James Redfern - VP, Corporate Development Aneel Bhusri - Chief Executive Officer Robynne Sisco - Chief Financial Officer Phil Wilmington - Co-President

Brent Thill - UBS Justin Furby - William Blair & Company Mark Murphy - JPMorgan Raimo Lenschow - Barclays Kirk Materne - Evercore ISI Keith Weiss - Morgan Stanley Heather Bellini - Goldman Sachs Pat Walravens - JMP Securities Karl Keirstead - Deutsche Bank Alex Zukin - Piper Jaffray Steve Ashley - Robert W. Baird Ross MacMillan - RBC Capital Markets Derrick Wood - Cowen and Company

Welcome to the Workday’s Third Quarter Fiscal 2017 Earnings Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference. With that, I will hand it over to Mr. James Redfern.

… [technical difficulty] fiscal 2017 earnings conference call. On the call, we have Aneel Bhusri, our CEO; Robynne Sisco, our CFO; Mark Peek and Phil Wilmington, our Co-Presidents. Following Aneel and Robynne’s prepared remarks, we will take questions. Our press release was issued after closes market and is posted on our website where this call is being simultaneously webcast. Statements made on this call include forward-looking statements, such as those with the words will, believe, expect, anticipate, and similar phrases that denote future expectation or intent regarding our financial results, applications, customer demand, operations, and other matters. These statements are subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors in documents filed with the Securities and Exchange Commission, including our most recent Quarterly Report on Form 10-Q, for information on risks and uncertainties that may cause actual results to differ materially from those set forth in such statements. In addition, during today’s call, we will discuss non-GAAP financial measures including non-GAAP operating profit and operating margins. These non-GAAP measures exclude the effect on our GAAP results of share-based compensation, employer payroll tax-related items on employee stock transactions, amortization of acquisition-related intangible assets, and debt discount and issuance costs associated with our convertible notes. We will also discuss free cash flows which are defined as cash flows from operations less certain capital expenditures other than owned real estate projects. These non-GAAP financial measures, which are used as measures of Workday’s performance, should be considered in addition to, not as a substitute for, or in isolation from, GAAP results. In addition on today’s call, we will discuss forward outlook for non-GAAP operating margins. A reconciliation of our forward outlook for non-GAAP operating margins with our forward-looking GAAP operating margins is not available without unreasonable efforts as a quantification of stock-based compensation expense required additional inputs such as number of shares granted and market price that are not ascertainable. You can find additional disclosers regarding these non-GAAP measures including reconciliations with comparable GAAP results, in our earnings press release and on the Investor Relations page of our website. Also the customer's page for our website includes a list of selected customers and is updated monthly. The webcast replay of this call will be available for the next 45 days on our company website under the Investor Relations' link. Our fourth quarter quiet period begins at the close of business January 15th, 2017. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2016. With that, let me hand it over to Aneel.

Thank you, James, and good afternoon everyone. Thank you for joining our third quarter analyst call today. I'm pleased to report that Q3 was another strong quarter for Workday as we saw healthy demand across all major geographies and industries. On the HCM front, we added great new customers including State Street Corporation, GE Appliances, Couche-Tard, the big retailer in Canada, Phillips Lighting, a spinout from existing customer Phillips, Covestro [ph] Deutschland in Germany, and KONE Corporation in Finland. We also had an excellent quarter in terms of adoption of our financial suite of applications. As we mentioned at Workday Rising in September, we're thrilled to add Panera and Denny's to our growing list of large financials customers. Other additions in Q3 include Iowa State University, the metropolitan Washington Airports Authority and Zillow. Lastly, we also added a prominent large investment management company as a new financials customer. We will be disclosing their name in the upcoming months. As always our key focus is brining customers' lives successfully; more than 70% are in production and recent deployments include Airbus Group, Centrica, First Financial Bank, ING Group, and St. Luke's Health System. In the third quarter, we also hosted our Annual User's Conference, Workday Rising. The show was a smashing success by all accounts, over 7,000 attendees, including 4,300 customers representing 947 organizations. Additionally we had over 600 prospects, representing 254 organizations, our strongest prospect showing at Rising in the history of the company. During the conference, we unveiled our annual customer satisfaction rating which this year came in at 97%. We continue to believe our ability to deliver high levels of customer success is a unique differentiator in our marketplace. During Workday Rising, we also announced a general availability of three new products, Workday Planning, Workday Learning, and Workday Student. We're seeing strong demand across the board for these new applications with particular excitement around Workday Planning. Indeed one quarter move from its initial delivery, we have already signed up over 70 customers for our revolutionary new Planning application. Just a few weeks ago, we had a similarly positive User Conference in Barcelona for our European customers and prospects. Since the event technically happened in Q4, I will save the update on that event for our next earnings call. I will end my comments with our view of the current market environment. During Q3, we saw no real change in the overall competitive dynamics in our key markets and our win rates against major competitors remain the same. We continue to lead with product differentiation, technology innovation and real customer success and this approach continues to work well for us. However, one recent development worth mentioning is slippage of some large deals early in Q4. Specifically, we have seen a few multinational prospects delay their projects. Some attribute the delay to global uncertainties such as Brexit, the U.S. Presidential Election and pending elections in other G8 countries. We suspected and hope these are isolated events that will be short-lived, but felt it was noteworthy enough to mention on this call. Other than that, our pipeline for both HCM and financial product lines is healthy and growing as we head into the remainder of Q4 and then onto fiscal year 2018 I will now pass it over to our great CFO, Robynne Sisco who will share more color on the financial aspects of our business. Take it away Robynne.

Thanks, Aneel, and good afternoon everyone, and thank you for joining us. Let me start with our results from the third quarter of fiscal 2017. We are pleased to once again generate record quarterly revenues and solid derived billings growth. We continue to exhibit strong momentum and growing our business at scale and we want to thank our employees for their continued dedication and our new and existing customers for their loyal support. Our total revenue for the third quarter of fiscal 2017 was $410 million, an increase of 34% from a year ago. Within that number, subscription revenue grew 38% to $336 million. Our Q3 professional services revenue was $74 million or growth of 18%. Our total derived billings, which is the sum of revenue and the sequential change in total unearned revenue, were $454 million for the third quarter or growth of 33% over last year. Subscription billings, which is the sum of subscription revenue and the sequential change in total unearned revenue, grew 37% to $380 million. Our non-GAAP operating profit for the third quarter was $4 million or an operating margin of 1%. This was better than we had expected and largely due to topline over performance and slower than expected hiring during Q3. In the quarter, we did not see any material impact from FX changes in general. While we are pleased with our margin performance in Q3, which indicates the increasing profitability of our model, we continue to prioritize topline growth over margins given the large opportunities still ahead of us. Our trailing 12-month operating cash flow for the quarter was $338 million, up 62% year-over-year. Our trailing 12-month free cash flow was $207 million, up 162% year-over-year. Note that in calculating our 12-month free cash flow, we have excluded $85 million related to our owned real estate investments as we consider such investments non-recurring in nature. We have over $1.9 billion of cash and marketable securities on our balance sheet, which continues to demonstrate the strengths of our business and provides more than ample cash for our capital expansion and strategic M&A. In addition, total unearned revenue at the end of Q3 reached a milestone level of over $1 billion and is up 43% year-over-year. Current unearned revenue which will be recognized over the next 12 months was $900 million or annual growth of 44%. The long-term nature of our contracts combined with our high levels of customer satisfaction is visible in our future subscription revenue and this continues to give us confidence in the sustained strength of our business. We added over 400 net new employees this quarter bringing our total employee count to over 6,400. We continue to enjoy an employee turnover rate that we believe is among the lowest in our industry. Let me now turn to guidance. As Aneel mentioned, during November, we saw expected close date slip on some large contracts. These delays have impacted our subscription revenue estimates for Q4 and fiscal year 2017. For fiscal 2017, we are raising the range of our estimated derived billings and now expect billings to be $1.887 billion to $1.892 billion or 32% growth. We estimate that our subscription revenue for fiscal 2017 will be $1.282 billion to $1.285 billion or growth of 38%. Additionally, we now expect professional services revenue for FY 2017 to be $278 million, representing growth of 19% and total revenues to be $1.560 billion to $1.563 billion or 34% growth. We continue to expect annual backlog growth in excess of 50%. Based on the fiscal 2017 guidance, we expect Q4 derived billings, which is the sum of total revenue and the sequential change in unearned revenue, to be approximately $630 million to $635 million or 25% to 26% annual growth. We expect Q4 subscription revenue to be $360 million to $363 million or 38% to 39% growth year-over-year with professional services growth slowing to 9% year-over-year to $67 million. As a result, we expect Q4 total revenue of between $427 million and $430 million or growth of 32% to 33%. We continue to prioritize growth over margins while maintaining our long-term goal of 20% plus non-GAAP operating margins. We expect Q4 non-GAAP operating margins to be a loss of 2% to approximately breakeven, reflecting normal Q4 seasonality as annual sales compensation plans conclude. Our non-GAAP operating margin for fiscal 2017 is expected to be approximately 1%. The GAAP operating margin for the fourth quarter and FY 2017 is expected to be approximately 26 to 27 percentage points lower than the non-GAAP margin, due primarily to the impact of share-based compensation expense. Let me turn to CapEx. When calculating our free cash flow, we're excluding owned real estate projects as we consider these to be non-recurring in nature. Excluding these projects, our CapEx in the third quarter was $28 million and $131 million on a trailing 12-month basis. We expect CapEx for fiscal 2017 excluding owned real estate projects to be approximately $150 million. We continue to expect capital expenses related to our owned real estate investment projects for FY 2017 to be approximately $125 million. We expect operating cash flow growth to approximate growth in billings for fiscal 2017. While we are early in our fiscal 2018 planning cycle, we're currently modeling 30% subscription revenue growth next year, which takes into account our expectation of a continued headwind from flexible terms. We expect FY 2018 subscription billings growth to be in the mid-20s. Due to the compounding effect of increasing seasonality and variability in the timing of recurring and renewal billings, we currently expect Q1 subscription billings growth rate in the low teens. We remain committed to measured incremental non-GAAP margin improvement in FY 2018. With that, I'll turn the call over to the operator for Q&A. Operator?

Thank you. Good afternoon. Aneel just on some of the slipped deals you mentioned on the multinational side, can you just give us a sense, do those deals -- are they technically won or are they still kind of going through the technical [back] [ph] office you will and a quick follow-up for Robynne.

It's still early, it was just the first month of the quarter and so we're still waiting to see how it plays out. I'd say there were a handful of large multinationals, a couple in the financial services space that are trying to figure out what Brexit means and now what our Presidential Election means to them and they just said hey we're going to hold off on making a final decision. I think in both cases, we're selected. So, it’s not a competitive dynamic, it's much more of a uncertainty issue and this is coming directly from the CEO of these companies.

Okay. And Robynne just when you mentioned 30% subscription growth for 2018 and the headwind still on flexible terms, can just help us understand what -- are you seeing more of the same in terms of the behavior from customers asking for these flexible terms, is that -- or is that increased as of late?

No, it hasn’t increased. We just expect that it will continue along the path that we've been on all this year into next year and that the compounding effect of multiple years of doing this won't flip until FY 2019 where it becomes a net neutral.

Great. Thank you.

The question is from Justin Furby from William Blair & Company.

Yes, thanks. I just -- a quick question for either Aneel or Phil. Just on the guidance for next year, the 30% growth, do you think that we've hit a point where HR and international from the other non-financials' markets can sort of sustain that growth or do you feel like for you to hit that number or be that financials has to become a more meaningful part of the mix next year. Can you give any sense I guess for what that mix looks like today on a new business basis? Thanks.

We're -- I would say we're pleased with how Q3 shaped up from a bookings perspective on financials. Maybe we'll give a year end look after end of Q4. I think we expect financials to continue to perform well next year, but we're not looking for any step functions increase in growth and financials. The HR business is very healthy and it's growing very rapidly outside of the U.S. and growing quite nicely in the U.S. So, I think the 30% number is one we feel comfortable with for at least the next few years depending on -- I think the business can continue to grow at a nice clip and may be even reaccelerate when the financials really becomes a bigger part of the business.

Okay, got it. And then just for Robynne, just to be clear Robynne is the idea that in that 30% guidance, is that another five points of headwind or what's the right way to think about fiscal 2018 in terms of the headwinds that you're baking at? Thank you.

Yes, the headwind we expect next year is not dissimilar from what we've experienced this current year.

Okay. Thank you.

The next question is from Mark Murphy from JPMorgan.

Yes. Thank you very much. So, Aneel heading into Q4, how are you handicapping the ability of your quota carriers to deliver successfully on the targets for Workday financials which were structured into the quotas for your broader sales teams earlier this year? And then I have a quick follow-up.

I'll probably defer that one to Phil; he's closer to that detail.

Let me make sure I understand the question. In terms of you say handicap, is it in terms of predicting the ability for the model to perform?

Yes, correct. So, I believe they were given - a portion of their quota for this year was allocated to financials in some manner of speaking so I think there was a bit of a change in that structure coming into this year, I'm wondering how you think it will play out?

I think quotas were not product-specific, but responsibilities to carry the product line, you're accurate, we gave the responsibility of the entire product line to the sales force. We're pleased with the number of platform deals and the progress there. We've seen -- as we said, a little bit slower in the large end of the market by some of the pushback we've seen now, but overall, we're pleased with the progress that the model has provided. And I think it will work going forward.

Okay. And then as a follow-up, Aneel, I think we don't normally hear about deal slippage early in the quarter. I think commonly we hear about that at the end of a quarter. I think because presumably the deals could still be closed later in this quarter. So, I'm just wondering are you conveying that it's just going to be a little more backend loaded quarter or do you see the potential for that slippage to may be extend a bit beyond the end of Q4 here and into next year?

I would say that I hope it's a backend loaded quarter. We'll see how this uncertainty subsides and I would say we don't see any of that uncertainty in the midmarket -- middle sized -- medium-sized companies are mostly U.S. based, but people that are -- entities that are global in particular in financial services, they have expressed that uncertainty and I think the dust will settle and we'll end up on a really good note in Q4. But we're conservative and when we see something happen in the marketplace, we feel like it's our duty to share that with investors.

Okay. Thank you very much.

The next question is from Raimo Lenschow from Barclays.

Hey, thanks for taking my question. Two quick questions. Aneel one of your competitors pointed out weakness in the HR space, weakness in the international side and that they cited more issues around data, where the data is residing post-Brexit et cetera. Is that kind of what you see or is it really like more macroeconomic uncertainty that's playing out there? And then I saw you on stage yesterday at AWS, congratulations, it's now the second cloud provider that you're kind of working with, how do you see long-term infrastructure strategy playing out now with kind of two guys that you want to work with going forward? Thank you,

Sure. On the first one the data sovereignty issues haven’t really been raised with Workday and I think it's because we've got such a good story in Europe for data sovereignty. We have the two data centers and we have an ability for European customers to keep all of their data in Europe without having anything leaked back to the U.S. So, that has not been an issue. And I wouldn’t call it macroeconomic concerns. I think it’s macro-political concerns, waiting to see what happens in Italy, waiting to see what happens in France. There's just some uncertainty. I personally believe this uncertainty will go away and it's early enough in the quarter where we can -- where we have time to make it up, but there's definitely uncertainty in the marketplace that candidly we haven't seen from that political environment in quite some time.

Okay. And on the data center side?

On the data center side, so we basically have two partnerships, one for dev test with IBM, public cloud with Amazon, in the case of Amazon, an AWS. We're on the hook for delivering pair of Canadian data centers, so we're going to launch in Canada with Amazon. I suspect for data solvency issues coming up; we'll also have other customer facing data center opportunities that will also go into the public cloud. Our view is pretty simple. Over time the players out there are building great infrastructure and the more we can leverage it rather than having to build it ourselves, the more it allows us to focus on building great applications. And so when we started Workday, there really wasn’t a public cloud to leverage. Now, as there is, we need to make sure that we take advantage of it so that we really can put our efforts into where we differentiate our products and running infrastructure is not that. So, I think you'll -- I don't know, you're not going to see any more announcements. I think we've pretty much said who are we work with, those two vendors and from here on, we're going to hopefully work more closely with both of them.

Perfect. Thank you.

The next question is from Kirk Materne from Evercore.

Yes, thanks very much. Aneel I was wondering on the planning side, obviously, a great early start with so many customers on Planning, about how long is it going to take to get some of those customers into production to start fueling or providing more example for others that it works and also start to make the financial sale -- potentially more strategic as you integrate Planning? I'm trying to sense of when we can start seeing some of these Planning customers up and running? Thanks.

Yes, we'll start seeing Planning customers go live in mass in the Q1 timeframe is my best guess based on our current set of go lives. I think the more points -- proof points we have, the more people are buying into it. The message is definitely working. We have a lot of very exciting large companies in the pipeline for financials and Planning is a key component of it. We just need to see those through the fruition and see them closeout. But it clearly is going to change the dynamic of the conversation and I think going live with the budget customers in Q1 will only help that.

If I can ask a really quick other one for Robynne. Just what these infrastructure partnerships with IBM and now AWS, does that change anything, we should be thinking about from a CapEx perspective longer time? I assume that it probably doesn’t move the needle all that dramatically, but I was just curious? Thanks.

Yes, that's right. I mean in the short-term in the next several years, we don't expect any meaningful impact at all. Longer-term, obviously, we hope that we will get margin improvement based on these partnerships.

The next question is from Keith Weiss from Morgan Stanley.

Excellent. Thank you guys for taking the question. A question about the guidance, particular Q1 guidance and for FY 2018. Is there an extra layer of conservatism because of these slip deals that are being applied to those. You talked about renewal day, I guess another way to asking the question, would Q1 -- would that drop down in subscription billings growth, would that be as steep if it wasn’t for the conservatism around slip deals, or is that more so just renewal base dynamic?

Yes, it's really just about the compounding seasonality that we have in Q1 as we get more and more seasonal each year and then you've got variability and when renewals come up and other such things in the billing cycle. So, it really doesn't have anything to do with the deal slippage that we're saying today. And keep in mind that we're are early in our planning cycle for 2018. We do some substantial amount of our FY 2017 business will be done in Q4 and so we really need to see how Q4 plays out. And we'll give you more details about FY 2018 in the next earnings call.

Got it. So, that's a level of seasonality that we should probably be thinking about longer term in our models, just Q1 being more seasonal than -- much more seasonal than we've seen historically?

Yes, that's correct.

Got it. And then one maybe for Aneel. In terms of some of the M&A activity that's been going on in the SI, with your SI partners, can you talk to us how some of those relationships are developing post some of that acquisition and whether sort of the strengthening of those relationships is living up to your expectations?

Well it's still early. They -- the two big ones Wipro's purchase of Appirio and Accenture's purchase of DayNine. I'm not even sure they've closed yet. But the early signals are pretty positive. They are both leaving -- Accenture and Wipro are both leaving Appirio and DayNine basically intact and letting them operate. And that's really what we had hoped they would do. We wanted them to let those well-functioning smaller organizations operate but with the resources and connections of a large organization. So, at this point, we're hopeful. It's definitely brought us into more strategic conversations with both Accenture and Wipro and we love the fact that big players are doubling down on the Workday ecosystem. So far so good is what I would say but we're very -- we're watching it very carefully.

Excellent. Thank you very much.

The next question is from Heather Bellini from Goldman Sachs.

Great. Thank you. I guess Aneel I had a question and I was wondering a little bit of a follow-up I'll attach to it. If we look back to since you went public, you had a tendency of really exceeding your full year forecast by a wide margin and over the last few years, we've seen the magnitude of those beats compress. I'm just wondering is this because financial maybe has taken a little bit longer to really take off and you thought is there something behind that that we should be thinking about.

Honestly, I think it's more than anything else; it's just a large numbers. We're now a big organization, 6,400 people. We do a better job of planning our markets easier to predict and I think we come in pretty close to where we plan. I'm very happy with where financials has taken off in the marketplace in terms of platform deals in the mid-market. Would I like to see more attraction in large enterprises? Absolutely. To me it's just a matter of time and when that large enterprise market really takes off, right now its -- we're getting some nice wins like Denny's and Panera and the big financial services company that we're not allowed to mention yet. I think as those companies go live, we're going to see a step function in the way that people adopt financials and that will be an important point for us along our trajectory. I don't envision a world in three or four years where people are running SAP and Oracle and PeopleSoft financial systems, I just don't see that being the case. And if you look at historically, the mid-market is where technology adoption happens first. We saw and that we've been successful that market has already shifted over to the cloud; it's just a matter time before the high end of the enterprise flips over as well. When it happens, I think we've got a pretty good sense. I'd love to see it happen faster, but we don't control when the market flips.

Thank you.

The next question is from Pat Walravens from JMP Securities.

Great. Thank you. I have two. So, Phil, just sort of big picture, I'm wondering if you're satisfied with the performance of the sales organization and the changes you've made. And if there's anything else that you think -- any other changes you think you need to make for next year? And then I guess maybe Aneel, so have you seen any benefits yet from Oracle's acquisition of NetSuite?

I guess on the first part, we're pleased with the progress of the salesforce. I think there are always things that you're looking to do to improve and to make more efficient and effective your distribution channel. But I don't foresee any major changes that we would make going forward. We're pleased with the progress. I think stay in the course the additions that we'll make will be in markets of expansion. We're very pleased with the progress we made in EMEA and APJ. We'll continue to pursue those, but no major changes in the horizon.

On the NetSuite front, I'd love to say yes to your question, but it's too early. Well, I think we'll know a lot more. Ask that question again at the end of Q4 where we have some competes against NetSuite and I think we'll be able to answer that in a more definitive way.

Okay. Will do. Thank you.

The next question is from Karl Keirstead from Deutsche Bank.

Great. Thanks. Aneel you mentioned that with respect to financials, you're not really looking for a step function growth in fiscal 2018. Maybe I'm wrong, but it feels like in prior calls, you sort of suggested we were getting closer to an inflection point. So, I just clarify is this you being a little bit more conservative around the financial trajectory perhaps in light of this uncertainty you flagged? Thank you.

No, I didn't say I didn't expect if that's where it came across. I don't know when it's going to happen, that step function. It could happen in fiscal year 2018. All the signs are there in the pipeline. The pipeline has grown really nicely. We've seen the traction with Planning; we've now got a large number of financial customers live on the system. So, all the things are happening. When does a large number Fortune 500 accounts close in the same quarter, I'm not going to try to predict that. Do I think there's a chance that we have a step function in the next fiscal year? Absolutely.

Okay. Thank you.

The market is there.

Got it. Understand. And then if I could do a follow-up with Robynne. Robynne if I could just go back to Keith's question around the guide for Q1 subscription billings, it's a fairly market the change from the subscription billings growth you just posted, so do you mind just elaborating on the key reasons why it's decelerating so much if it is seasonality what's causing that? If it's renewal activity, what's causing that? Maybe a little more color might help us. Thank you.

Sure. So, we are seeing increasing seasonality, more deals coming in the back half of the year and we've seen that over multiple years. So, we have a compounding effect of that happening. In addition to that, we've got fairly significant variability in the renewals as well as other things like for example, if a customer pays more than one year ahead, then we won't get a billing the next year, right. So, there's a lot of complexities with the billings and when we look at the scheduled billings for Q1 of this year, they are smaller portion of our billings number than they were a year ago, So, it's actually a lot of dynamics.

Okay. And is it also fair to say that you're not assuming that some of these slipped deals that Aneel talked about are going to close in 1Q, it will be 2Q or after, is that also the case?

The deals Aneel was talking about are really slippage from November to later in Q4. So, not impactful to FY 2018, but impactful to our Q4 revenue estimate, given we'll get less revenue on those deals since were closed later in the quarter.

Okay. I understand. Thank you both.

The next question is from Alex Zukin from Piper Jaffray.

Hey guys. Thanks for taking my question. I wanted to ask about the progress of your efforts to move down market, and particularly also strategically is it part of some of the uncertainty around the timing of this financials uptick in the -- at the larger enterprise level that's driving this push down market?

No. I think I've been pretty consistent on the earnings call in the past. Our win rates against SAP and Oracle are quite a bit higher than they are against NetSuite and Ultimate. And I think that's -- against NetSuite and Ultimate, they were both above 50% this quarter, but as not as high it is against SAP and Oracle and frankly, it's because we're so focused on the high end of the market and yet, there's a lot happening in the middle market and it's just getting more competitive in that segment. The biggest impact there is reducing the cost of implementation. We've been bringing out new tooling. I think you're going to see the real focus on the mid-market. It's hard to make major changes during a sales year. Go-to-market changes -- programmatic changes. I think you'll see the real focus on what we're doing in -- as we launch fiscal year 2018 selling and support.

Got it. And then maybe one for Phil. This question has been asked a couple of times, just one more time, I guess, do you anticipate -- I mean from our patterned checks, we picked up that you guys did beef-up your financial overlay sales team, would you consider at all a dedicated financial sales motion sometime next year?

I think the financial overlay decision we made is the right decision. And when you say we beefed it up, we did at the beginning of the year, we're pleased with progress that that the expertise that that brings to our regions. I think which they focused on that business strategy going forward.

Got it. Thanks guys.

The next question is from Steve Ashley from Robert W. Baird.

Great. Thanks very much. I was wondering if you would have any interest in quantifying the impact of the slip deals to the billings guidance you gave to the fourth quarter.

No. I mean really the main impact was on revenue because we saw slippage within the quarter.

All right. Okay. And then my other question--

We don't know how the deals will shake out. Whether they will still close in this quarter or not and we're just going to be conservative until we get better data.

Great. And then I have other -- my follow-up is you were becoming more of a platform. You've acquired Platfora. You're offering Data-as-a-Service. Does this change how you go-to-market relative to the IT Department? And does it change the timing and your relationship with them going forward? Thanks.

I think it probably elevates our visibility with IT earlier on in the sales cycle than just HR. The platform deal in self does that. At the end of the day, when people look at Platfora, I think at first blush, they look at it as a vehicle for us to have a financial data warehouse. So, I mean really it -- what we see in the platform deals is those are much more likely to get to not just the CFO, but even to the CEO. And IT as part of that, but if it gets to the CEO, it has to go through IT as well. So, that's really the dynamic we see where. Early on when we were just really focused on HR accounts, we were selling to HR. We still had a deal with IT, but we didn’t really often have to go into the CEO's office. Frankly, we love going to CEO's office, we get to position ourselves much more strategically and that is the change with platform and -- both financials and a broader platform story.

Thank you.

We have time for two more questions. The next question is from Ross MacMillan from RBC Capital Markets.

Thanks so much. One for Robynne and one for Aneel. Just so I'm clear on this point when you say that subscription billings growth next year will be in mid-20s, if we had not had to slip deals, would we be thinking about the same growth rate just off a slightly higher base or did you actually modify your thoughts at all around subscription billings next year as a result of these slip deals? And then I have a follow-up.

No, we have not modified our current view of next year for these slip deals that we saw in November. And again it's early days and Q4 and how we deliver and Q4 will have a significant impact on next year. So, we'll have better information for you on FY 2018 at next quarter's call.

Great. And Aneel I wondered if you could just comment on the S4/HANA SAP Public Cloud addition that they plan on launching next year. I don't know if you've seen any of that in market; just love your early thoughts around that. Thanks.

We've seen in market from time-to-time until it's actually out and live in production. There are always -- I think both of our large competitors are really good at marketing well before the product is available. I don't see it being impactful. Frankly, I think as SAP gears up to launch financials in the cloud that might be impactful in a positive way, because it will signal that financials are truly going into the cloud. Right now, it's just us and Oracle competing for business. I don't want to throw our competitors under the bus as much as I would enjoy doing that. It's worth digging into both of these vendors, their ability to actually run their customer's data center operations, I mean run their data center operations for customer. I think if you dig out, you'll find that there's quite a few problems as they move into the cloud.

Thanks.

The last question is from Derrick Wood from Cowen and Company.

Thanks. Aneel just curious of this cautiousness you saw impact in Q4 on a few deals, was that really relegated to just a few deals or do you see the dialogue around the election uncertainty spreading in a broader way?

I think time will tell. The good and the bad for me is I've access to a lot of CEOs over the last couple of months. I'm part of a Business Council and I really don't think anybody in the Business Council expected the U.S. Election to play out the way it did. Independent of who they wanted to play out with, people did not see that coming, the rhetoric around trade agreements and some of the protectionism. For Brexit, real issues as Brexit starts getting -- put in the place for institutions that have a significant presence, especially financial services institutions based in Europe what that means to them. So, I believe this will dissipate. And I believe on our Q4 call, we'll be talking on a very positive tone. But we saw enough of it that we felt like it was definitely worth flagging and hopefully goes away and we got two months to make sure it goes away. But our typical closing pattern on a -- for Q3 -- for Q4 in terms of monthly, we know saw slipping. So, we want to highlight it to you.

Great. If I could squeeze one more and Robynne. Just on Q3, I know we'll see the domestic versus international in the Q, but can you give us any color as to how growth trended between the two geographies?

Yes, we had a strong showing overseas and so you should expect that that international percent of revenues to continue to slowly tick up. Obviously, we have large numbers in the U.S. and so it will be a while before you see any major moves. But it should continue to trend upward.

Thank you.

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