Welcome to Workday's Fourth Quarter and Fiscal Year 2023 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. During the Q&A, please limit your questions to one. With that, I will now hand it over to Justin Furby, Vice President of Investor Relations.

Thank you, operator. Welcome to Workday's fourth quarter fiscal 2023 earnings conference call. On the call, we have Aneel Bhusri and Carl Eschenbach, our Co-CEOs; Barbara Larson, our CFO; and Doug Robinson, our Co-President. Following 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. Before we get started, we want to emphasize that some of our statements on this call, particularly our guidance, are based on the information we have as of today and include forward-looking statements regarding our financial results, applications, customer demand, operations and other matters. These statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially. Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our fiscal 2023 Annual Report on Form 10-K for additional 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 from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, in our investor presentation and on the 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. Additionally, our quarterly investor presentation will be posted on our Investor Relations website following this call. Also, the customers' page of our website includes a list of selected customers and is updated monthly. Our first quarter fiscal 2024 quiet period begins on April 15, 2023. We Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2022. With that, I'll hand the call over to Aneel.

Thank you, Justin, and welcome to Workday's fiscal 2023 fourth quarter and full year financial results earnings call. I'm pleased to share that we delivered solid Q4 results and once again outperformed against our key operating metrics, which include a subscription revenue growth of 22% for the quarter and for full year fiscal year 2023. While the macro environment continues to be unpredictable, Workday's value proposition is only getting stronger as more organizations turn to us to help them adapt and manage their two most important resources, their people and their finances. As a result, our thriving customer community continues to grow and feel our path to $10 billion in revenue and beyond. In fact, we achieved a significant milestone in Q4, as we surpassed the 10,000 customer mark with more than 4,750 of those being our core HCM and finance customers, a true testament to the power of the Workday platform and our ability to address the needs for the offices of the CHRO and CFO. Additionally, approximately 629 billion transactions were processed with Workday in fiscal year 2023, an increase of 42% year-over-year and further proof of the scale that we had reached. Before we share some Q4 highlights, I want to touch on several recent leadership moves and one organizational announcement that we made, all of which will help set us up for our next phase of growth. The first is the appointment of Carl Eschenbach as Co-CEO, which we announced in December. Carl has been a Workday Board member since 2018, and for the past 35 years, has been one of the finest sales and operational leaders in enterprise technology. With his experience and commitment to our values and culture, Carl is a perfect fit to help Workday scale and lead us forward. At the end…

Thank you, Aneel, for those kind words, and thank you to everyone for joining us today. Let me start by saying that I am humbled and honored by the opportunity to partner and work alongside Aneel and our Workmates across this amazing company. I'm truly energized by Workday's unique opportunity to be one of the largest and most profitable software companies in the world. This was my first quarterly call as co-CEO and I could not be more proud of our teams for their incredible execution. Despite a macro environment that remains uncertain and that no one is immune from, we drove strong close rates in Q4 and built a healthy pipeline for the year ahead. Our team was prepared to respond to the extra scrutiny we knew would come with deals in this environment. And because of that, we are heading into our new fiscal year in a position of strength. I can tell you the excitement for the year is all around us as we are coming to you live from our annual sales kickoff conference in Las Vegas. As a Board member for the last five years, I have been actively involved in Workday's growth journey. Today, more than two months in as Co-CEO, I have had the privilege of spending time with hundreds of Workmates, customers, partners and prospects around the world. Those meetings have given me an even greater appreciation of how compelling Workday's value proposition is and how differentiated we really are. I have also gotten to know Aneel and the leadership team even better. And while I already considered Aneel, a partner and a friend, our co-CEO relationship is working really well as we have very complementary skill sets. It's a true one plus one equals three equation. As I reflect upon my…

Thanks, Carl, and welcome. I know I speak for the broader Workday organization when I say that I'm incredibly excited to partner with you on the next phase of our growth journey. As Aneel and Carl mentioned, we had a solid close to the year, driven by strong execution across the company, combined with durable demand for our solutions as organizations of all sizes, prioritize finance and HR modernization during these uncertain times. Subscription revenue in Q4 was $1.50 billion, up 22% year-over-year. For the full year, subscription revenue was $5.57 billion, also a growth of 22%. Professional services revenue was $151 million for Q4 and $649 million for the full year. Total revenue outside of the US was $396 million in Q4, representing 24% of total revenue. 24-month subscription revenue backlog at the end of the fourth quarter was $9.68 billion, up 21%. The result was driven by solid new ACV bookings and strong renewals, with growth in net revenue retention rates over 95% and over 100%, respectively. In addition, early renewals added roughly 1 percentage point of upside to 24-month backlog growth and roughly 2 percentage points to total backlog growth. Total subscription revenue backlog at the end of Q4 was $16.45 billion, up 28%. Our non-GAAP operating income for the fourth quarter was $305 million, resulting in non-GAAP operating margin of 18.5%. Margin overachievement was driven by revenue upside and continued cost discipline. The workforce realignment we announced at the end of January was a $34 million non-GAAP expense in the quarter, or a roughly 2 percentage point headwind to Q4 non-GAAP operating margin, most of which was factored into our guidance. For the year, non-GAAP operating income was $1.21 billion, representing a margin of 19.5%. Q4 operating cash flow was $694 million, growth of 13%. As…

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Kirk Materne with Evercore ISI. Please proceed with your question.

Thanks. Thanks very much, and congrats on a strong finish to the year. Carl, since you have a relatively fresh pair of eyes looking at the business, I was wondering if you could just talk a little bit about what you're seeing in the close in 4Q and the pipeline that leads you to believe that getting back to 20% growth is achievable once we get into a more sort of normalized operating environment. Just some specifics around that or what you're seeing maybe be helpful on that front. And then I have a quick follow-up for Barbara.

Sure. Well, first of all, thank you, Kirk, for the question. Let me start by just saying I want to thank all of our Workmates around the world for delivering a strong close to the year and setting us up for a strong FY ‘24. As you know, Kirk, announcing a CEO transition in the middle of Q4, your biggest quarter, is probably not always optimal. And we talked about our priorities at that time was to finish the year strong, and we did just that. As far as what we're seeing in the environment to think about getting back to a 20% growth, we see plenty of opportunity to continue to invest in the business, both on the go-to-market side with additional sales capacity in quota-carrying reps as well as continued investment in product and technology. A couple of key insights early on, now, I guess, over 60 days into the role, is we see continued opportunity in our international business, both in EMEA and in APJ. Today, we have only 25% of our business coming from our international operation, yet it represents greater than 50% of our TAM. So we see a really big opportunity there. And what we did is we brought in strong leadership both in EMEA and APJ. And Doug and Patrick have actually brought in additional strength even under our top leaders in those respective markets. We also think we're going to double down even further on our FINS opportunity, both to sell back into our customer base as well into net new. We see this as a rich opportunity. We did a nice job in Q4 selling back into our HCM base with our FINS solution, and we think that's something we can do a lot more of. And then the last thing, although there's plenty more, Kirk, I'd highlight is we're going to continue to leverage our ecosystem. Our partners around the world are doing a great job, implementing our technology and driving deployment. But we're also going to work with them to build business plans so they can help us drive net new business, not just do implementations, but help us drive new business into the base as well as net new customers overall. And then last thing on the ecosystem, we were excited to be able to announce today a partnership with AWS that allows us, for the first time, to sell our technology platform through their marketplace, allowing their customers to leverage the spend they have with AWS on Workday solutions. So that's an aggregate of why we think over time, depending on when the macro turns more favorable, we'll be able to get back to 20% growth on the subscription side.

That's super. And just a real quick one for Barbara. Barbara, just in terms of margins -- thanks for the commentary on 1Q and 2Q, just we're thinking about it correctly. I assume because risings in 3Q, we should see the rest of sort of the margin expansion in 4Q, maybe more seasonally flat or sequentially flat between 2Q and 3Q?

Yes, that sounds about right.

Okay. That’s great. Thanks, all. Appreciate it.

Our next question comes from the line of Kash Rangan with Goldman Sachs. Please proceed with your question.

Thank you so much. Congratulations, Aneel, Carl and Barbara. Carl, the question is targeted for you since I get only one or maybe 1.5. One is, as you speak with customers, what are the key themes that are emerging from your conversations with respect to how they're prioritizing investments in software, in particular, Workday, given inflation worries, rate worries, et cetera? And also everybody is conscious of the risk of a recession. I think our models are all increasingly building that. But since you've been through multiple cycles before in your very long career, as Aneel mentioned, what are the signs you're looking for in terms of a recovery, although it might be a little foolhardy to entertain the hopes of a recovery? But what are the things that could that you could be looking at that could increase your conviction that we go from high teens to 20-plus percent when environment gets better? Thank you so much.

Yes. Thanks. I'll start off, and then I'll turn it over to our Co-President, Doug, who's joining us on the call here today. So first, Kash, I'd say, companies continue to prioritize both HCM and in their financials in driving a digital transformation. Everyone is looking to get more value out of both their people and their financial systems, and I think we're at the core of that. So while it is true, customers are reprioritizing where they're going to make their investments. I think we move to the top of that list because we do drive true digital transformation, which is a term we've all talked about for probably the last five or 10 years, but it's in the midst of happening right now. And we're seeing early signs of us being a beneficiary of that transformation, including the seven Fortune 500 wins we had last quarter, we had 11 global wins in the Global 2000. And by the way, a number of those weren't just replacing legacy on-premise solutions, three of the Fortune 500 wins came with us, replacing our legacy competitors' cloud solutions. So that's another really good sign. And then two other things is while it's true, people are moving to the cloud and they're doing it faster than ever, we have the opportunity to be at the forefront of that. When people move to the cloud, whether it's HCM or FINS, Kash, we are going to get a look. And when we get a look, when we look at our win rates just last quarter, they're improving, and we're not seeing any additional discount to actually win those opportunities. So we think we're well positioned for the digital transformation that's happening. And it's interesting because with scarcity, all of a sudden, customers get clarity. And it's clear that we're in the middle of the opportunity here, unlike we've seen before to help them drive their digital transformation to focus on both their people and their financial systems.

Yeah. Hi Kash, Doug here. Thanks for the question. There's a couple of things I'd highlight for you. The first and -- the question went to what are you hearing from customers and executives. The first is tight labor markets continue. And so you see CEOs increasingly turn back to how do I reskill, retain and get the company positioned for the jobs of tomorrow. And so it shows up, and it's showing up, I think, in those seven Fortune 500 wins, some familiar themes there, those 11 Global 2000. And then really on the -- really driving the FINS side of it, there's talk at the CEO level about reinventing the entire business model. And, of course, Workday doesn't reinvent business models, but we give you an agile, enabling technology for you to be able to make those changes to your business over time. And the last thing I'd say as it relates to your question about what signs do we look for when we're starting to come out of it. To me, it's sales cycle duration on the net new. And we track that, as you might guess, by industry, by size of company, by geography. And when we see that start to come down, I think we'll be in a position to go up and over 20%. And what we're seeing right now is solid pipeline build. So we're pleased with the pipeline build, but we're still dealing with some of those elongated cycles in the net new space.

Yeah. One other thing to add there, Doug, is we see customers during times of tailwind, typically want to buy best-of-breed solutions. When there's headwinds, they buy best of suite. And today, we have the best platform for both FINS and core HCM. So we see more and more customers, to your point, of consolidating on our platform than we've ever seen before as they look to drive efficiencies in their own infrastructure.

Thank you, Carl and Doug. Congratulations.

Our next question comes from Mark Murphy with JPMorgan. Please proceed with your question.

Thank you very much. So Carl, Workday's revenue growth really is not flowing very much. If we just look around and compare it to the rest of the software industry, there's so many companies suffering through this period where their growth has slowed by 10 or 15 or 20 points or more. Is Workday's resilience more driven by the ability to help companies navigate through this complex type of a labor market, or do you think it's more of a function of the diversification across verticals where I think you have a little less reliance on the tech industry, or is there some other factor that's kind of coming to the forefront for you? And I have a quick follow-up.

Yeah, sure. Thanks for the question, Mark. I'll start, and then I'll hand it over to Aneel to make some additional comments. So first, I think the diversity of our business is what allows us to be so differentiated from the rest of the companies out there in our peer group. What I mean by that is we have a large installed base that we get to sell back into with high renewal rates. We're landing net new customers. We're selling across all industries and all verticals. So the diversity of our business is radically different than most people out there. And also, I think -- the other thing is our business is quite predictable. When you have a renewal rate like we have on a quarterly basis, we can really dial in what we think we're going to deliver to all of you in the Street and hit that with consistency. So we are diverse in our business. We have durability in our business model with good operating margin and good solid growth and good cash flows. And I just think as compared to the rest of the industry, we can weather any potential headwinds we're seeing going forward, which is reflected in our FY 2024 guidance. And Aneel, maybe you'd like to add some color around this question as well.

Yes. I think the other part is, our applications are just -- they're just proven out to be mission-critical. And some of the apps that did well during the last few years when you have a downturn, they're just not -- they're not viewed as mission-critical. But a lot of companies are doubling down on becoming more efficient during a downturn, and I think we're a beneficiary of that, and it supports our business. And it's all based on those very sticky systems of record.

Excellent. And just a quick follow-up for Barbara. Is the trend of seeing some of these very sizable planning deals in the pipeline, which I think you might have mentioned a quarter or two ago, seeming to continue here as you look forward into FY 2024.

Do you want to take that one? It's about the plans in the pipeline.

Yes, I'll take it. Yes. Planning was -- we had a really strong planning performance in Q4, and we do see more of it coming. In fact, there's -- two of the areas and changes we're making for this fiscal year is increasing sales capacity in two ways: one, with dedicated sellers to help convert the planning customers or those planning first customers into core financials, Accounting Center, Prism Analytics, some of the other solutions that are a nice follow-on to the office of the CFO. And then the second is dedicated land sellers for the planning business for Adaptive. We're increasing sales capacity there. And that's not just a US phenomenon that we actually see that opportunity internationally as well, as Carl highlighted earlier.

Thank you, very much.

Our next question comes from DJ Hynes with Canaccord. Please proceed with your question.

Hey, thanks very much for taking the question. Curious if you're seeing any additional signs of large projects being put on hold. I think last quarter, we talked about some services revenue disruption, understand kind of the ecosystem handoff is influencing the numbers a bit in the guide. But curious if that was kind of a one-off event or something that's starting to show up a little bit more broadly with implementation cycles?

Doug, why don't you take that one?

Yes. They're not seeing -- if I understood your question correctly, wholesale stoppages of projects. It's more about round trips of approvals. And I do think companies are looking for -- CEOs are looking for productivity gains and operating margin leverage. And so, every investment is getting extra scrutiny. And I think one of the things I'm really, frankly, quite proud of in this quarter and in this year is that, I think our sales team did a great job of anticipating that and really building solid business cases in conjunction with our customers to get those projects over the line. But no question, these cycles happen, take a longer bit of time to close on the pure net new large transformational projects.

Yes. The only thing I'd like to add is just, thank Doug and Patrick and our teams around the world, we knew these deals would get extra scrutiny, and we were prepared for it. The level of deal inspection we had throughout Q4 was taken up a couple of notches -- and we saw the outcome of that in, if you will, the close rates in Q4, and we anticipate that going forward.

Got it, got it. And then, Doug, maybe a more strategic question for you. Just as you talk with customers about evolving to become kind of a skills-based organization, right, adopting ML and AI strategies, like how much change management has to accompany the technology adoption, right? And I guess I'm curious, like, how deep we bought into this playbook or your partners? Is this something they're leading to or leading with in their go-to-market conversations?

I think that's a great question, and the answer is a lot. And there is work to be done, more around strategy upfront, to really take advantage of the skills cloud, in and of itself, as an enabling technology. And so, you've heard us talk about how important partners are to our growth this year and beyond, we are partnering with some of the large global GSIs that you know all too well, who are really bringing that skill set, their IP around that change management and how to look at skills and through the lens of skills and anticipating skills needed five years from now or 10 years from now, as opposed to just job profile-based analysis of where to build out your teams. So yes, it goes hand-in-hand and both are needed to give a complete solution to the customer. Anything you guys want to add, Aneel?

I'd say it's a one to two-year process. It's not a simple journey. But coming out the other end, it just enables you to do business the way everybody is looking forward to doing business in the skills-based world. And I'd point to one of our biggest HCM customers, it's one of our biggest partners, Accenture, they have done this for their own organization, and so they're going around and using that learning to help our customers do it as well. But it's a big investment and I think the payoff -- but the payoff is huge.

Yes, makes sense. Thank you, guys for the color.

Our next question comes from Michael Turrin with Wells Fargo. Please proceed with your question.

Hey great. Thanks. Appreciate you taking the question and nice job in closing out the year. Barbara, given the change in accounting, you mentioned the useful life policy brings the operating margin expectation up to 23% for the coming year. Does that impact how you're thinking about the longer term 25% margin target, $10 billion in scale, as we kind of trend line towards those, or anything you can add around just views and opportunities near-term for margin leverage versus longer term is helpful? Thank you.

Yes, thanks so much for your question. So, there's no change to that 25% operating margin target at $10 billion. We haven't updated our medium term framework for that at this time. When we provided that outlook, we weren't factoring in this change in useful life assumptions. And while it has a near-term positive impact on our margins, the impact will reduce over time. So, the focus remains on driving profitable long-term growth, and that's exactly what we described at our Analyst Day. And we definitely see opportunity to drive non-GAAP operating margin beyond 25% over the longer term.

That’s all the questions from Michael. Our next question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your question.

Excellent. Thank you, guys for taking the question. A couple of kind of cleanup questions for Barbara. You mentioned 1 percentage point benefit to the 24-month backlog from early renewals. Can you talk to -- is that unusual? Because one of your peers talked about missing their guidance because they didn't get the early renewal. So, to what extent were those early renewals already kind of in your expectations, or to what extent were they unusual? And then two, on the other side of that, how should we think about sort of the tightening of the range on the guidance from the 2017 to 2019 to the 2017 to 2018 after the outperformance that you saw in Q4? Is it adding more conservatism to the forecast, or was there some push and pulls of like the early renewals that we should be thinking about? Like is it a more conservative guide or are there other factors that we should be considering?

So, let me go ahead and take that first question on early renewals. So, we had healthy customer base activity in Q4 as customers added new SKUs to their Workday footprint. And as part of that, many of the customers renewed early. And so we do see renewals move around from time-to-time, but just with the strength of customer base, we saw a larger impact this quarter and wanted to make sure we called that out. On your second question around what's going into our guidance for subscription revenue next year. Really after a solid Q4, we have more visibility into our FY 2024 subscription revenue, allowing us to maintain the midpoint of $6.55 billion and narrow that $100 million range down to $50 million that we shared last quarter. So still very early in the year, and the guidance prudently accounts for the fact that the environment remains uncertain and consistent with what we've described over the last couple of quarters.

Got it. That makes a ton of sense. And maybe one big picture question for Carl. A question I've been getting a lot from investors is, what changes should we expect from Carl or what big impacts can Carl have on Workday and the company on a go-forward basis? And I have my answers, obviously. But I'd love to hear from the horse's mouth, but I'd love to hear from you. When you look at this opportunity to take on the Co-CEO role, what are the big changes or sort of big improvements that you think you can make to Workday over the next year or three years or whatnot?

Yes, sure. So a couple of things. So as you know, I had a front row seat to the last five years as a Board member, and I had a good understanding of Workday, the business model and the opportunity. And what I would say is now being on Board almost a full quarter, right, the opportunity is probably even bigger than I anticipated. That being said, the company is doing a lot of things right. Just look at our results for the full year last year, our results for Q4. So with the executive team and our Workmates have done is pretty special. That being said, there are opportunities for us to get back to that 20% growth going forward. I've mentioned a couple of them earlier. So first and foremost, I think one of the things we're doing around consolidating all go-to-market under Doug Robinson, who's been here for 11-plus years, was a good move. He now is responsible for everything from a go-to-market perspective, including sales, presales, partners, our industries and revenue operations were before that was broken up. So I am focused on driving operational efficiency across the company and across organizations. And we're starting to see that play out already. The second thing I mentioned earlier is I just think we have a tremendous opportunity to grow the business internationally. Our performance internationally is I don't think where it should be, but we're going to really focus on it. We have new leadership in place, and we're going to drive a different level of execution both in EMEA and across APJ. And I think that's also important. The last thing, as both Aneel highlighted and Barbara and myself, we are looking for ways to optimize our workforce. And one of the things we're doing here in Q1 is we're doubling down our efforts on product and technology. So we continue to focus on innovation. And we're also investing heavily in go-to-market, specifically around quota-carrying capacity. And it is our belief and my personal belief that those who can invest in innovation and technology and go-to-market when markets are potentially challenging like we're faced today will be the fastest to emerge on the other side and reaccelerate growth. So I think there are just a couple of areas of focus for us, along with a number of other things, including the ecosystem what we spoke about and Doug mentioned earlier. So there are some of the things in the near term you can expect from us and I think they'll drive long-term durable growth that gets us back to that 20%.

Outstanding. Thank you for the concept.

If I can just add a couple of other things. Carl is definitely an innovator on the go-to-market side. And so we're all learning some new approaches on what we can do differently. And I'd frankly say, including myself, just raise the sense of urgency and energy level of the entire management team. And I think it's great, and I couldn't be happier that he's here. He's telling us all to have more giddyup.

Outstanding.

And we will now take two more questions. Our next question comes from Karl Keirstead with UBS. Please proceed with your question.

Okay. Great. I've got two for Barbara. Barbara, the relationship between CRPO today and subscription revenue growth tomorrow is not perfect, but it's actually pretty good. Despite all the macro, your CRPO is hanging in there like a champ at like 20s or low 20s. But your guidance on the sub-rev growth implies a decel from 22% this most recent quarter, down to like 16%, 17% in the second half. And I'm just curious, why would that be? At first blush, it makes your guidance for sub-revs growth looks somewhat conservative, but maybe I'm missing something in the relationship that might explain that maybe go-lives are getting extended but are still within the 24 months. Is there anything that you would flag?

No, I mean I would just reiterate what you said at the beginning, which keep in mind that backlog isn't a perfect proxy for future subscription revenue growth due to many factors, including the timing of renewals. As we called out, early renewals had roughly 1 percentage point of upside to our 24-month Q4 backlog, though it does not impact the underlying subscription revenue growth. And the FY 2024 subscription revenue guidance is our best view at the time, and we think it prudently factors in a macro environment, which remains uncertain.

Okay. That's helpful, Barbara. And then if -- I don't think anyone's asked on your cash flow guide, if I could, I think a quick calculation suggests that you're guiding to operating margin improvement or percentage increase year-over-year of about 30% but your operating cash flow guidance implies more like a modest -- more modest 25% growth. Is there anything going on in your operating cash flow guide? Any sort of one-time factors to highlight that might create a somewhat bigger spread between it and the operating margin expansion? Thanks a lot.

Yes, you’re welcome. So the cash flow guidance does reflect the strong margin expansion that we are expecting in FY 2024. But when you're looking at it from a year-over-year standpoint, both Q1 and FY 2024 cash flows impacted by the first full year payout of our company-wide performance-based cash bonus, the severance costs associated with the recent realignment and then an interest payment that didn't occur last Q1 due to the timing of our debt offering. And then also keep in mind that the change in server and network equipment useful life has an impact on margin, but it does not impact cash flow.

Yes. All that makes sense. Thanks a lot, Barbara.

All right. Thank you.

And our last question comes from Alex Zukin with Wolfe Research. Please proceed with your question.

Hey, thanks for squeezing me in. I guess maybe one for Carl and Aneel, and then just a follow-up on the cash flow question. If you kind of stand back and you think about where we are right now from the macro environment, the demand environment, it does seem like things aren't getting progressively worse. They seem to have stabilized, at least based on commentary from some other companies. As you look at the current configuration, do you feel like we've rebased in terms of a net new sales cycle, a net new digestion phase or period? And what -- is this the trough basically is a question we get a lot. Do you have any signals or data points that give you a view one way or the other on that?

I personally still think it's a very uncertain environment. It doesn't feel like the economy is falling off a cliff anymore. I don't think it ever really did feel like it was falling off a cliff. But there's conflicting signs as to whether the Fed is going to continue to slow down the economy and get inflation under control, and that continues to be a challenge. So I think it's still pretty much the same it's been for the last couple of quarters. I don't see it -- I definitely don't see it getting better anytime soon, but maybe not getting worse. So yeah, maybe we're in a stable. I don't know, what you think, Carl?

Yeah, I agree with you. Actually, the commentary I always respond with people ask this question, I say there's -- it's consistently inconsistent depending on who you talk to out there. But what we do know is companies are continuing to invest in technology. And if you have a strong value proposition like we have around HCM and FINS, we should be able to navigate the choppy waters that we're faced with going forward. And I think that was reflected in both Q4 and our FY 2024 guide. So we're staying the course. We're prudent in our guidance. And we have a lot of confidence that our team will execute regardless of what we face in the future. So it's uncertain, but we're prepared for it as well.

And then maybe just one on the ecosystem, specifically the GSI community. It does feel like they're getting a little bit even reinvigorated to some extent from some of the moves and changes that you're making around driving -- helping them continue to be also a driver of growth or enabling them to be a driver of growth for your business. What are the key dynamics we should be tuning to that could make that really a bit of a different growth driver this year or in the coming years than it's been in the past?

Yeah, Doug, why don't you take that, and then I'll add any color.

Yeah, it's a great question. A couple of things to think about or that you should be looking for. Where it really comes to life is when we can take -- I mentioned this before in another question, the IP from our partners and couple it with what we deliver and then give something more profound to our mutual customer, and so we loosely put that under umbrella called Industry Accelerators. And I think that's where you're going to see it show up with our partners, much more openness to drive industry specific solutions with their expertise partnered with our technology. And so that drives things like Prism and Extend, which we haven't talked about much on this earnings call, but really taking Workday and extending it beyond core capabilities.

I think it's really well said, Doug, and that's specific to the GSIs, but we're also looking for alternate routes to market like the announcement we just made with AWS to be on our marketplace, which is a new distribution channel for us here at Workday. So we're looking at driving operating leverage on the go-to-market, both through GSIs and additional ecosystem partners going forward, which is really important, we haven't done that in the past.

Perfect. Congrats guys. Thanks again.

Thank you.

And ladies and gentlemen, thank you for your participation on today's conference. This will conclude Workday's fourth quarter and fiscal year 2023 earnings call. Thank you again for joining us.