) General and administrative 274,124 (95,239) (3,241) | | | | | 395,662 289,906 773,612 745,521 175,644 Operating income (loss) Operating margin (106,921) 619,513 77,518 590,110 (3.6) % 20.9% 2.6% % 19.9 % Other income (expense), net (52,952) (52,952) Income (loss) before provision for (benefit from) income taxes (159,873) 619,513 77,518 537,158 Provision for (benefit from) income taxes 6,458 95,601 102,059 Net income (loss) $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ (166,331) $ (0.66) $ (0.66) $ 2.45 619,513 $ 2.45 $ $ 77,518 $ (95,601) $ 435,099 0.31 $ 0.31 $ (0.38) $ 1.72 (0.44) $ 1.66 1. 2. 3. GAAP net loss per share is calculated based upon 253,071 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 253,071 basic and 263,224 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $2.6 million for after-tax interest expense on our convertible senior notes in accordance with the if-converted method. Other operating expenses include amortization of acquisition-related intangible assets of $43.1 million and employer payroll tax-related items on employee stock transactions of $34.4 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 is 19%. Included in the per share amount is a dilution impact of $0.06 from the conversion of GAAP diluted net loss per share to non- GAAP diluted net income per share.#22Reconciliation of GAAP to Non-GAAP Data Six Months Ended July 31, 2021 (in thousands, except percentages and per share data) GAAP Costs and expenses: Share-Based Compensation Expenses Other Operating Expenses² Income Tax and Dilution Effects³ Non-GAAP Costs of subscription services $ 374,946 $ (41,138) $ (27,336) $ $ 306,472 Costs of professional services 303,628 (54,226) (8,168) 241,234 Product development 885,867 (259,754) (22,703) 603,410 Sales and marketing 684,651 (102,476) (26,870) 555,305 General and administrative 225,735 (71,760) (5,319) 148,656 Operating income (loss) (39,433) 529,354 90,396 580,317 Operating margin (1.6)% 21.7 % 3.7 % % 23.8 % Other income (expense), net 93,934 93,934 Income (loss) before provision for (benefit from) 54,501 529,354 90,396 674,251 income taxes Provision for (benefit from) income taxes (4,713) 132,821 128,108 Net income (loss) $ 59,214 $ 529,354 Net income (loss) per share, basic¹ $ 0.24 $ 2.16 Net income (loss) per share, diluted¹ $ 0.23 $ 2.09 SSS $ $ $ 0.36 90,396 $ 0.37 $ $ (132,821) $ 546,143 (0.54) $ 2.23 (0.58) $ 2.10 1. 2. 3. GAAP net income per share is calculated based upon 245,308 basic and 252,900 diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 245,308 basic and 260,718 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $2.6 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 $52.7 million and amortization of acquisition-related intangible assets of $37.7 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 2022, the non-GAAP tax rate was 19%. Included in the per share amount is a dilution impact of $0.05 from the conversion of GAAP diluted net income per share to non-GAAP diluted net income per share.#23About 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.#24About 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 2023 and 2022, 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 income and 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.#25workday Thank You