Workday Announces Fiscal 2017 Second Quarter Financial Results

PLEASANTON, CA--(Marketwired - Aug 24, 2016) -  Workday, Inc. (NYSE: WDAY), a leader in enterprise cloud applications for finance and human resources, today announced results for the fiscal second quarter ended July 31, 2016.

• Total revenues were $377.7 million, an increase of 34% from the second quarter of fiscal 2016. Subscription revenues were $306.2 million, an increase of 37% from the same period last year.
  
  
• Operating loss was $86.9 million, or negative 23.0% of revenues, compared to an operating loss of $67.6 million, or negative 23.9% of revenues, in the same period last year. Non-GAAP operating profit for the second quarter was $5.9 million, or 1.6% of revenues, compared to a non-GAAP operating loss of $0.7 million, or negative 0.3% of revenues, in the same period last year.¹
  
  
• Net loss per basic and diluted share was $0.55, compared to a net loss per basic and diluted share of $0.37 in the second quarter of fiscal 2016. Non-GAAP net loss per basic and diluted share was $0.04, compared to a non-GAAP net income per basic and diluted share of $0.02 for the same period last year.¹
  
  
• Operating cash flows for the second quarter were $6.3 million and free cash flows were negative $20.3 million. For the trailing twelve months, operating cash flows were $319.0 million and free cash flows were $178.1 million.²
  
  
• Cash, cash equivalents and marketable securities were approximately $2.1 billion as of July 31, 2016. Unearned revenues were $979.1 million, a 43.3% increase from the same period last year.

"We delivered record second quarter results with solid customer momentum and strong competitive win rates," said Aneel Bhusri, co-founder and CEO, Workday. "The results were well balanced across our key initiatives as we saw consistent strength across product lines, industries, and geographies and we are proud to welcome our new largest customer based in the APJ region."

"We are very pleased with our strong second quarter results," said Robynne Sisco, chief financial officer, Workday. "We again generated record quarterly revenues and strong trailing twelve month operating cash flows. Looking ahead, we anticipate third quarter subscription revenues to be within a range of $331 to $333 million and third quarter total revenues to be $398 to $400 million."

Recent Highlights

• Workday had the second strongest quarter for new Workday Financial Management customers in company history, and the strongest quarter for new Workday Financial Management customers in EMEA.
  
  
• Workday continued to see strong global adoption of Workday Human Capital Management, including an expanded partnership with IBM to support its entire global workforce; Kering and Repsol based in the EMEA region; and Samsung, Qantas, and Air New Zealand based in the APJ region.
  
  
• Workday achieved the highest and furthest position in the leaders quadrant of the first-ever Gartner Magic Quadrant for Cloud Human Capital Management Suites for Midmarket and Large Enterprises.^(a)
  
  
• Workday acquired Platfora, a leading provider of operational analytics and data discovery tools that enable companies to visually interact with and analyze petabyte-scale data in seconds.

Workday plans to host a conference call today to review its second quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via webcast or through the company's Investor Relations website at www.workday.com/investorrelations. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 45 days.

¹ Non-GAAP operating profit (loss) and non-GAAP net income (loss) per share exclude share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, and debt discount and issuance costs associated with convertible notes. See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.

² Free cash flows are defined as operating cash flows minus capital expenditures (excluding owned real estate projects). See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.

^(a) Gartner "Magic Quadrant for Cloud HCM Suites for Midmarket and Large Enterprises," by Ron Hanscome, Chris Pang, Jeff Freyermuth, Helen Poitevin, Melanie Lougee, Sam Grinter, 16 June 2016.

About Workday
Workday is a leading provider of enterprise cloud applications for finance and human resources. Founded in 2005, Workday delivers financial management, human capital management, and analytics applications designed for the world's largest companies, educational institutions, and government agencies. More than 1,000 organizations, ranging from medium-sized businesses to Fortune 50 enterprises, have selected Workday.

Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Workday's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."

Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's third quarter revenue projections. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) breaches in our security measures, unauthorized access to our customers' data or disruptions in our data center operations; (ii) our ability to manage our growth effectively; (iii) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (iv) the development of the market for enterprise cloud services; (v) acceptance of our applications and services by customers; (vi) adverse changes in general economic or market conditions; (vii) delays or reductions in information technology spending; (viii) our limited operating history, which makes it difficult to predict future results; and (ix) changes in sales may not be immediately reflected in our results due to our subscription model. Further information on risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission (SEC), including our Form 10-Q for the quarter ended April 30, 2016 and our future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Any unreleased services, features, or functions referenced in this document, our website or other press releases or public statements 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.

© 2016. Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.

Workday, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
			July 31,  2016				January 31,  2016
Assets
Current assets:
	Cash and cash equivalents		$	405,529			$	300,087
	Marketable securities			1,662,381				1,669,372
	Accounts receivable, net			248,658				293,407
	Deferred costs			22,664				21,817
	Prepaid expenses and other current assets			90,858				77,625
Total current assets				2,430,090				2,362,308
Property and equipment, net				255,118				214,158
Deferred costs, noncurrent				32,488				30,074
Goodwill and acquisition-related intangible assets, net				68,623				65,816
Other assets				43,485				57,738
Total assets			$	2,829,804			$	2,730,094
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable		$	17,135			$	19,605
	Accrued expenses and other current liabilities			58,880				43,122
	Accrued compensation			76,693				91,211
	Unearned revenue			854,845				768,741
Total current liabilities				1,007,553				922,679
Convertible senior notes, net				520,765				507,476
Unearned revenue, noncurrent				124,269				130,988
Other liabilities				36,371				32,794
Total liabilities				1,688,958				1,593,937
Stockholders' equity:
	Common stock			198				193
	Additional paid-in capital			2,444,172				2,247,454
	Accumulated other comprehensive income (loss)			(2,588	)			799
	Accumulated deficit			(1,300,936	)			(1,112,289	)
Total stockholders' equity				1,140,846				1,136,157
Total liabilities and stockholders' equity			$	2,829,804			$	2,730,094

Workday, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
			Three Months Ended  July 31,								Six Months Ended  July 31,
			2016				2015				2016				2015
Revenues:
	Subscription services		$	306,228			$	223,742			$	586,231			$	424,735
	Professional services			71,495				58,954				136,922				108,918
Total revenues				377,723				282,696				723,153				533,653
Costs and expenses(1):
	Costs of subscription services			51,379				35,287				100,579				67,069
	Costs of professional services			66,473				56,792				125,900				102,924
	Product development			161,886				115,345				303,664				214,680
	Sales and marketing			139,177				106,430				266,668				201,325
	General and administrative			45,705				36,482				86,888				68,699
Total costs and expenses				464,620				350,336				883,699				654,697
Operating loss				(86,897	)			(67,640	)			(160,546	)			(121,044	)
Other expense, net				(21,193	)			(3,779	)			(27,031	)			(11,015	)
Loss before provision for (benefit from) income taxes				(108,090	)			(71,419	)			(187,577	)			(132,059	)
Provision for (benefit from) income taxes				(65	)			(1,998	)			1,070				(1,080	)
Net loss			$	(108,025	)		$	(69,421	)		$	(188,647	)		$	(130,979	)
Net loss per share, basic and diluted			$	(0.55	)		$	(0.37	)		$	(0.96	)		$	(0.70	)
Weighted-average shares used to compute net loss per share, basic and diluted				197,223				189,360				195,887				188,382

(1) Costs and expenses include share-based compensation expenses as follows:
		Costs of subscription services		$	4,968		$	3,173		$	9,365		$	5,221
		Costs of professional services			5,969			5,144			11,262			8,598
		Product development			38,314			28,632			71,282			49,443
		Sales and marketing			20,844			13,222			39,846			21,587
		General and administrative			18,127			14,593			34,702			27,189

Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
				Three Months Ended  July 31,								Six Months Ended  July 31,
				2016				2015				2016				2015
Cash flows from operating activities
Net loss				$	(108,025	)		$	(69,421	)		$	(188,647	)		$	(130,979	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization				26,662				19,888				52,786				38,457
	Share-based compensation expenses				88,222				64,764				166,457				112,038
	Amortization of deferred costs				6,140				7,735				12,013				12,360
	Amortization of debt discount and issuance costs				6,690				6,336				13,289				12,586
	Gain on sale of cost method investment				(65	)			(3,220	)			(65	)			(3,220	)
	Impairment of cost method investment				15,000				--				15,000				--
	Other				1,918				(2,119	)			1,600				(1,382	)
	Changes in operating assets and liabilities, net of business combinations:
		Accounts receivable			(55,992	)			(27,570	)			45,055				32,147
		Deferred costs			(10,486	)			(7,082	)			(15,274	)			(10,583	)
		Prepaid expenses and other assets			(11,902	)			(7,806	)			(12,678	)			(15,476	)
		Accounts payable			1,542				1,428				(180	)			4,180
		Accrued expense and other liabilities			(6,517	)			2,590				(972	)			6,915
		Unearned revenue			53,071				29,665				79,340				50,344
Net cash provided by (used in) operating activities					6,258				15,188				167,724				107,387
Cash flows from investing activities
Purchases of marketable securities					(557,180	)			(476,470	)			(1,191,136	)			(862,045	)
Maturities of marketable securities					539,315				429,186				1,164,903				710,593
Sales of available-for-sale securities					28,652				19,524				28,852				29,524
Business combinations, net of cash acquired					(3,670	)			(7,961	)			(3,670	)			(7,961	)
Owned real estate projects					(6,788	)			--				(25,774	)			--
Capital expenditures, excluding owned real estate projects					(26,539	)			(25,469	)			(61,017	)			(53,789	)
Purchases of cost method investments					(200	)			(15,750	)			(300	)			(15,750	)
Sale of cost method investment					315				3,538				315				3,538
Change in restricted cash					(4,000	)			--				(4,000	)			--
Other					(684	)			--				(296	)			--
Net cash provided by (used in) investing activities					(30,779	)			(73,402	)			(92,123	)			(195,890	)
Cash flows from financing activities
Proceeds from issuance of common stock from employee equity plans					25,395				19,172				28,776				22,736
Principal payments on capital lease obligations					--				(1,016	)			--				(2,464	)
Other					195				362				571				779
Net cash provided by (used in) financing activities					25,590				18,518				29,347				21,051
Effect of exchange rate changes					(144	)			(210	)			494				(162	)
Net increase (decrease) in cash and cash equivalents					925				(39,906	)			105,442				(67,614	)
Cash and cash equivalents at the beginning of period					404,604				270,484				300,087				298,192
Cash and cash equivalents at the end of period				$	405,529			$	230,578			$	405,529			$	230,578
Supplemental cash flow data
Cash paid for interest				$	3,241			$	3,211			$	3,245			$	3,244
Cash paid for taxes					3,566				418				4,147				1,034
Non-cash investing and financing activities:
	Vesting of early exercise stock options			$	460			$	472			$	920			$	944
	Property and equipment, accrued but not paid				11,426				18,642				11,426				18,642
	Non-cash additions to property and equipment				394				323				915				2,183

Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Three Months Ended July 31, 2016
(in thousands, except percentages and per share data)
(unaudited)
	GAAP				Share-Based Compensation Expenses				Other Operating Expenses (2)				Amortization of Debt Discount and Issuance Costs			Non-GAAP
Costs and expenses:
Costs of subscription services	$	51,379			$	(4,968	)		$	(133	)		$	--		$	46,278
Costs of professional services		66,473				(5,969	)			(226	)			--			60,278
Product development		161,886				(38,314	)			(2,566	)			--			121,006
Sales and marketing		139,177				(20,844	)			(707	)			--			117,626
General and administrative		45,705				(18,127	)			(924	)			--			26,654
Operating income (loss)		(86,897	)			88,222				4,556				--			5,881
Operating margin		(23.0)	%			23.4	%			1.2	%			--	%		1.6	%
Other income (expense), net		(21,193	)			--				--				6,690			(14,503	)
Income (loss) before provision for (benefit from) income taxes		(108,090	)			88,222				4,556				6,690			(8,622	)
Provision for (benefit from) income taxes		(65	)			--				--				--			(65	)
Net income (loss)	$	(108,025	)		$	88,222			$	4,556			$	6,690		$	(8,557	)
Net income (loss) per share (1)	$	(0.55	)		$	0.45			$	0.02			$	0.04		$	(0.04	)

(1)	Calculated based upon 197,223 basic and diluted weighted-average shares of common stock.
(2)	Other operating expenses include total employer payroll tax-related items on employee stock transactions of $3.2 million, and amortization of acquisition-related intangible assets of $1.4 million recorded as part of product development expenses.

Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Three Months Ended July 31, 2015
(in thousands, except percentages and per share data)
(unaudited)
	GAAP				Share-Based Compensation Expenses				Other Operating Expenses(2)				Amortization of Debt Discount and Issuance Costs			Non-GAAP
Costs and expenses:
Costs of subscription services	$	35,287			$	(3,173	)		$	(76	)		$	--		$	32,038
Costs of professional services		56,792				(5,144	)			(170	)			--			51,478
Product development		115,345				(28,632	)			(1,068	)			--			85,645
Sales and marketing		106,430				(13,222	)			(327	)			--			92,881
General and administrative		36,482				(14,593	)			(516	)			--			21,373
Operating income (loss)		(67,640	)			64,764				2,157				--			(719	)
Operating margin		(23.9)	%			22.9	%			0.7	%			--	%		(0.3	)%
Other income (expense), net		(3,779	)			--				--				6,336			2,557
Income (loss) before provision for (benefit from) income taxes		(71,419	)			64,764				2,157				6,336			1,838
Provision for (benefit from) income taxes		(1,998	)			--				--				--			(1,998	)
Net income (loss)	$	(69,421	)		$	64,764			$	2,157			$	6,336		$	3,836
Net income (loss) per share (1)	$	(0.37	)		$	0.34			$	0.01			$	0.04		$	0.02

(1)	GAAP net loss per share calculated based upon 189,360 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share calculated based upon 202,450 diluted weighted-average shares of common stock.
(2)	Other operating expenses include total employer payroll tax-related items on employee stock transactions of $1.8 million, and amortization of acquisition-related intangible assets of $0.4 million recorded as part of product development expenses.

Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Six Months Ended July 31, 2016
(in thousands, except percentages and per share data)
(unaudited)
	GAAP				Share-Based Compensation Expenses				Other Operating Expenses (2)				Amortization of Debt Discount and Issuance Costs			Non-GAAP
Costs and expenses:
Costs of subscription services	$	100,579			$	(9,365	)		$	(452	)		$	--		$	90,762
Costs of professional services		125,900				(11,262	)			(716	)			--			113,922
Product development		303,664				(71,282	)			(6,360	)			--			226,022
Sales and marketing		266,668				(39,846	)			(1,797	)			--			225,025
General and administrative		86,888				(34,702	)			(1,736	)			--			50,450
Operating income (loss)		(160,546	)			166,457				11,061				--			16,972
Operating margin		(22.2)	%			23.0	%			1.5	%			--	%		2.3	%
Other income (expense), net		(27,031	)			--				--				13,289			(13,742	)
Income (loss) before provision for (benefit from) income taxes		(187,577	)			166,457				11,061				13,289			3,230
Provision for (benefit from) income taxes		1,070				--				--				--			1,070
Net income (loss)	$	(188,647	)		$	166,457			$	11,061			$	13,289		$	2,160
Net income (loss) per share (1)	$	(0.96	)		$	0.85			$	0.06			$	0.06		$	0.01

(1)	GAAP net loss per share calculated based upon 195,887 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share calculated based upon 206,531 diluted weighted-average shares of common stock.
(2)	Other operating expenses include total employer payroll tax-related items on employee stock transactions of $8.3 million, and amortization of acquisition-related intangible assets of $2.7 million recorded as part of product development expenses.

Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Six Months Ended July 31, 2015
(in thousands, except percentages and per share data)
(unaudited)
	GAAP				Share-Based Compensation Expenses				Other Operating Expenses(2)				Amortization of Debt Discount and Issuance Costs			Non-GAAP
Costs and expenses:
Costs of subscription services	$	67,069			$	(5,221	)		$	(262	)		$	--		$	61,586
Costs of professional services		102,924				(8,598	)			(524	)			--			93,802
Product development		214,680				(49,443	)			(3,381	)			--			161,856
Sales and marketing		201,325				(21,587	)			(958	)			--			178,780
General and administrative		68,699				(27,189	)			(1,103	)			--			40,407
Operating income (loss)		(121,044	)			112,038				6,228				--			(2,778	)
Operating margin		(22.7)	%			21.0	%			1.2	%			--	%		(0.5)	%
Other income (expense), net		(11,015	)			--				--				12,586			1,571
Income (loss) before provision for (benefit from) income taxes		(132,059	)			112,038				6,228				12,586			(1,207	)
Provision for (benefit from) income taxes		(1,080	)			--				--				--			(1,080	)
Net income (loss)	$	(130,979	)		$	112,038			$	6,228			$	12,586		$	(127	)
Net income (loss) per share (1)	$	(0.70	)		$	0.59			$	0.03			$	0.08		$	--

(1)	Calculated based upon 188,382 basic and diluted weighted-average shares of common stock.
(2)	Other operating expenses include total employer payroll tax-related items on employee stock transactions of $5.5 million, and amortization of acquisition-related intangible assets of $0.7 million recorded as part of product development expenses.

Workday, Inc.
Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows
(A Non-GAAP Financial Measure)
(in thousands)
(unaudited)
			Three Months Ended July 31,								Six Months Ended July 31,
			2016				2015				2016				2015
Net cash provided by (used in) operating activities			$	6,258			$	15,188			$	167,724			$	107,387
Capital expenditures, excluding owned real estate projects				(26,539	)			(25,469	)			(61,017	)			(53,789	)
	Free cash flows		$	(20,281	)		$	(10,281	)		$	106,707			$	53,598
			Trailing Twelve Months Ended July 31,
			2016				2015
Net cash provided by (used in) operating activities			$	318,974			$	196,704
Capital expenditures, excluding owned real estate projects				(140,895	)			(119,153	)
	Free cash flows		$	178,079			$	77,551

About 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 net income (loss) per share and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. The non-GAAP financial measures of non-GAAP operating income (loss) and non-GAAP net income (loss) per share differ from GAAP in that they exclude share-based compensation expenses, employer payroll tax-related items on employee stock transactions, amortization of acquisition-related intangible assets, and non-cash interest expense related to our convertible senior notes. Free cash flows differ from GAAP cash flows from operating activities in that it treats capital expenditures (excluding owned real estate projects) 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 and the ability of operations to generate cash. 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, as they exclude expenses that are not reflective of ongoing operating results. 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 future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flows provides investors and others with an important perspective on the cash flows generated by normal recurring activities to make strategic acquisitions and investments, to fund ongoing operations and to fund other capital expenditures, after our owned real estate projects.

Management believes excluding the following items from the GAAP Condensed Consolidated Statement 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 in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. For restricted stock unit awards, the amount of share-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Moreover, determining the fair value of certain of the share-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards. Unlike cash compensation, the value of stock options and shares offered under our Employee Stock Purchase Plan, which are elements of our ongoing share-based compensation expenses, is determined using a complex formula that incorporates factors, such as market volatility and forfeiture rates, that are beyond our control.
  
  
• 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.
  
  
• Amortization of debt discount and issuance costs. Under GAAP, we are 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. Accordingly, for GAAP purposes we are 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 are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company's operational performance.

Additionally, we believe that the non-GAAP financial measure, free cash flows, is meaningful to investors because we review cash flows generated from or used in operations after deducting certain capital expenditures that are considered to be an ongoing operational component of our business. Capital expenditures deducted from cash flows from operations do not include purchases of land and buildings, and construction costs of our new development center and of other owned buildings. We exclude these owned real estate projects as they are infrequent, non-recurring in nature and distinctly separate from our ongoing business operations. This provides an enhanced view of cash available to make strategic acquisitions and investments, to fund ongoing operations and to fund other capital expenditures, after our owned real estate projects.

The use of non-GAAP operating income (loss) and non-GAAP net income (loss) per share measures has certain limitations as they do not reflect all items of income and expense that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.

Investor Relations Contact:
James Redfern
[phone]
[e-mail]

Media Contact:
Eric Glass
[phone]
[e-mail]