#1workday Investor Presentation Q3 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 US 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 or cash flows 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 $142B+ Market Opportunity¹ $6.34B 20% YoY Growth Trailing Twelve Month Subscription Revenues² $6.05B 22% YoY Growth 12-Month Subscription Revenue Backlog³ $1.85B 26% Margin Trailing Twelve Month Operating Cash Flow² Enterprise Management Cloud For Finance, HR, Planning, Spend Management and Analytics 10,000+ Global Customers Operating across 175+ Countries Serving 50%+ of the Fortune 500 Including 70%+ of the top 50 Fortune 500 companies 65M+ Global Users 4 95%+ Customer Satisfaction5 18,300+ Employees Worldwide 88 Offices in 30+ Countries 1 TAM estimates based on Workday and third-party data as of 9.27.23 2 For the trailing twelve months ended 10.31.2023 3 As of 10.31.2023 4 Represents users under contract as of 10.31.2023 5 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 Security Privacy Financial Management Core Accounting • Revenue Projects • Billing Intelligent Data Core FRAMEWORKS Analytics Org Hierarchy Workday Al Analytics & Reporting . Discovery Boards OfficeConnect Analytic App Workforce Human Capital Core HR Ta Compliance Process Business W True Cloud Scale Elasticity • Performance Availability • Continuous Delivery of Innovation ⚫ Single Version#7Workday Delivers Al Differently WORKDAY ΑΙ Intelligent Data Management WORKDAY Al Quality Data Uniform data model, 65M+ users¹, 600B+ transactions² Platform Approach Embedded, not bolted on Trustworthy Transparent and human-centric 1 Represents users under contract as of 10.31.2023 2 For the fiscal year ended 1.31.23#8charles Chevron AON SCHWAB CardinalHealth 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 QANTAS Roche Office DEPOT. SIEMENS Panera BREAD patagonia salesforce sanofi SHAKE SHACK THE DEPOT HOME Unilever VISA#9Meaningful Market Opportunity $142B+ Addressing One of the Largest Markets in Enterprise Software HCM $58B Human Capital Management/Workforce Management Talent Management Payroll Workforce Planning and People Analytics Employee Experience FINS+ $84B Financial Management Spend Management Analytics Financial Planning Workday Extend Student TAM estimates based on Workday and third-party data as of 9.27.23#10Driving Profitable Growth at Scale Annual Subscription Revenues 21% CAGR $3.10B FY20 1,040 bps $6.60B FY24E2 95%+ 23.8% FY24E² Gross Revenue Retention³ Non-GAAP Operating Margin 1 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix 2 As provided on Q3 FY24 Earnings Call on 11.28.2023 13.4% FY201 3 Measures the annual recurring revenue of our customers as of 10.31.22 that we have maintained as of 10.31.23, without giving credit for additional upsells or price and/or seats related changes. The metric captures only customer and product churn Note: Lines not drawn to scale#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 2023 Global Impact Report#12Financial Highlights and Guidance#13Q3 FY24 Financial Highlights Total Revenues Subscription Revenues Total Subscription Revenue Backlog Q3 FY24 Results $1.87B Increase (Decrease) YoY 17% $1.69B 18% $18.45B 31% 12-month Subscription Revenue Backlog $6.05B 22% 24-month Subscription Revenue Backlog $10.58B 23% GAAP Operating Margin 4.7% 630 bps Non-GAAP Operating Margin¹ 24.8% 510 bps Operating Cash Flows $451M 10% Free Cash Flows1 $391M 12% 1 Reconciliations of GAAP to Non-GAAP financial data included in the Appendix#14Q3 FY24 Customer Wins and Expansions Advent Health AURELIUS AXA BBVA Bentley U.S. DEPARTMENT OF COPELAND > DFDS ENERGY GROUP 1 AUTOMOTIVE® KERN COUNTY MINOR Mondelez, HOTELS International SEGA THALES Lifespan#15• Q3 FY24 Business Highlights Announced new full platform customers for Workday Financial Management and Workday Human Capital Management (HCM), with new wins including AdventHealth, Aurelius Group, Bentley Systems, Globe Life, Houston Methodist, and Kern County. Surpassed 5,000 core Workday Human Capital Management (HCM) customers in Q3. Announced several Al updates, including multiple generative Al capabilities; new Al capabilities in Workday Adaptive Planning; a Manager Insights Hub that surfaces automated insights for managers to develop their teams; and enhancements to Workday Extend to enable developers to leverage Workday Al services. Demonstrated continued expansion of the Workday global partner ecosystem with several updates including a new Workday Al Marketplace to help customers easily find and deploy trusted Al apps within the Workday ecosystem, an expanded partnership with ADP to help deliver an enhanced frictionless global payroll, compliance, and HR experience for joint customers, and an expanded partnership with Accenture to help companies accelerate their adoption of skills-based talent strategies. Workday celebrated its customers with more than 15,000 attendees at Workday Rising and more than 4,000 attendees at Workday Rising EMEA. Named a Leader in the GartnerⓇ Magic Quadrant™ for Cloud HCM Suites for 1,000+ Employee Enterprises¹ and GartnerⓇ Magic Quadrant™ for Cloud ERP for Service-Centric Enterprises.² Workday VNDLY was named a 2023 Top HR Product of the Year by Human Resource Executive. 1 Gartner, "Magic Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises," Ranadip Chandra, Sam Grinter, Ron Hanscome, Chris Pang, Anand Chouksey, Josie Xing, Harsh Kundulli, David Bobo, Laura Gardiner, Hiten Sheth, Jackie Watrous, Travis Wickesberg, October 18, 2023. 2 Gartner, "Magic Quadrant for Cloud ERP for Service-Centric Enterprises," Denis Torii, Sam Grinter, Tim Faith, Naveen Mahendra, Neha Ralhan, Robert Anderson, August 29, 2023.#16Q4 FY24 Total Revenues Subscription Revenues 12-month Subscription Revenue Backlog Non-GAAP Operating Margin GAAP Operating Margin Guidance Summary Quarterly Guidance $1.913B $1.755B n/a 23.5% Increase (Decrease) YoY 16% 17% 19% 500 bps n/a Full Year FY24 Total Revenues Subscription Revenues Non-GAAP Operating Margin GAAP Operating Margin Non-GAAP Tax Rate Operating Cash Flows Total Capital Expenditures¹ Full Year FY25 Subscription Revenues Non-GAAP Operating Margin As provided on Q3 FY24 Earnings Call on 11.28.2023 1 Total Capital expenditures include owned real estate projects ~20 points lower than non-GAAP Full Year Guidance $7.250B $6.598B 23.8% ~22 points lower than non-GAAP 19% $1.975B $250M Full Year Guidance $7.725B $7.775B Expand FY25 non-GAAP operating margins from FY24 levels Increase (Decrease) YoY 17% 19% 430 bps n/a n/a 19% (31%) Increase (Decrease) YoY 17% - 18% n/a#17Appendix#18Reconciliation of GAAP to Non-GAAP Data Three Months Ended October 31, 2023 (in thousands, except percentages and per share data) Costs and expenses: GAAP Share-Based Compensation Expenses Other Operating Expenses² Income Tax and Non-GAAP Dilution Effects³ Costs of subscription services $ 263,840 $ (30,543) $ (9,140) $ Costs of professional services 181,400 (28,738) (1,097) Product development 618,736 (162,025) (3,006) General and administrative Sales and marketing Operating income (loss) Operating margin Other income (expense), net Income (loss) before provision for (benefit from) 537,816 (64,805) (10,438) 176,028 (63,146) (1,305) | | | | | $ 224,157 151,565 453,705 462,573 111,577 87,855 349,257 24,986 462,098 4.7 % 18.7 % 1.4 % % 24.8 % 41,388 41,388 129,243 349,257 24,986 503,486 income taxes Provision for (benefit from) income taxes 15,534 80,129 95,663 Net income (loss) $ 113,709 69 $ 349,257 $ Net income (loss) per share, basic¹ 0.43 $ Net income (loss) per share, diluted¹ 0.43 $ 1. $ $ GAAP and non-GAAP net income per share are both calculated based upon 262,153 basic and 266,377 diluted weighted-average shares of common stock. 1.33 $ 1.31 $ 0.09 24,986 $ 0.10 $ $ (80,129) $ (0.30) $ 407,823 1.56 (0.30) $ 1.53 2. Other operating expenses include amortization of acquisition-related intangible assets of $16.0 million and employer payroll tax-related items on employee stock transactions of $9.0 million. 3. 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 October 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 $ 259,397 $ (25,598) $ (14,100) $ Costs of professional services 176,396 (26,577) (623) Product development 565,727 (149,279) (1,899) General and administrative Operating margin Sales and marketing Operating income (loss) Other income (expense), net Income (loss) before provision for (benefit from) income taxes Provision for (benefit from) income taxes 470,196 (61,186) (9,206) 153,708 (51,556) (531) | | | | | $ 219,699 149,196 414,549 399,804 101,621 (26,321) 314,196 26,359 314,234 (1.6)% 19.6 % 1.7 % % 19.7 % 4,163 4,163 (22,158) 314,196 26,359 318,397 52,563 Net income (loss) Net income (loss) per share, basic¹ Net income (loss) per share, diluted¹ 1. $ $ $ SSS (74,721) $ 314,196 (0.29) $ (0.29) $ 2. 3. 0.99 GAAP net loss per share is calculated based upon 255,753 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 255,753 basic and 261,777 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $0.9 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 $21.2 million and employer payroll tax-related items on employee stock transactions of $5.2 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 2023, the non-GAAP tax rate was 19%. Included in the per share amount is a dilution impact of $0.02 from the conversion of GAAP diluted net loss per share to non-GAAP diluted net income per share. 1.23 1.23 $ $ 555 $ 26,359 $ 7,933 (7,933) $ 60,496 257,901 0.10 0.10 $ $ (0.03) $ 1.01 (0.05) $#20Reconciliation of GAAP to Non-GAAP Data Nine Months Ended October 31, 2023 (in thousands, except percentages and per share data) Costs and expenses: GAAP Share-Based Compensation Expenses Other Operating Expenses² Income Tax and Dilution Effects³ Non-GAAP Costs of subscription services $ Costs of professional services 758,551 $ 552,233 (89,793) $ (39,500) $ 629,258 (87,532) (5,537) Product development 1,828,870 (493,934) (18,806) 459,164 1,316,130 Sales and marketing 1,580,639 (211,560) (35,222) General and administrative 512,148 (187,810) (5,468) Operating income (loss) 104,312 1,070,629 104,533 1,333,857 318,870 1,279,474 Operating margin 2.0 % 20.1 % 1.9 % % 24.0 % Other income (expense), net 113,652 113,652 Income (loss) before provision for (benefit from) income taxes 217,964 1,070,629 104,533 1,393,126 Provision for (benefit from) income taxes 25,459 Net income (loss) $ 192,505 69 $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ 0.74 $ 0.73 $ 1. (0.91) $ GAAP and non-GAAP net income per share are both calculated based upon 260,747 basic and 264,087 diluted weighted-average shares of common stock. 1,070,629 $ 4.11 $ $ 4.05 104,533 $ 0.40 $ 0.40 $ 239,235 (239,235) $ (0.92) $ 264,694 1,128,432 4.33 4.27 2. Other operating expenses include amortization of acquisition-related intangible assets of $58.4 million and employer payroll tax-related items on employee stock transactions of $46.2 million. 3. 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%.#21Reconciliation of GAAP to Non-GAAP Data Nine Months Ended October 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 Effects ³ Costs of subscription services $ Costs of professional services 737,301 $ 524,398 (76,918) $ (45,022) $ $ 615,361 (79,999) (5,297) 439,102 Product development 1,655,071 (449,764) (17,146) 1,188,161 Sales and marketing 1,358,198 (180,233) (32,640) 1,145,325 General and administrative 427,832 (146,795) (3,772) 277,265 income taxes Operating income (loss) Operating margin Other income (expense), net Income (loss) before provision for (benefit from) Provision for (benefit from) income taxes (133,242) 933,709 103,877 904,344 (2.9)% 20.4 % 2.3 % % 19.8 % (48,789) (48,789) (182,031) 933,709 103,877 855,555 59,021 Net income (loss) Net income (loss) per share, basic¹ Net income (loss) per share, diluted¹ $ (241,052) $ 933,709 $ $ $ (0.95) $ (0.95) $ 3.68 3.68 $ $ 103,877 0.41 $ $ 103,534 (103,534) $ (0.41) 162,555 $ 69 69 693,000 2.73 0.41 $ (0.49) $ 2.65 1. 2. 3. GAAP net loss per share is calculated based upon 253,975 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 253,975 basic and 262,742 diluted weighted-average shares of common stock. The numerator used to compute non-GAAP diluted net income per share was increased by $3.5 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 $64.3 million and employer payroll tax-related items on employee stock transactions of $39.5 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 $0.08 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 Year Ended January 31, 2020 (in thousands, except percentages and per share data) GAAP Costs and expenses: Share-Based Compensation Expenses Other Operating Expenses² Amortization of Debt Discount and Issuance Costs 3 Income Tax and Dilution Effects4 Non-GAAP Costs of subscription services $ Costs of professional services 488,513 $ 576,745 (49,919) $ (40,326) $ $ 398,268 (80,401) (6,440) 489,904 Product development 1,549,906 (434,188) (30,684) 1,085,034 Sales and marketing 1,146,548 (176,758) (40,774) 929,016 General and administrative 367,724 (118,614) (8,592) 240,518 Operating income (loss) Operating margin (502,230) 859,880 126,816 484,466 (13.8)% 23.7 % 3.5 % % % 13.4 % Other income (expense), net 19,783 54,034 73,817 Income (loss) before provision for (benefit from) income taxes (482,447) 859,880 126,816 54,034 558,283 Provision for (benefit from) income taxes (1,773) Net income (loss) $ (480,674) $ Net income (loss) per share, basic¹ $ Net income (loss) per share, diluted¹ $ (2.12) $ (2.12) $ 859,880 $ 3.78 $ 3.78 $ 0.56 126,816 $ $ 54,034 $ 0.56 $ 0.24 $ 0.24 $ 96,681 (96,681) $ (0.42) $ 94,908 463,375 2.04 1. 2. 3. 4. (0.58) $ 1.88 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.#23Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows (in thousands) Net cash provided by (used in) operating activities Less: Total capital expenditures¹ Free cash flows 1. Three Months Ended October 31, 2023 2022 $ 450,775 $ $ (59,948) 390,827 $ 408,668 $ (58,846) 349,822 $ Nine Months Ended October 31, 2023 1,153,355 $ (184,165) 969,190 $ 2022 962,743 Total capital expenditures consists of Capital expenditures, excluding owned real estate projects of $59 million, $59 million, $181 million, and $286 million for the three and nine months ended October 31, 2023, and 2022, respectively, and Owned real estate projects of $1 million, $0.2 million, $3 million, and $0.4 million for the three and nine months ended October 31, 2023, and 2022, respectively. (286,459) 676,284#24About 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, non-GAAP net income (loss) per share, and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this presentation 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. Free cash flows differ from GAAP cash flows from operating activities in that it treats total capital expenditures as a reduction to cash flows. 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.#25About 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. Additionally, with regards to free cash flows, Workday's management believes that reducing cash provided by (used in) operating activities by capital expenditures is meaningful to investors and others because it provides an enhanced view of cash flow generation from the ongoing operations of our business, and it balances operating results, cash management, and capital efficiency. The use of the non-GAAP measures of non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) per share, and free cash flows have certain limitations as they do not reflect all items of expense or cash 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.#26workday