Welcome to Workday's first quarter fiscal year 2020 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 call. And with that, I will hand it over to Mike Magaro, Vice President of Investor Relations.

Welcome to Workday's first quarter fiscal 2020 earnings conference call. On the call, we have Aneel Bhusri, our CEO, Robynne Sisco, our Co-President and CFO, Chano Fernandez, our Co-President and Tom Bogan, Executive Vice President of the Business Planning Unit. Following Aneel and Robynne's prepared remarks, we will take questions. Our press release was issued after the close of market and is posted on our website where this call is being simultaneously webcast. Statements made on this call include forward-looking statements 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 and documents we file with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, for information on risks, uncertainties and assumptions 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, which we believe are useful as supplemental measures of Workday's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation [AUDIO GAP] …Investor Relations page of our website. The webcast replay of this call will be available for the next 90 days on our company website under the Investor Relations link. Also, the Customers page of our website includes a list of selected customers and is updated monthly. Our second quarter quiet period begins on July 15, 2019. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2019. With that, let me hand it over to Aneel.

Thank you Michael. I would first like to thank everyone for joining our Q1 2020 earnings call. I am pleased to report that our first quarter fiscal year 2020 got us off to a great start for the year. We continue to attract new customers and many of our current customers are growing their investments with us. Our customer satisfaction rating remains amongst the highest in enterprise software and the success of our customers is a cornerstone of our long term business strategy. Let's start with some of the highlights from Q1, beginning with Workday HCM. Momentum for this application suite remains strong as organizations continue their transitions to the cloud. In Q1, we added Carl Zeiss AG, Cisco Systems, Daimler Trucks North America, Old Mutual Limited and Procter & Gamble among the many new HCM customers in the quarter. Our proven ability to support our customer's large volumes of data and transactions continues to be a big differentiator in our success. Notable go-lives in Q1 included Enterprise Holdings and Tyson Shared services. Turning to Workday financial management. We saw continued momentum in Q1 with over 50% customer in net new ACV growth. New customers included Advocate Aurora Health System and E-Trade Financial Corporation. In addition, during the quarter, many existing customers expanded their relationship with Workday. Legg Mason, for example, a leading investment management firm, expanded their use of Workday financial management to include all of their affiliates. Lastly, we also had a large Fortune 500 scale insurance company add financial management to become a full platform customer. As always, getting customers live and on budget is core to our business. Amongst the many go-lives of Q1 for financials, I would like to highlight Sprouts Farmers Market and NASDAQ. Q1 was also our third quarter with the Adaptive Insights business planning cloud and customer demand continues to reinforce our confidence in the long term opportunity. We added approximately 150 standalone Adaptive deals and once again saw success selling it to the large enterprise market with approximately 50 deals representing both platform sales and planning add-ons. New customer selecting Adaptive Insights business planning cloud in Q1 included Advocate Aurora Health System, Airbus, AstraZeneca, AutoZone Parts, H&R Block and the Ohio State University. We are pleased that our customer and product momentum continues to get recognized by leading industry analysts. This month, Gartner published its 2019 Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises and Gartner named Workday as a leader for the third year in a row. Also in Q1, I am pleased to announce that we moved all customers to Workday 32. With this update, we delivered more than 500 new features, including deeper investments in Workday Learning and Workday Recruiting, finance-focused machine learning capabilities to help resource managers align skills resources to projects and deeper integration between Workday and Adaptive Insights. Indeed, we are well on our way for a goal of bringing Adaptive Insights full into the power of one. And last but not least for Q1, we are pleased to share that we were once again ranked number one on San Francisco Business Times' Best Places to Work in the Bay Area list. This is the seventh time Workday has been ranked number one on the list. Workday also ranked number one on the UK's Best Large Workplaces list by Great Place to Work Institute. All-in-all, this quarter was a strong start to our fiscal year. I will now turn it over to our Co-President and CFO, Robynne Sisco. Over to you, Robynne.

Thanks Aneel and good afternoon everyone. As Aneel mentioned, we continue to execute well against our long term market opportunity, differentiating ourselves through our technology and our uniquely purposed customer success model. We are very pleased with our first quarter results, delivering total revenue of $825 million, reflecting year-over-year growth of 33%. Our subscription revenue was $701 million, up 34% and professional services revenue came in at $124 million, up 29%. We continue to see our long term opportunity expanding outside of the U.S. with revenue up 42% to $197 million. Our non-U.S. revenue now represents a record 24% of total revenue. Subscription revenue backlog was $6.8 billion, growth of 30% year-over-year driven by strong performance across net new bookings, add-on business and renewals with net retention once again over 100%. Subscription revenue backlog that will be recognized within the next 24 months was $4.56 billion, growth of 29%. Our non-GAAP operating income for the first quarter was $108 million, resulting in a non-GAAP operating margin of 13.1%. Operating cash flow in Q1 was $209 million. Current unearned revenue was $1.73 billion in Q1, up 31% year-over-year while total unearned revenue grew 29% to $1.83 billion. We continue to invest in our people and in attracting top talent to Workday. During Q1, we successfully added and integrated approximately 400 net new employees, bringing our total workforce at the end of the quarter to almost 11,000. Operationally, it was another strong quarter of execution in Q1. We are extremely pleased with our results and have gotten off to a great start for fiscal 2020. I will now turn to guidance. Our focus remains centered on driving strong durable growth and we will continue to invest in our products and other areas of the business to support our long term growth aspirations. Based on our over-performance in Q1, but keeping in mind we face a very difficult second half comps from last year, we are raising our fiscal 2020 outlook and providing Q2 guidance as follows. For subscription revenue, we are raising our full year estimate to be in the range of $3.045 billion to $3.06 billion. We expect our Q2 subscription revenue to be $746 million to $748 million or 32% growth, with sequential improvement in Q3 and Q4 of approximately 4.7% and 5.7% respectively. Similar to last year, this pattern reflects our increasing seasonal trends towards larger Q4s. We still expect professional services revenue to be $500 million in fiscal 2020 as we continue to prioritize driving the highest levels of customer success. For Q2, we expect services revenue of $124 million. For non-GAAP operating margins, we estimate Q2 to be 10% and we still anticipate 12.3% margins for the full year as we remain committed to 200 basis point of margin expansion even as we continue to aggressively invest for continued growth. The sequential decline in the non-GAAP operating margin from Q1 reflects typical seasonality and is primarily a result of our annual employee compensation cycle, which took effect at the beginning of Q2. The GAAP operating margin is expected to be lower than the non-GAAP margin by approximately 27 percentage points in each remaining quarter and for the full year. We still expect subscription revenue backlog to follow the pattern we laid out in our Q4 call with high-20s growth in the first half and low-20s growth in the second half. We continue to see a healthy pace of cloud migrations across HR and finance but as we look at the full year we are seeing more opportunities move into the back part of the year, specifically shifting into Q4. There is no change to our operating cash flow guidance in FY 2020 of approximately $790 million or 30% growth. As a reminder, Q2 traditionally generates limited operating cash flows. This is due to the combination of seasonally low collections and the seasonally high sequential increase in expenses resulting from our annual employee compensation cycle. We are excited to have recently begun occupying our new Pleasanton development center, which will house more than 2,200 employees and also be home to our new customer center. We continue to expect the FY 2020 capital outlay for our owned real estate projects will be approximately $130 million, of which $94 million relates specifically to the development center. There is no change to our fiscal 2020 plans of $280 million for other capital investments to support customer growth and continued business expansion. And finally, I will close by thanking our amazing customers, partners and employees for their continued support and hard work. We are still in early stages of executing against our long term vision as a company, but our progress wouldn't be possible without a shared goal. We are off to a great start for FY 2020 and look forward to updating you on our progress throughout the year. Operator, let's begin the Q&A process.

[Operator Instructions]. Our first question comes from the line of Kash Rangan from Bank of America. Please ask your question.

Hi. Congratulations on a spectacular start to the fiscal year. One question for Robynne. If you look at the deferred revenues, I know that you don't guide to deferred revenues and billings. They are not exactly representative of the strength of the business. But nonetheless, I just wanted to understand if there were certain factors that might have driven better, much better than the typical seasonality we have seen in deferred revenues? And one for you Aneel, you mentioned 50 platform deals with Adaptive. Are these fairly large corporations? Or as the next few years unfold for the company, how do you see planning playing out alongside financials? Does one synergize the other? And just wanted to get your broader thoughts on the adoption of planning and financials. Thank you. Congratulations.

Well, I will take that and thanks Kash. I will take the second part first. One of the traction we saw with Adaptive in the suite market was in large companies. And I mentioned, several of them, they were either add-ons or a part of platform deals. AstraZeneca, Airbus and H&R Block, these are big organizations that are embracing the Adaptive business planning cloud. I don't know, Tom, if you want to add anything?

Yes. I think that's right, Aneel. And from our perspective, we have seen a lot more traction with the larger companies working with the broader Workday sales team. And as we know, those are longer sales cycles, but the early traction with those customers is very encouraging.

Kash, on your deferred revenue question. Nothing particular to call out in Q1 outside of just the strong performance that we had overall. And as you know, just a reminder that unearned balance can vary with contract terms and renewal timing as well.

And if I could just take one. Aneel, any broad comment on the replacement cycle you are seeing in core HCM, whether it's legacy SaaS or legacy on-premise? It looks like there is a bit of an acceleration of another inflection point in that journey and maybe I am wrong about it, but just wanted to get your comment on that. Thank you.

Yes. I don't think we are seeing an inflection point or a reacceleration. I think the HR product line continues to do very well. And we are now on mainstream in terms of the types of customers that are looking to move to the cloud and with the high levels of customer satisfaction and the proven points of customers being live, I think it just bodes well for Workday. I think if there is anything that I would say about this quarter is that all the product lines are beginning to kick in and take some of the pressure off HCM. I hope that continues. Operator, can we have the next question please?

And we have a question from the line of Brent Bracelin from KeyBanc. Please ask your question.

Thank you for taking the question here. One for Aneel and a follow-up for Robynne. Aneel, my question is on the demand drivers for cloud financials in the Fortune 50. Given the increasing number of proof points over the last year within the Fortune 500, what are the remaining objections you are fielding from the larger enterprises? And when would you expect to see some of the larger Fortune 50s begin to go down the path to embrace cloud financials?

Well, I would separate out, you said Fortune 500 and Fortune 50s in there. The Fortune 50s are really hard to predict and we have a few of them. I would hope keep my comments to the broader Fortune 500. I believe, we are seeing a very similar adoption pattern for Fortune 500s as we did in HR five or six years ago. The more reference customers we have, the more that customers are facing painful upgrades of their legacy systems, the more that the regulations change with things like 606, those are all catalysts and I do think that the cloud is now viewed as the preferred deployment option versus on-premise, even for CFOs and whether that's through planning or through core accounting, I think that that is happening as well. And that's has been the case in HR and CRM for a while. It's beginning to happen in finance now. So a lot of things, no one thing to point out.

Certainly good to hear. And then as a follow-up for Robynne. You talked about more opportunity shifting into kind of Q4. My question here is just, is this tied to a handful of larger lands that are shifting, because of complexity? Is it more geo-specific? What are the factors there that you should point us to as you think about some opportunity shifting in the quarters there in the second half?

Brent, this is Chano speaking. I don't think there is one single factor. I would just say that particularly large deals, the timing move quarter-to-quarter. And as we are becoming a larger company, those tend to navigate more and move more towards the back end part of the year. But overall, the pipeline is healthy and quality of the global opportunities remain strong.

Okay. So it's not geo-specific then?

Nothing to highlight really specific, I think

Great. Thank you.

And we have a question from the line of Mark Murphy from JPMorgan. Please ask your question.

Yes. Thank you and I will add my congrats. Robynne, just following up on the prior question about more opportunities moving into Q4. At the same time, you are raising guidance and I think you are reaffirming the subscription backlog guidance. So I just wanted to clarify, are you highlighting the same trends that's been there, I think, for many years of the business just becoming a little more Q4 seasonal? Or were you intending to call out some type of maybe more meaningful change in this fiscal year?

No. Nothing more meaningful, Mark. As you know, in the past, there have been times when we have called out specific trends that we are seeing just to help our analysts and investors understand the dynamics that impact the metrics that you track. For example, last year, we talked about the difficult first half comps where we were seeing, in terms of larger deals flowing into the second half of the year. We are actually seeing a similar dynamic this year, but they are just flowing into Q4 instead of more evenly spread across Q3 and Q4. So we thought it might be helpful for you to just highlight that as you look at how to model our business. But it's has nothing really unusual. It's just a continuation of the trend that we have been seeing.

Okay. Great. And then as a quick follow-up. Aneel, when you secure a planning win with a large organization like an Airbus or an AstraZeneca, do you see that as a precursor to a core financials win in the future? Or do you have enough data to know whether that increases the odds that that you would be able to win core financials from that organization in the future?

I think it's still early, but if you look at it, if they have HR and planning, so they are more than just one Workday product in the customer account, then I think it bodes well for finance. Then the account has chances to default to a Workday platform. If it's just standalone planning, I think it's probably harder to predict at this point. And Tom, if you want to add anything?

No. I agree. I think all those accounts are opportunities to engage with the customer and develop a more holistic relationship. But I think it's more likely to advance if it's an HCM and planning deal.

Thank you very much.

And we have a question from the line of Keith Weiss from Morgan Stanley. Please ask your question.

Hi. This is Sanjit Singh for Keith Weiss. And congrats on a swell and a strong start to the year. Robynne, maybe kickoff with a cash flow related question. When I looked at the billing performance this quarter and the deferred revenue performance, all very strong at nearly 30%-plus and it seems on the cash flows side, though, it seems to under pace the growth in billings as well as in overall cash flow. Can give us a sense of why cash flow grew 40% year-over-year versus the 30% type of growth you saw in deferred revenue?

Yes. So because Q4 is sort of a high volume collections quarter, it's not really easy to predict how much we are getting at in Q4 versus Q1. And so we saw an over-performance in cash collections in Q4, which took some cash out of Q1. So we still feel really good about our guide for the year. But Q1 was a little bit of a lower cash flow quarter for us than usual, but you should expect that to pick up later in the year.

Great. That's very helpful. And maybe Aneel, for you. As we think more broadly about the platform, it seems like each of the various HCM, financials, financial planning, just seem to be performing well. When I look back to PeopleSoft all those years ago, you guys, I think, brought on supply chain at the later stages of the PeopleSoft story. Is that and area where the platform can move next in serving where the sort of manufacturing type vertical? Any thoughts on that?

I would say, it's on the radar but I wouldn't say that we are going to announcing imminently. That's a big undertaking. We still have more work to do to really establish ourselves as leaders outside of HR. We want that same leadership position for financials, for planning. I think we are planning with Adaptive. We are one of the two. And then, with Prism Analytics, we saw 70% or almost 70% growth this past quarter. So I don't feel the need for another growth engine at this point. Frankly, I think it would be a distraction. We have a lot of work to do on the product side, especially as we take all the products into the world of machine learning. But you know, I would ask that question every year. And some of you might get a different answer.

Appreciate that, Aneel. Thank you.

Your next question comes from the line of Justin Furby from William Blair & Company. Please ask your question.

Thanks guys and congrats. Chano, I want to ask about just your efforts selling back to the base. I think there has been a bit more focused around that over the last several quarters. I am wondering if you are seeing any sort of measurable impact, whether retention rates or bookings mix? Or if it's more incremental? And then I have got a quick follow-up for Aneel.

Thanks Justin. That customer base efforts or add-ons is tracking well. We see increased adoption around many different product lines, recruitment, learning, clearly Prism and planning, expenses and some others. We are very happy with the retention rates. We have commented again over 100% on a net basis. So, those efforts, we feel, that they are paying off. They are still early days but clearly as the opportunities increase, not only domestic here in the U.S. but also internationally, with a larger customer base, we see a huge opportunity there based on our great customer satisfaction and proven solution adoption. That's a great opportunity for us going forward.

Okay. Great. And then, Aneel, I think you mentioned Legg Mason, which if I remember right was an Oracle win and it sounds like a win back for you guys. I am just wondering if you could speak more broadly on whether you are seeing more of those types of opportunities in your pipeline from Oracle, SAP? And is so, what do you think is driving that? Thanks.

I would probably rather not comment on that. We won Legg Mason for the full organization. Not going into all the competitive dynamics. They were happy with what they rolled out initially and decided to broaden their use of Workday. And that's probably best to leave it there. There are failed cloud implementations. There are also cloud implementations of best-of-breed products tied back to legacy core HR and finance that are on-premise. All those create opportunities for us. So it all comes back to having happy customers and having projects that are successful. And as we stay focused on that and other people don't have successful outcomes, hopefully they do look to Workday.

Okay. Great. Thanks guys.

And we have Mark Moerdler from Sanford Bernstein. Please ask your question.

Thank you. And again, as you heard, congrats on the quarter. I have got two questions. The first is, can you give us a bit more color on services specifically how have you seen the Workday delivered services shifting from HCM to financials? What I am really trying to understand is, how the process is moving in terms of getting the partners to deliver not just on the HCM side but on the full financial side themselves? Are you seeing the partners able to build and implement better and bigger implementations of financials? So where are you on both of those journeys? And then a follow-up question.

I have to get back to you with some of the specific data. But finance is definitely now more than half of the ecosystem, well more than half of the ecosystem is the partner ecosystem. That was the case for HR many years ago. And I am going to guess it's better than 80/20 for HR. I am not quite sure where it is for finance, probably tracking close to that. But partners have all, to a large partner have all embraced financials and in some cases, some of the firms that were late to embracing HR have made up by embracing finance early. And then we have got the boost from these partners embracing Adaptive. So I feel very good about the partner engagement on financials. And our stated goal is that our services is there to support our customers and they are for customer satisfaction, but we really count on our partners to take on the bulk of the implementation work.

That makes sense. That's very helpful. And then as a follow-up, where are you on moving the existing planning customers over to Adaptive?

Yes. This is Tom. We have made excellent progress and I think at this point we have had conversations with probably 75% of the customers. Some of the customers who had implemented the Workday planning product, it's operating successfully for them. So they will be a little bit slower in their migration, but we have several successful customers. For example, Bucknell University is up. It is live, running on Adaptive. And we have five or six other customers who have already converted and gone live.

Very helpful. Thank you. I appreciate it.

And we have a question from John DiFucci from Jefferies. Please ask your question.

Hi. This is Samad Samana, on for John. Couple of questions. One for Aneel, the 50% net new ACV growth for financials is really impressive. I was curious, if we were to stratify that for midmarket customers versus large enterprise, how would that growth rate look? And then I have maybe a follow-up question for Robynne.

Chano, on that first one?

I wouldn't know exactly. I would need to come back to you on that one. What I can tell you is that the momentum continues in terms of seeing financials moving more upmarket and there is a good strength there. We had a great quarter in terms of large financials customers, particularly in healthcare and financial services, to mention some. We still have good to momentum continuing in terms of financials first move that we highlighted in Q4 and as well some good progress in terms of our HCM customer base coming out of, again being very happy with the product and the partnership considering us for financials. And the pipeline around those opportunities seems pretty healthy going forward.

Great. And then Robynne, I guess from a bit of the CFO perspective, if you think about the adoption for financials, how do you think in terms of all the changes we have seen. And if I think about even ASC 606, as some of that lessens, do you think that adoption for financials should continue to increase as a result of that as well as the CFOs maybe have less to deal with from a regulatory standpoint? Maybe just help us understand from your perspective on financials adoption as well? Thank you.

Yes. That's a great question, Samad. I do think there has been some distraction around some of these big accounting changes, including 606 and then more recently the lease accounting changes which was, I know, a lot of work for public company's finance organizations. It will be interesting to see as the company's get beyond that, you know if that freeze them up to make system changes. I do believe that one of the things that these accounting changes really highlights is how difficult it is to implement these changes if you are on a legacy on-premise financial system, where customers who are in the cloud and even more specifically on Workday financials we built in all the functionality that they needed to adopt and account properly under the standard going forward. And we did that internally ourselves as well. We are using all of the lease accounting functionality to adopt that at the beginning of our Q1. So I do think that it will highlight the need for CFOs and businesses to move to the cloud. So I do expect some positive momentum coming out of that but the timing of that is unclear as a lot of companies will move along their own timelines.

Great. I appreciate you taking our questions and congrats on the quarter.

And we have a question from the line of Alex Zukin from Piper Jaffray. Please ask your question.

Hi guys. Two quick ones for me. Robynne, maybe just one more time on the linearity of the pipeline through the year, if you could talk to? Are you saying that this is a question of the comps being just more difficult in the 3Q period versus last year? Or is it something about the size of some very large and pace of some very large transactions that could make 4Q or could make the year more backend loaded? And where would that show up? Should we look at two years ago from a billings linearity or deferred linearity to get a better sense than the year ago period? And then I have a got a quick follow-up.

Yes. Alex, so really two different things. One, I wanted to highlight the difficult comps from last year for the back half, right, just overall. But my comment specifically about Q4 and then I will turn it over to Chano to add what he wants is when we look at our net new ACV for the year, a higher percent of it is landing in Q4 than what we have seen in the last few years. Now this is just a continuation of a trend that we have been seeing. But I did wanted to call it out because it will impact backlog, it will impact unearned, which will impact other metrics that you derive from those. So I just wanted to make sure that you had the visibility that we were seeing with that dynamic. Chano, anything you want to add?

Thank you Robynne. Not much. I would say, Alex, that as you know we come off of a very strong FY 2019 and particularly strong Q4. And some of the large transactions that will be certainly larger cycles in terms of how long it take us to get there will also happen more materially around the Q4 time frame again this year. So that potentially has an impact of what we are commenting here on the yearly linearity. Nothing else to highlight. But I think that's a normal cycle and trend as we are becoming a larger company, I would say.

Got it. And then maybe just, Aneel, a quick one for you. Now you are seeing the strong, really strong continued traction with Adaptive, your first much larger acquisition. As you think about the broader aperture of your financial suite and you think about organic versus inorganic innovation around that suite, do you feel even better now about your ability to add functionality there through M&A to accelerate your vision? Or just maybe any comments about how you think about that for the future?

I think my personal view is that larger acquisitions are really difficult and frankly a lot of things fell in place with Adaptive. Number one, we knew the team really well. Tom and I are close friends going back 15 years. We had very similar corporate cultures, very similar focus on customers. And then the products and technology were very complementary. We knew the space. We were pretty far behind where Adaptive was. So there was a lot of things that fell into place to make that work. I just don't think there's a lot more targets out there like that. So you could see us continue to do smaller M&A. But the big ones will have to pass through a very tight filter on cultural fit, on technology compatibility, on limited overlap in terms of both revenue and technology. So I wouldn't see that as a precursor for us doing a whole bunch of more large acquisitions.

Perfect. Thanks Aneel.

And we have a question from Heather Bellini from Goldman Sachs. Please ask your question.

Great. Thank you. I just wanted to follow-up on planning. It seems like you guys are having a lot of really good success there and I know you have only owned the asset for a little less than a year. But I am wondering if you could talk a little bit about how the selling motion has changed since you have owned it? If it's a shorter sales cycle for you, given how well you know these customers already when you are going into your installed base with it? And maybe any comment on your ability to sell this, like as an add-on to what you know as a sweet sale versus standalone traction? Thank you.

Yes. Thanks Heather. This is Tom. So there are two fundamental selling motions. The first is a stand where we are selling planning on a standalone basis and that's analogous to the way we sold the product prior to the acquisition by Workday. We continue to have a lot of success with that selling motion, a lot of interest from customers and the business there. We continue to be very pleased with the business there. I think in the nine months since the acquisition, the biggest change has been in Adaptive's ability to penetrate larger customers and have meaningful conversations. These are often platform deals and I will let Chano comment on that as well or they are planning upsells to existing customers. And I believe the credibility that we have being part of Workday has really accelerated our ability to have meaningful conversations with those customers.

Yes. Completely agree, Tom. I think, yes, the decision planning cycles are shorter than the normal financial cycles. So you see a couple of motions there. One is those customers that will be going with Adaptive on a standalone basis, even some of our HCM or financial customer base is starting with and you see those where basically they see Adaptive as critical solution for them to make a decision to move forward with us, either on a financial transformation or an HR transformation and that is certainly an asset that we didn't have a significant strength before. And that was, I would say, a gap and it is much more complementary now. So clearly it's great, the power that it is giving us in terms of not just the Adaptive planning standalone business but obviously for customers making broader decisions with Workday.

Well, I would just add that the three we highlighted in the press release were all existing Workday customers and they bought it as an add-on, Airbus, AstraZeneca and H&R Block, all were already existing Workday customers. So that was even part of a platform deal. So that's also a very exciting new development for us.

Great. Thank you so much.

And we have Derrick Wood from Cowen & Co. Please ask your question.

Great. Thanks. Aneel, you mentioned trying to get new machine learning capabilities woven into the platform. Where are you guys in this journey? And how should we think about the modernization? How you get modernization out of it? Does it give you pricing leverage? What the revenue capture is?

Well, we have been, for the last three years, basically sowing in the machine learning capabilities into the platform rather than making it a feature app-by-app, right. You could add machine learning to one specific app, but it's not leveraged by the rest of the application. So we are taking the longer term approach of building it into the fabric and today we have got several examples of where it's shown up. In the career planning world, the system can make recommendations for the next move you should take or the next course you should take on the learning side. In the finance world, a lot of automation around the audit process. So it's coming to life really rapidly and we are going to unveil a whole wave of more capabilities at our next user conference. I don't see it as pricing. We are not going to charge extra for it. It's hard to see charging one price for the products with machine learning and then charging less, if they don't have machine learning. I think it's going to be a core capability that is just required just to be competitive. And so maybe it gives us pricing leverage because we will be ahead of our competition. I think it's very likely that we are already ahead and we will just extend that gap. And we will see if that gives us some pricing leverage.

Okay. And I guess just staying on the product question. Do you have any update on your platform efforts? I know it's a long build out cycle, but are there certain milestones we should be looking at as you roll this out to the market?

Well, so we now are up to almost 100 customers that have signed on for being either a pilot customer or actually using the platform in production. Very simply, the path to being in full GA, right now we are in limited GA, is just opening up the full platform from an API perspective. Right now, we are building out the APIs for very specific use cases, making sure those first wave of customers are successful and then adding a new set of APIs to open up additional use cases. And you will just see over time that, I think of it maybe won't take us long, but Gmail was in beta forever even though it was a great product. I think we are going to be in some form of limited GA for some time just as the breadth of APIs increases. But if the APIs that are there meet your needs, then it's full GA. So I think maybe that's not a clear way to describe it, but we have work to do on the APIs. The rest of the platform looks very strong.

Okay. That's good color. Thank you.

And we have a question from Brian Schwartz from Oppenheimer. Please ask your question.

Yes. Hi. Thanks for taking my question here this afternoon. Either for Chano or Aneel, I was wondering if you can share with us, it's an industry question, on what you are seeing on demand trends and the pipeline momentum in the federal government? And then as we think about financial management in the federal government, is it possible to either compare or contrast the adoption trends that you are seeing for that industry versus what you are seeing in the commercial area? Thanks.

Yes. This will be really simple and really short. We don't sell to the federal government. There's a whole set of unique accounting requirements and even HR requirements that almost make it a completely different product line. Now if the federal government continues down the path to acting more like commercial organizations, that would open up a brand new market for us. And we do have some quasi-federal agencies that are Workday customers because they actually tend to operate more like a commercial entity. But right now, it's not a focal point for us.

And we have Scott Berg from Needham. Please ask your question.

Hi everyone. Congrats on a good quarter. Just one question for me and I don't know who wants to take it. But we heard in the quarter that, I assume it was Workday ventures who made an investment in one of the large RPA, robotic process automation, vendors that's out there. That company subsequently bought both your financials and HR platform and is using it to reduce the implementation times by 50% or better. I just wanted to know, is this the technology you guys are looking to bring into your own implementation cycles because I know that has been a large focus for reduced implementation time frames in costs over the last few years? Thank you.

Yes. I would say that's in the TBD category. We make investment in a lot of interesting technologies. This new world of automation is definitely interesting to us. But we haven't made any decision yet to bring it into our own platform. And some of the estimates in terms of reduced time, we haven't been able to validate those ourselves. So we continue to invest heavily in our technologies to reduce the cost of implementation. And if some of this RPA stuff can reduce the cost of implementation or reduce the time, we definitely would embrace it but unclear at this point. It's an exciting new area, but unclear that this is something that we are going to bring in closer to Workday.

We have time for two more questions. Our next question comes from the line of Raimo Lenschow from Barclays. Please ask your question.

Hi. Thanks for squeezing me in. A quick question for Aneel. If you look at the competitive landscape, one of your competitors, large competitors is trying to force their client base over to kind of non-value add upgrades. Do you see anything of that showing up in your conversations already? Or is that something that's still going to come? Thank you.

Anytime a customer is facing an upgrade from the legacy platform, they tend to look around and all we want to do is just to be in the mix of conversations. There definitely are customers that probably don't come to market, but increasingly customers are smart about their choices. And so I do think that those kinds of tactics just drive customers into a decision making process and they look at alternatives and hope we do well as part of those evaluations. Customers don't like, they don't want to be forced to do anything. But I think if they are being pushed to move into the cloud, if I were them, I would say, hey take a look at all the alternatives that are out there before you make a decision.

Yes. Okay. Bye, bye. It makes sense. Thank you. Well done.

We will take our final question from Brad Reback from Stifel. Please ask your question.

Great. Thanks very much. Can you give us a sense of how the renewal pipeline looks for the remainder of the year and the opportunity that can afford you to sustain the strong upsell you saw in the current quarter? Thanks.

Yes. This is Chano. The renewal pipeline is looking very strong for the remainder of the year. We, at this point, have no reason to feel other than confident with the same kind of renewal ratios in terms of the net basis that we have been sharing with you.

And Chano, on that point, how is your confidence on the ability to upsell with this much broader products set than these customers saw when they first signed their deals?

As I commented before, having a broader customer base with a broader set of products, when you have the customer satisfaction ratios that we are enjoying is just a blessing, right. Because it clearly allows us to have conversations with the customers that are already seeing value in some of the products and investments they have done with Workday. And we have to try to prove basically the opportunity for them to get value of the additional solutions that we bring to market. So we feel very confident and we have been sharing with you some of the attached ratios on very high rates that we have been experiencing on the sale of our products, around 70% or 70%-plus on products like time tracking, recruiting, payroll and others that have been longer in the market. We have no reason to believe that some of the other products that are just new will not get to the same ratios over time.

Great. Thank you very much.

We now conclude the call. Thank you for joining Workday's Q1 earnings conference call. Have a good night.