Good morning, everyone. My name is Robert and I will be your conference operator for today. At this time, I would like to welcome everyone to the Workday Adaptive Insight Acquisition Conference Call. All lines have Thank you. Mr.
Mike Margarone, you may begin your conference.
Great. Thank you so much and good morning, everyone. Earlier this morning, Workday announces entered into an agreement to acquire Adaptive Insights, a leading provider of cloud based software to modernize business planning, The details of the transaction can be found in a press release issued at approximately 8 am Eastern Time today. Joining me today to discuss transaction are Aneel Burstree, Workday's CEO Tom Bogan, CEO of Adaptive Insights and Robynne Sisco, Workday's Co President and CFO. The purpose of today's call is to discuss the acquisition of Adaptive Insights.
Anil, Tom and Robin will review the proposed acquisition After our prepared remarks, we'll turn the call over to your questions. You should be aware that our discussion and responses to your questions may contain forward looking statements related to Workday, Adaptive Insights and the acquisition of Adaptive Insights that involve substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. All statements other than historical facts included in our discussion, including, but not limited to, statements regarding the timing and closing of the transaction, the potential benefits and financial impact of the transaction, Workday and Adaptive Insights, plans, objectives, expectations and intentions, the financial condition results of operations and business of Workday And Adaptive Insights, and any assumptions underlying any of the foregoing are forward looking statements. Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, actual company results, and actual effects of the transaction to differ materially from these forward looking statements. Please refer to the press release and the risk factors and documents we file with the Securities And Exchange Commission, including our most recent quarterly report on Form Ten Q for information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.
So with that,
Good morning, everybody. Thank you for joining us bright and early and on such short notice. We cannot be more excited to talk to you about our agreement to acquire Adaptive Insights. As you know, it's their leading provider of cloud based software to modernize business planning. Since day 1, our core focus has been centered on customer driven innovation across in HR, we have broadened our offering to become an even more important and strategic business partner to our customers as digital transformation initiatives flow through corporations across the globe.
We have firmly established our leadership in HCM, differentiating ourselves through scalability and customer satisfaction. We continue to grow our business across the globe. Over the last few years, we've seen strong signs of increasing transformation in the CFO organization, and have been delivering against our unique vision of bringing planning, transactions and analytics into 1 unified cloud system. We expect the adoption of cloud management suites in large enterprise to accelerate over the next several years, as I've talked about on previous earnings calls, as companies are increasingly embracing the modernization across core GL with a focus around financial planning and analytics. As you know, we launched Workday Planning a year and a half ago, And since then, we have seen great success with over 250 customers.
Customer see great benefits with workforce planning components and increasingly financial related planning. The acquisition of Adaptive Insights, we'll accelerate our financial planning technology roadmap by 2 to 3 years and deliver new and advanced modeling capabilities to our customers. With Workday's planning product being an intricate part of the HCM system, we will focus our existing planning product on delivering against the current roadmap and strategy centered around workforce planning. That's why the acquisition is so exciting for all of our customers. Together Workday And Adaptive will accelerate customer's transformation across the organization through a powerful combination of integrated planning and a complete finance suite of products.
This combination will enable customers to leverage power of cloud First Solutions and offer a dynamic interactive and collaborative approach to finance. They'll be able to make smarter, faster decisions and drive strong business value. And that's just not our opinion. Adaptive has been consistently recognized as a leader in cloud's strategic corporate performance management systems by many industry analysts. So I will end with Workday and Adaptive are the perfect complement, marrying Adaptive's robust modeling engine and technology with Workday's go to market and large enterprise customers.
We see a tremendous opportunity to accelerate growth globally, leveraging our ecosystem momentum across many geographies. We happen to know Adaptive Insights very well. I've known Tom Boggan, Adaptive CEO for many years, and we've been good friends, I think, for the last 15 years and have tremendous respect for him and for their leadership team, products and business they've built. Cultural values are everything to Workday. And importantly, we are a lockstep on that dimension.
We're thrilled to welcome Adaptive Insights of the Workday family once this transaction closes. And with that, I'd like to turn the call over to to Adaptive Insight CEO and my good friend, Tom Bogan.
Thanks, Anil. I greatly appreciate the warm welcome and It's truly an exciting day for Adaptive Insights, our customers and our employees. Adaptive Insights is at the center of a significant opportunity to help organizations transform business planning into a strategic and competitive advantage by enabling organizations to respond to changing business conditions with confidence and agility through digital transformation. In organizations of all sizes, everybody plans, whether it's the corporate planning process driven by finance or plans driven by functional leaders, planning is mission critical, across an enterprise. Our business planning cloud was designed to enable holistic collaborative planning across the enterprise.
We believe that the market opportunity for our cloud based planning platform is largely untapped because most organizations still rely on spreadsheets and other manual processes to the plan. Our solutions are capable of addressing opportunities at companies of all sizes and are a modern replacement for legacy planning tools used by larger enterprises where data and information is static and inaccessible by most employees. Our platform is easy to use. It has powerful modeling capabilities, enables insights from analytics, facilitates rapid iterative planning processes and offers fast time to value and low total cost of ownership for our customers. This value proposition coupled with recent investments in our platform scale and security along with new enterprise sales capability allows us to address the needs of a wide range of organizations from large enterprises and smaller businesses, whether they use legacy planning tools or spreadsheets and manual processes to plan.
Our business planning cloud already integrates with Workday HR And Financials, and we already share a number of customers. We're headquartered in Palo Alto with approximately 500 employees, and we have offices around the world. As of April 30, we had over 3800 customers across all customer segments with trailing 12 month revenue of $114,000,000 and subscription revenue growth in our latest quarter of 33%. It's very exciting to be here today to join forces with Workday. As Anil said, I've known Workday and Danil for many years, I've always admired what they built as a customer centric focus that they have.
Joining forces with Workday accelerates our vision to modernize business planning on the promise of digital transformation for our customers. But the synergy and combination of Workday and Adaptive Insights are powerful, with a primary focus on go to market, speed of innovation and robust distribution capabilities of large enterprise. This is an exciting future for our joint employees, for our customers and for our partners. We believe that our shared commitment to customer success and similar cultures make our companies a great fit. I want to thank our adaptive insights team members for all of your and Workday are going to do together.
Now let me hand the call over to Robin.
Thank you, Tom. As Neil and Tom mentioned, we couldn't be more excited about bringing together Workday and Adaptive Insights. This powerful combination accelerates our opportunity to support Under the terms of the definitive agreement, Workday will acquire all of the outstanding shares of Adaptive Insights for approximately 1,550,000,000 including approximately $150,000,000 in unvested equity issued to Adaptive Insights employees. We plan to fund the acquisition with cash from the company's balance sheet. We expect the transaction to close in Q3 subject to customary closing conditions.
Adaptive Insights currently generates a non GAAP operating loss as well as operating cash flow losses. These losses, along with purchase accounting adjustments, adoption to reduce our FY19 non GAAP operating margin target, which we previously guided at 12% and reduce our operating cash flow growth which we previously guided at 30%. We plan to update our FY 2019 guidance during our 2nd quarter earnings call. In the meantime, we encourage you Our management teams as it relates to our ability to accelerate growth globally by leveraging our ecosystem and momentum across geographies. We have high expectations
Thank
Your first
from the line of Mr. Alex Zukin from Piper Jaffray. Your line is open.
Hey guys, thanks for taking my question. I wanted to ask about the approximate split of the customer base for Adaptive between SMB And Enterprise? And also any thoughts just initially on kind of go to market strategy in terms of adaptive sales organization taking on primary responsibility for selling financials or and or do you anticipate to be able to sell planning as a standalone product, as well.
I'll take the second part and then as Tom to weigh in on the split, it's still early days in figuring out sales planning, but the clear opportunity is to take the adaptive product, which has, which has undergone some significant transformation over the last couple of years and sell it up market through our, our fairly sizable sales force. And, and leave, we'll plan to leave adaptive as a fairly standalone company, but it's but they've got a fairly small group of enterprise sales reps and we have a huge group of enterprise sales reps. So I think there's going to be tremendous synergy there. And I'll turn it over to Tom about the split.
23% of our business is enterprise, 43% mid market and just over a third of our business is SME.
Great. Thank you, guys.
Thank you. And your next question comes from the line of Scottberg from Needham. Your line is open.
Hi, everyone. Thanks for taking my question. I guess this is probably for Anil. Anil, this is your first acquisition of what I consider to be a front end application technology and a sizable one. But I guess 2 part question is, 1, how do you integrate it with your current technology stack or do you lease some of the technology separate?
And then secondly, does the signal willingness to do more point forward? Thanks.
I don't really know how to comment on the second part. We're very focused on just making sure that the coming together of Adaptive and Workday works great. It was a unique opportunity. As you all know, planning has been really central to our strategy the last several years. And simply put, we wanted to be in the market now with a robust financial planning solution and looked at our own solution, said that's 3 years away.
The market's happening now and Adaptive is a great company. So it has to be it has to hit a very high strategic bar, which adaptive did and there has to be a great cultural fit. There's just not that many of those, opportunities out there. As it relates to bringing the companies together, at the end of the day, it's much tougher to bring together companies that are 2 transactional platforms. That's where you have overlapping workflows and overlapping, systems of record.
In this case, planning the planning system is really an engine that over time we'll be able to harmonize the user interface, the security model and the metadata and data models to be a seamless unified solution for our customers. And that's possible because of the way that the Adaptive Product was written and the way our product was written. But it's a nice adjacency that makes it actually more straightforward to bring into the Workday technology and have it feel like still a power of 1 type product.
Thank you. And your next question comes from the line of Karl Kristin from Deutsche Bank. Your line is open.
Thank you, Robin. As we take a shot maybe before you report your next earnings regarding the impact that the Adaptive deal might have on your margins and operating cash flow. We obviously have through the S-one through their April quarter, but looking forward, was there any material inflection in adaptive's cash flow or operating margin performance that you'd call out as we take a shot at modeling the impact on Workday? Thank you.
No, I would just encourage you to follow their trends. They've been making great progress on both the margin front and the cash flow front. We expect that that would continue. If they were independent and will continue, as a combined with Workday. And so it will really be these other changes I discussed about the adoption of 606, which obviously has revenue and margin implications as well as the purchase accounting adjustments.
Thank you. And your next question comes from the line of Mr. Justin Furby from William Blair And Company. Your line is open.
Hey guys, this is actually Vanae on for Justin. Thanks for taking my questions. I guess I just wanted to ask, is there any overlap in customers you in Adaptive Insights? And then just sort of a strategy around, what's sort of the future of Workday planning in terms of how that integrates? Both from the existing customer front as well as new customers?
Thanks.
I think, and Tom can correct me, think Mike Magaro has as well. I think they're 30 to 40 joint customers. So that's about 10% of our 10% of our financial customer installed base. In terms of our strategy, it's, it's when I articulated on the, on the in the opening remarks, Workday Planning is now really going to focus in on workforce planning, which is a key requirement for many of our our Mega HR customers and it's a product that's very exciting to them. And we're going to have Adaptive continue to focus on their strength, which is financial planning and sales planning.
So, so really that's strategy and over the next several months, we'll roll out a roadmap on how the technologies come together more closely from from a user experience security model and data model perspective, but that's really the bifurcation. We're going to focus, Workday's efforts on workforce planning and Adaptive has continued to do what they do, what they're doing extremely well in financial planning and sales planning.
Perfect. Thanks.
There are no further questions at this time. Please continue.
Perfect. Thank you so much. Appreciate everyone's time this morning. Thanks again for joining us. We look forward to answering your questions, I guess, over the next several weeks months.
We will be out on the road pretty actively this week. So we'll see many of you at our conferences and whatnot. Thanks again for joining us and we'll talk again soon.
This concludes today's conference call. You may now disconnect.