Welcome to Workday's Second Quarter 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 this conference. With that, I’ll hand it over to Mike Haase.

Welcome to Workday's second quarter fiscal 2014 earnings conference call. On the call we have Aneel Bhusri, our Chairman and Co-CEO; and Mark Peek, our CFO. Following their prepared remarks, we will take questions. Our press release was issued after 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 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-K 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. 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 an isolation from GAAP results. Our non-GAAP measures exclude the effect on our GAAP results of stock-based compensation and for the fiscal first and second quarters of 2014, also exclude employer payroll taxes on employee stock transactions. Our non- GAAP measures for the second fiscal quarter of 2014 also excludes non-cash interest expense associated with our convertible notes. You can find additional disclosures 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 customers’ page of our website includes a list of selected customers and is updated at the beginning of each month. Any additional customers will be listed on our session guide for Workday Rising at workdayrising.com. The webcast replay of this call will be available for the next 45 days on our company website under the Investor Relations link. Our third quarter quiet period begins at the close of business October 17, 2013. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2013. Finally, our Analyst Day will be held September 10th in San Francisco and will be webcast. With that, let me hand it over to Aneel.

Thanks Mike. In the second quarter we executed well. Notably, we crossed the 500 customer mark as we continued to grow our business across North America, Europe and Asia. We remain extremely focused on maintaining the industry's highest levels of customer success and fostering our unique employee culture of fun and innovation as we expand our workforce around the world. We believe happy employees equal happy customers and we are thrilled that in the second quarter our employees voted us the number one Top Workplace in the Large Company Category in the most recent Bay Area News Group survey. This is the second time our employees have voted us the number one best place to work during the fiscal year. In just two weeks from now more than 3,000 attendees will join us in San Francisco for our seventh Annual Customer Conference Workday Rising. At Workday, it's our customers that drive much of our innovation and we're looking forward to learning from them and celebrating with them in the weeks ahead. The development for Big Data analytics and recruiting is on track and [bakes in] our focus on bringing financial management applications to global Fortune 2000 continues to progress as planned. We'll share updates on these initiatives arising, along with results of annual customer satisfaction survey. I look forward to seeing many of you at our first Analyst Day in just a few weeks. For now, I will turn over to Mark for look at our performance.

Thanks Aneel and good afternoon everyone. I want to thank you for joining us this afternoon as we close out a very successful first half of fiscal 2014. We are very pleased not only with the financial results for the quarter, but also with the progress we have made in our product and market expansion. In the second quarter we generated record quarterly revenues and billings, continued to make progress toward profitability, and strengthened our balance sheet with our convertible notes offerings. Operationally, we continued to execute well as we expand our footprint globally and have made significant investments in our data centers, new product initiatives and expansion of our office facilities to accommodate our growth. We're able to fund these investments because our business model continues to prove itself from a cash flows perspective and we continue to make progress on our non- GAAP operating margins, although this is clearly a secondary objective to grow and new customer acquisition. Fundamental to our business model is the belief that once we win a customer, we keep a customer for years beyond the initial subscription period. This is driven by a combination of the importance of the application to our customers' business, our frequent updates with meaningful features, functionality and improved ease of use and of course very high customer satisfaction. Our balance sheet remains strong, with nearly $1.3 billion of cash and marketable securities and $326 million of unearned revenue. We raised $533 million in cash from our convertible notes offering net of issuance costs and the cost of related bond hedge and warrant transactions. We are pleased with our accomplishments in the first half of the year and want to thank our employees, our partners and our customers. Now I’ll walk you through the financial details of our second…

(Operator Instructions). Your first question comes from the line of John DiFucci from JP Morgan. John DiFucci – JPMorgan: You have a lot of development projects going on right now, big data, international payroll, recruiting, but you just raised over $500 million with the converts. I guess what area should we be thinking about that are areas that you would consider acquiring technology? You’ve only done one I think in your history with Cape Clear. But what other areas might you consider acquiring versus developing in-house?

John, thanks for the question. Acquisitions are not a huge part of our strategy. And I think the Cape Clear acquisition is illustrative of the kinds of acquisitions we do really around core technologies that were things that we were not building at Workday. And there is a couple around, visualization as an example or technology and analytics that could be of interest, but there’s nothing immediate on the radar. John DiFucci – JPMorgan: And just for Mark, a follow-up, I just want to clarify something. You said, I think you said Q3 billings will be flat in Q2. I just wonder, was that total billings? Because if I look over the last couple of years, you've actually seen a decline in total billings where -- or when I look at revenue plus change in total deferred. Or was that -- when I look at change in current deferred because you had some, you’ve been billing just annually more recently. That has been flat quarter-to-quarter the last couple of years

Yeah. The color we gave, John, is for total billings and part of that is, as we have moved more towards just collecting one year of ACV on new contracts, things are beginning to flatten out over time. And so just as we looked at the seasonality versus last year, we think it's going to be approximately flat to the second quarter.

Your next question comes from the line of Heather Bellini with Goldman Sachs. Heather Bellini – Goldman Sachs: I just had two questions, guys. The first, you mentioned the five year deals that you signed. Did some of those pay more than one year upfront? Because it seems like the outperformance on differed versus the street was more in long-term versus short-term. And then the second question is, can you give us an update, Aneel, on the top two add-on products in the quarter and who you think you're displacing with those wins? Thank you.

Heather, on the billings, we had one five year deal that was eight figure and they did pay three years as the initial ACV which impacted the long-term unearned revenue.

In terms of add-on products, we don't typically disclose any rank order. I do know we had a good quarter in terms of payroll, both as attach as part of core HR, as well as add-ons. At the rising Analyst Day, we’re going to get into a lot more detail about the new product initiatives and where you might see attachments going forward. And the new product initiatives are right on track and we’re very pleased with where they are today. Competitively, it's the same people. We're replacing Oracle SAP primarily on the HR side, some are handful of wins against Ultimate which are replacements as well. I think the only new one I would highlight is that as we're getting traction in financials and as we know the product is moving up market in the mid-market arena we're beginning to replace Microsoft Dynamics and all the different flavors.

Your next question comes from the line of Jennifer Lowe with Morgan Stanley. Jennifer Lowe – Morgan Stanley: Aneel, maybe this one is for you. If you look at Oracle and SAP, they both had some challenges in Q2 and obviously you all had another strong result. As you look out in the marketplace, are there signs of delayed decisions or anything like that that you are seeing across the board that might explain some the weakness that you've seen in some of the competitors? Or do you feel like you're starting to see more competitive momentum versus those traditional years now that you've been in the market a little bit longer and do you start having more reference customers, those types of things?

I think this is all tied to the mass of secular shift we're going through, the shift from client server to cloud. And what we see are big upgrades of legacy systems being delayed as customers evaluate the different cloud offerings. So I really think that it’s more secular shift than anything else. Jennifer Lowe – Morgan Stanley: And then just a quick one for Mark. I think at the time of the IPO where you all had talked about was a five year target of seeing profitability on margins or I think 10% type margins in that timeframe, and clearly you’re tracking ahead of that or you’re tracking ahead of the guidance for this year. But on the other hand, now you have all this additional capital that you’ve raised with the convert which in theory should help extend that timeline in terms of starting to see more material cash flow profitability. So has there been any change in the thinking on that timeline given that you are sort keeping ahead of expectations right counterbalanced with the additional financial flexibility from the convert?

Yeah. We haven't made a significant shift in how we are thinking about when we’d reach profitability. I’d point out that this quarter the 20% negative margin result frankly was a little bit disappointing because it came partly as a result that we didn't hire up to where we had planned to hire and we think we're making progress and that we should catch up on that by the end of the year, and hence the guidance of operating margins being down sequentially in the third quarter. But right now our focus is completely on growth. It's on getting net new customers, our market expansion and it's on continued product developments.

Your next question comes from the line of Walter Pritchard with Citigroup. Robert Chen – Citigroup: Thanks. This is Robert Chen for Walter. Aneel, a question about the economics of the mid enterprise that is tracking the job postings. We’ve noticed that a lot of your investments are going into that band of customers. Can you -- and I think hinted earlier that maybe you're seeing better cross sell with the financial product in that customer segment. Could you talk a little bit about the economics of that segment and the justifications for investment there?

Yeah. So historically we had had a field organization that really could really hunt whatever deals that they wanted to hunt. And we got into a pattern of probably being too tied to the very large deals. And we also noticed that in the 1,000 to 3,000 category we were doing well, but we didn't have a focused sales effort there. We thought that that was a quick fold market to pursue as well. That's where we frankly end up replacing Ultimate quite often or beating Ultimate. That's where they typically sell to. So we've set up a dedicated sales organization I think a year and a half ago just to sell to the mid-market. We are pioneering some new implementation methodologies there to speed up the implementations and reduce the cost of the implementations. Those are going quite well. And I would suspect that over time those methodologies drift their way up into the large marketplace, as well as since those customers also want to see faster and cheaper implementations. In that mid-market, the financials products are very much ready for prime time. And so, yeah, we're seeing the sale of the entire platform. I would say just as something of note for that market, if they can buy a full platform from one vendor, they will. They tend to choose platforms rather than having to piece together best of breed solutions. And so we've seen that pattern in the mid-market. And again, that's one of the reasons why we’re beginning to get some Microsoft Dynamics replacements as well on the financial side. Robert Chen – Citigroup: A question for Mark. I think last quarter you talked about some total billings guidance for the full year as not being over $530 million. Just wondering if you have any update to that here in light of the most recent quarter?

Yeah, we didn't -- although we didn't update the 5 -- the total of $530 million, I think it's safe given the performance in Q2 and that we expect flat in Q3 that will be up probably around $530 million or slightly ahead of it for the full year.

Your next question comes from the line of Peter Goldmacher with Cowen & Company.

Hi, guys. This is Joe for Peter. So we noticed that you are doing investments mostly in Internet, a lot in international. And so given that Europe has been SAP’s success factor is home-based and Asia has recently been weak. How do you guys see the opportunity internationally over the near term? And what do you think of it in the future? Is it -- are you going to be primarily addressing U.S-based multinationals or are you addressing foreign multinationals as well? Thanks a lot. del Callar – Cowen & Company: Hi, guys. This is Joe for Peter. So we noticed that you are doing investments mostly in Internet, a lot in international. And so given that Europe has been SAP’s success factor is home-based and Asia has recently been weak. How do you guys see the opportunity internationally over the near term? And what do you think of it in the future? Is it -- are you going to be primarily addressing U.S-based multinationals or are you addressing foreign multinationals as well? Thanks a lot.

So we already are addressing foreign multinationals. We have a strong sales organization in Europe and we're building sales organization in Asia. And those sales organizations are very focused on the multinational companies based in those regions. Now I think just like the U.S and the rest of North America, Europe and Asia are going through the same secular trends, the shift from client server to the cloud. Probably two or three years behind in Europe, in Asia it's happening I think right as it happens in the U.S and in some cases in some markets in Asia they’re just skipping the last generation of technology and going straight to the cloud. So we’re very bullish on both of those markets. Having said that, I do think that we see from time to time a deal get pushed or a deal get adjusted because of the economic uncertainties, in particular in Europe. But those are economic cycles that come and go and in general we see the same great market opportunities overseas as we do in North America. We probably see -- I don't think we see SAP more in Europe. I think we see them a lot in the U.S. and we see them a lot in Europe. I think we see Oracle less in Europe. We see Oracle more in the U.S.

Your next question comes from the line of Jason Maynard with Wells Fargo. Jason Maynard – Wells Fargo: I have two questions for you. First up, I don't believe you gave the customer account financials, but any color you can provide us on what you saw during the quarter in terms of uptake around the financial applications. And then the second question is, Aneel, maybe talk a little bit what you're seeing in terms of bottlenecks to growth on the distribution side or things like that. Where do you feel you're at with your partners in terms of getting them ramped to provide obviously fulfillment capacity on implementations? Thanks.

So on financials, we don't update the customer account every quarter. We tend to do it around milestones. I would say we had a good quarter and everything is trending well on the financial products themselves and the sales organization, I'm going to give a more detailed overview about what's happening with the financial products, the ecosystem, the sales organization at the Analyst Day. So I don't want to steal my own thunder. So just stay tuned for that piece. In terms of the gating items for growth, Mark covered one of those, is continually finding the best and brightest people and we are a little bit behind on hiring. I think we've done a good job on sales hiring. We’re now into the areas where we're hiring people that are not necessarily ERP veterans, but people from other technology companies that we're doing a lot of the training ourselves. On the ecosystem's side, it's been nice over the last 12 months to see the investments coming in from Accenture and Deloitte. Deloitte has been there from the early days, but Accenture has really stepped up. So has IBM, so has PWC. And Towers Watson continues to be a big investor. We've always had a great stable of boutiques, but now the big firms are beginning to invest pretty heavily in the ecosystem. It's still a matter of keeping up with the customer growth on that ecosystem side. So that's something we monitor very carefully and we know we need to still see pretty significant growth, not just the end of this year but well into next year as well. Jason Maynard – Wells Fargo: Maybe one follow-up on that front. What types of things are you doing differently in terms of your international system integrator relationships? Is there anything that you're finding that you need to do different either in Europe or in Asia Pacific versus the U.S.?

In some ways it happened in reverse order in Europe, where in the U.S we started with a set of boutique partners. The big SIs were not ready to engage with Workday. The big SIs came later. As we moved into Europe, we have the big SI partners in the U.S. and they quickly jumped into investing in Europe. So we have a strong stable of Accentures and Deloittes and IBMs and PWCs working with us across the globe. We are also in the process of building out that boutique set of partners in Europe. And I think that's probably not necessarily different. It’s just that we have the big Sis going in the Europe in a different way than we have them in the early days in the U.S.

Your next question comes from the line of Brendan Barnicle with Pacific Crest Securities. Brendan Barnicle – Pacific Crest Securities: I know you guys have made great progress on the HR side and the financial side. As you look a bit longer term, where do you think you may go next? Is it more vertical specific or are there some other adjacencies that make some sense?

I’m going to spend a little more time talking about this topic at our Analyst Day. The natural next place is to first take our existing HR and financial products, in particular our financial products and begin to add industry features to them. So the first place we've done that has been in the education and government market. And I would expect that the next wave of functionality once we've really built out the core for financials and once we've proven the scale and those projects are tracking nicely and actually in the not so distant future behind us, we'll look at industry-specific areas like billing, like professional services, automation, the unique features for financial services and our continued investment in education and government. And beyond that longer term, we could start to look at industry applications that go beyond HR and financials. For the time being though, we're very focused on the HR financials and now big data marketplace. I think that's going to carry us for at least the next three or four years before we would entertain anything that was industry specific from a new application perspective. But we'll start layering in industry features and you might see us add to the breadth of our analytics products as well. Brendan Barnicle – Pacific Crest Securities: Great. That's really helpful. And Mark, on the free cash flow, obviously it's being well above expectations for the last couple of quarters. You noted that it was mostly driven by the tax benefit. But is there anything else that you've seen on the collection side or other places that surprised you on the cash flow side?

Not in particular. We had -- there was some lumpiness between the first and the second quarter as a result of really the expiration of the lock up. And we talked about that last quarter where Q1 benefited by $17 million. Q2, that balanced itself out. But no real surprises. We’re beginning to level out a bit on the fact that we're billing and collecting one year of ACV. From quarter-to-quarter like this quarter, it may go up a little bit because of one particular transaction. But for the most part it's balancing itself out. DSO is staying relatively flat. Our collection history is good. And it's going about as expected.

Your next question comes from the line of Pat Walravens with JMP Group. Pat Walravens – JMP Securities: Aneel, on Oracle's earnings call last quarter, they made a comment about not are we bigger than Workday and HCM, but we’re growing faster than Workday. I was wondering if you could share your perspective on that.

It's hard to know because they don't disclose their independent numbers on HR. All I can look at are win rates and our win rates are very positive against all the legacy competitors, including Oracle. Pat Walravens – JMP Securities: And maybe following up on that, could you address the partnerships that they announced with Salesforce and NetSuite which seem to be motivated by you guys?

I'm not sure what they’re motivated by, so I won't try to guess at that. The NetSuite one doesn't really impact us. The SMB market has just never been a focal point for us. And we're still on the -- as we continue to move upmarket in the financial world, we still rarely see NetSuite. So I don't think that that impacts us. With the Salesforce one, I think you should talk to Mark. All I would say is our partnership remains intact. Our friendship remains intact and our field organizations continue to work well together. We all have to work with lots of different vendors in the marketplace, but our relationship with Salesforce to me is not really any different than it was one or two or three quarters ago. Time will tell how all these relationships pan out. But I would hope that we stay close partners with Salesforce and our other close partners.

Your next question comes from Brent Thill with UBS. Brent Thill – UBS: Aneel, in the past you've mentioned some flavors of the wins during the quarter in terms of the customer names and size of where they are headed. Can you give us any color or is that -- you're saving that for the conference?

We're going to save that for the conference. But I would also say that as the number of customers continues to grow, it's a lot of effort every quarter to get the customers to give us the authorization to use their name in the press release. And I frankly think that the point early on was to show the brand names that we're getting. And we've got so many great brand names. We'll disclose customers from time-to-time, but I’m not sure we're going to do it on a quarterly basis going forward the way we have. And I will focus on showing some new names at the Analyst meeting in a couple of weeks. Brent Thill – UBS: Okay, totally understand. Just on hiring, you mentioned you're behind. Is there a reason why you're lagging or when you look at the second half, you're obviously expecting that to ramp to get above the 680 item last year.

I think Brent it's a combination of things. One is that we are adding more people again this year than we added in total a year ago. And so we're just beginning to feel some of the strains of scale in those processes that we're investing in, recruiting organizations and then our own internal processes of about how to hire the larger groups of people. That said, we're behind our hiring plan, but it's not at a level where it's causing us to lose focus or to miss any of the key deliverables that we have either from a product perspective or with customers. And it was great to see the first Monday of August we had our largest hiring class ever. Yes, I think it's something that will get back on track just from a pacing perspective and as we were looking at our plans as we started the year, we’re bit behind.

Operator, we’re going to take two more questions please.

Your next question comes from the line of Steve Koenig with Wedbush. Steve Koenig – Wedbush Securities: Maybe just two questions that expand on earlier ones. The easy question is, do you all have handy the international versus U.S revenue splits? Just wondering what that is.

The revenue percentages domestic was 85% during the quarter and international was 15%. Steve Koenig – Wedbush Securities: Great, thank you. And then just for the follow up. You talked a little bit about bringing the partners, growing those partners and the importance of the ecosystem. I’m wondering as a result of talking with integrators and finding out how backlogged they are and how much demand there is and the lack of trained partner personal in the ecosystem. How long do you think it will take to get that to ramp to the point where deals maybe aren't waiting much longer than you'd like because of the lack of training consultants? How long does that last before supply and demand balances better?

I hope the integrators are constantly trying to keep up with our sales momentum. So I don't see that changing anytime in the near future. I'm not sure it's slowing up as much. What we have tended to do at Workday is if we sense a gap in the ecosystem, whether it's a quarter out or two quarters out, we will hire ourselves. And that's why the professional services number can bump up and down a bit. We're very focused on customer success and if there is not the resources required, we'll fill the gap. And in particularly new products like financials, we tend to take more of the onus of that work ourselves just to make sure there is customer satisfaction with those first wave of customers.

Your final question comes from the line of Brad Reback with Stifel Financial. Brad Reback – Stifel Nicolaus: Just real quick, on the eight figure deal that you alluded to, was that just HR or was that the entire suite, HR and financials?

It was purely an HCM deal.

Great. That concludes the call. We'll talk to you at the Analyst Day in a few weeks.

We thank you for your participation in today's earnings call. You may now disconnect and have a great day.