Welcome to Workday's 4th Quarter and Fiscal Year 2020 Earnings Call. At this time, all participants are in a listen only mode. We will conduct a question and answer session towards the end of the call. And with that, I'll hand it over to Justin Furby, Senior Director of Investor Relations.
Welcome to Workday's Q4 fiscal 2020 earnings conference call. On the call, we have Aneel Bhushri, our CEO Robin Sisco, our Co President and CFO Chano Fernandez, our Co President and Tom Bogan, our Executive Vice President of the Planning Business Unit. Following Aneel and Robin's prepared remarks, we'll 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 regarding our financial results, applications, customer demand, operations and other matters.
These statements are subject to risks, uncertainties and assumptions. Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent quarterly report on Form 10 Q for information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non GAAP financial measures, which we believe are useful as supplemental measures of Workday's performance. These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. 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.
The webcast replay of this call will be available for the next 90 days on our company website under the Investor Relations link. Also, the customer page of our website includes a list of selected customers and is updated monthly. Our Q1 quiet period begins on April 16, 2020. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2019. With that, let me hand it over to Anil.
Thank you, Justin, and good afternoon, everyone. Thank you for joining us today for our Q4 fiscal year 'twenty earnings call. I am pleased to report that Workday had another strong quarter, ending the year with significant momentum and positioning us well as we enter fiscal year 'twenty one. Our success continues to be driven by the relentless dedication of our workmates and by our forward thinking customers who expect more from their enterprise applications and who continue to choose Workday as their partner for their finance and HR cloud transformations. We now have over 3,200 customers and our commitment to their success is demonstrated by our 97% customer satisfaction rate and broad referenceability.
In Q4, we saw healthy demand across all product areas. Starting out with Workday HCM, we had another strong quarter as we continue to be the market leader with our differentiated suite of products. In total, we added 11 new Fortune 500 customers, almost equaling our best ever quarter and now have 45% of the Fortune 500 as HCM customers, including 60% of the Fortune 50. We also added 16 new Global 2,000 customers and now have almost 20% of the Global 2,000. New customers include Spanish Multinational Bank, BBVA, Southwest Airlines and Wells Fargo Bank.
Notable HCM go lives in Q4 included NatWest Group, Banco Santander and the Prudential Company of America, as we continue to have over 70% of our HCM customers in production. Switching over to our financial management applications, Q4 was our best quarter ever. We added a record number of core financial management customers, including KeyBank, Beth Israel, Leahy Health, Dun and Bradstreet and West Virginia United Health System. In addition to the strong growth from our core financial applications, we saw continued momentum from our expanding suite of products that support the office of the CFO. Both Workday Prism Analytics and the Adaptive Insights Business Planning Cloud had outstanding quarters.
We added over 100 new Prism customers and over 350 planning customers, which includes over 100 on the broader Workday platform. Our new workmates at SCAT RFP had an excellent initial quarter as well with strong momentum on sourcing opportunities, both standalone and as part of Workday spend management offerings. We believe the depth and breadth of our cloud based finance products in combination with our industry leading HCM suite, Workday Prism Analytics, Adaptive Insights Business Planning, Cloud and Expanding Spend Management offerings with ScanRFP delivers a global solution that is highly differentiated and helps to empower business leaders to plan, execute, analyze and extend all in one system powered by machine learning. Switching to the people front, a key part of our success continues to be our vibrant company culture, which allows us to maintain high levels of employee satisfaction and greatly helps us attract and retain talent across all levels of the company. To that end, we are proud of our recent recognition as Fortune and Great Place to Work announced their 100 Best Companies to Work For list ranking Workday as number 5.
This is the 6th consecutive year that Workday has made the list and the 3rd year in a row that we've been in the top 10. Being a great place to work is something that Dave and I have prioritized since day 1. So it's an honor for Workday to be on these prestigious lists. As we look forward to fiscal year 'twenty one and beyond, we are relentlessly focused on innovation and expect to see continued momentum from our growing family of applications. We're confident in the pipeline we have built and the sales execution model we have in place.
As such, we expect fiscal year 2021 to be another strong year of growth. We continue to invest heavily in our company culture and our value system and have a great group of employees committed to delivering the highest levels of customer satisfaction to our great customers. I will now turn over to our CFO and Co President, Robin Sisco. Over to you, Robin.
Thanks, Anil, and good afternoon, everyone. Our 4th quarter capped a strong year, driven by solid execution across the company. We not only added a record number of net new HCM and Fins customers, our high levels of customer satisfaction continued to drive 95 plus percent gross renewal rates as well as strong add on sales to existing customers. Subscription revenue was $840,000,000 in Q4 and $3,100,000,000 for the full year, representing growth of 25% 30%, respectively. Professional services revenue came in at $137,000,000 for Q4 $531,000,000 for the full year.
4th quarter revenue outside the U. S. Increased 33 percent year over year to $244,000,000 representing 25% of total revenue. We see significant global opportunity ahead and expect that our revenue mix from the rest of the world markets will continue to increase over both the near and longer term. Subscription revenue backlog was $8,290,000,000
at the
end of the 4th quarter, growth of 23% year over year. Backlog growth was driven by healthy net new bookings, add on business and strong renewals, with our net retention once again over 100%. Subscription revenue backlog that will be recognized within the next 24 months was $5,480,000,000 growth of 22%. Our non GAAP operating profit for the 4th quarter was $117,000,000 or 11.9 percent of revenue, with a margin overachievement primarily driven by our top line outperformance. For the year, our non GAAP operating profit increased 66% to $484,000,000 or 13.4 percent of total revenue, up more than 300 basis points from FY 'nineteen as we continue to scale and drive efficiencies in our business.
Operating cash flow for Q4 was $297,000,000 bringing our operating cash flow for the full year to $865,000,000 or 43% growth. This strong performance was driven by a combination of operating margin expansion and exceptionally strong collections in Q4. We successfully added and integrated more than 16.50 net new employees to Workday this year, including approximately 150 from the Scout RFP acquisition in Q4, bringing our total employee count at year end to over 12,200. Overall, we're very pleased with the strong company wide execution in our seasonally most important quarter. Now let me turn to guidance.
We entered the year with considerable momentum, and we see significant opportunity ahead to support both our near and long term growth aspirations, while continuing our progression towards 25 plus percent non GAAP operating margins. We are raising our FY 'twenty one subscription revenue guidance to a range of $3,755,000,000 dollars to 3.770000000000 dollars representing year over year growth of 22% at the high end. As a reminder, Scout is expected to add less than 1 percentage point to our overall subscription revenue growth in FY 'twenty one. For the Q1, we expect subscription revenue to be between $873,000,000 $875,000,000 representing 25% year over year growth. We expect subscription revenue to sequentially increase from the previous quarter by just under 6% in Q2, approximately 4% in Q3 and 4.5% in Q4.
As we continue to expand our product portfolio, we want to provide investors with increased visibility into the growth sectors across our business. At our Analyst Day last October, we provided incremental disclosure around our HCM and Fins Plus businesses. As we look into fiscal 'twenty one, our current full year guidance assumes high teens HCM subscription revenue growth and low 40% growth in our Fins Plus business. We do not plan to provide quarterly updates to these numbers, but we'll revisit them annually. On the professional services front, we continue to value and support a growing systems integrator ecosystem.
Our partners are seeing robust growth in their workday practices, and we will continue our tight alignment with them to help ensure customers have successful implementations that support the highest levels of customer satisfaction and business value. We're expecting professional services revenue to be approximately $137,000,000 in Q1 $580,000,000 for FY 'twenty one. We expect FY 'twenty one professional services margins to be flat from FY 'twenty as we continue to invest in programs to support customer deployments and to sustain our high levels of customer satisfaction. Based on our current outlook, we expect total subscription revenue backlog growth in the low 20s for the 1st 3 quarters of FY 'twenty 1, moderating to the high teens in Q4 against a very tough comp. We are raising our non GAAP operating margin guidance for the full year to 14.5%.
As a reminder, our margin guidance includes roughly 150 basis points of dilution from the Scout RFP acquisition. We estimate non GAAP operating margins of approximately 15% in Q1 and expect a normal seasonal sequential decline in Q2 as we invest in our people through our annual compensation process. The GAAP margins for the Q1 and the full year are expected to be approximately 26 to 20 7 percentage points lower than the non GAAP margins. We expect operating cash flow in FY 'twenty one be approximately $1,080,000,000 representing growth of 25%. The FY 'twenty one non GAAP tax rate is 19%.
We continue to invest in our real estate footprint at our Pleasanton headquarters to support our continued growth. In FY 'twenty one, we expect approximately $230,000,000 of owned real estate investments, which includes the potential purchase of a 5 building complex that we are currently occupying. We expect to spend an additional $350,000,000 in FY 'twenty one to support our other capital needs, including investments in customer data centers, leased facilities and corporate IT infrastructure to support our continued business expansion. And finally, I'll close by thanking our amazing employees, customers and partners for their continued support and hard work, which allowed us to deliver great results this past year. We are still in the early stages of executing against our long term vision as a company, but our progress wouldn't be possible without shared goals.
We look forward to updating you on our progress throughout the year. With that, I'll turn it over to the operator to begin Q and A.
Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Mark Murphy with JPMorgan. Please proceed with your question.
Thank you and congrats on a very strong finish. Aneel, I wanted to inquire about the coronavirus situation. We certainly understand that there's no reason you would be experts on this, but we had seen the headlines about changes to your sales kickoff. And I'm just wondering what you are seeing from your customers, whether they are pulling out of conferences or restricting travel or having employees work from home if they visited Italy or Southeast Asia? And just at a high level, whether any disruption kind of seems manageable to you through this fiscal year or whether it's just too hard to gauge that?
It's still early and we're not experts. As it relates to the sales kickoff, I and I think the rest of the team didn't think the risk was very high in the U. S, but our Asia Pac folks could not attend. And then with outbreak in Italy, And we actually had a joint meeting with some of the UK and Italy team. We felt like just the U.
S. Team, that's not really inclusive and that's not really the way Workday would go forward with a global sales kickoff meeting. So we're going to wait until we can get all the people together in person after this outbreak gets past us. In the meantime, we're going to do things virtually. I think in the U.
S. Though, right now, it still feels like mostly business as usual.
Okay, great. And just as a quick follow-up, I was wondering if you could just comment on
how far reaching your
ambitions are going to
be in procurement and replicate the kind of success you've had in recruiting. I think it took you 5 years to go from 0 to number 1 market share in the Fortune 500 there. Just curious whether you see that type of potential in that market?
There's definitely a ton of potential. And as we've gotten smarter about the spend management market and in particular with SCAT RFP, first of all, they had a great Q1 as part of Workday, really a great team. But the dollars that flow through sourcing are just massive. Even at a Workday, the amount of money that goes through the procurement organization is huge. And I do think there's a chance to build a differentiated solution in the short term that is more Scout as a standalone solution plus as part of our suite.
But over time, you could see our procurement suite be a best in breed, best in class suite. And I think the market is only going to grow. I think it's a really exciting market opportunity for us. Can I mimic recruiting? Time will tell.
I think what it can do is be a great driver of financial sales. I think financial sales
can be a great driver of the spend management marketplace.
And every company on the planet has to
manage their spend effectively. So it is a truly global opportunity.
Thank you very much.
Thank you. Our next question comes from the line of Kash Rangan with Bank of America Merrill Lynch. Please proceed with your question.
Hi, thank you very much. I like for my congratulations as well to the Workday team. Aneel, I know that you sounded just a little cautious about the slowing HCM business. I'm curious given the particular strength in the quarter, are we doing more of a smoother standing with the ATM business showing obvious trends in the quarter? And also, if you could talk to the network effect of the platform effect, where you are able to sell financials deals to existing HCM customers that have been very successful.
And one for you, Robin, should we stop looking at billings calculated as deferred revenue change and just focus on your backlog because that calculation of bookings comes up at 28% and it has been more predictable, more consistent. So is that the right way to look at indicator of your business? Thank you very much.
Yes. So on the HCM market, we had a great 4th quarter. We had 11 Fortune 500 accounts, the 2nd best quarter we've ever had as a company. So the large enterprise market is alive and well for HR. But we continue to gain and see growth in the medium enterprise business for HR.
And there's still a ton of greenfield opportunity in that medium enterprise market across the globe. So as we head into this year, I think we're thinking about high teens growth for HR. I think that's what we've been forecasting and I think it's going to hold up. I'm not necessarily focused on the next 12 months. I think longer term, we'll just have to understand how that market matures and what we can do to come up with more add ons to continue the growth in that marketplace.
No question that the Suite market is picking up. Today, I think one of every 4 customers has both product lines. And what we saw in the Q4 for another quarter was a bunch again of Financial First customers. And that's a great sign for us. That means our Financial products are winning on a best of basis even without the leverage from the HR marketplace.
And I still think for the foreseeable future, large enterprises or the mega enterprises, they will buy HR and finance separately. They're just that's just the way they've done it historically. But the medium enterprise increasingly is buying HR and finance together, and that's a really powerful trend for us.
And Kash, to your second question, yes, we absolutely do believe that looking at subscription revenue backlog is better indicator of our performance than billings or deferred revenue. Keep in mind, however, that there's several factors that influence the bookings calculation, including renewal volume, duration. So the quarterly bookings count can vary widely from actual ACV net bookings, as we discussed at Analyst Day. We've been saying all along that this would be a back end loaded year for us, and that's exactly what's played out, which has led to the high growth in the bookings number as you noted.
Wonderful. Congratulations. Thank you very much.
Thank you. Our next question comes from the line of Kirk Materne with Evercore ISI. Please proceed with your question.
Hi. Thanks very much. I'll echo the congratulations on the good quarter and finish to the year. Neil, just on the financial side, talking to your partners, healthcare seems to be one vertical, and I think you mentioned a couple of companies in your prepared remarks. That seems to be picking up some steam for you all.
Can you just discuss that a little bit? And when you think into fiscal 2021, maybe in addition maybe to healthcare, are there any other verticals you feel that are starting to pick up some momentum for you in that area? Thanks.
Sure. So we did have a good year and quarter in healthcare, but we also had a Financial Services. And I think that is a really key market for us. And of course, KeyBank was a big win for Workday. That's a huge bank, well respected bank, and they were already a Workday HR customer.
It was great to see them buy Workday Financials. I think financial services is the next market. We've had good success in government. I think you'll see that continue. And I think you'll see Business Services be another great market for us with Financials.
But candidly, it was strong across the board. It was the best quarter we've ever had for Financials, the best quarter we ever had for Adaptive Planning Business Insights. It was not only their best quarter, growth accelerated in the 4th quarter the planning products. And that was a it's a testament to the fact that the office of the CFO was looking at planning, analytics and transactions together and want a unified system and our message is resonating. So it's resonating to all types of companies.
And then if I could just ask one quick follow-up along that same lines where you're just talking about. When you think about sort of selling in the office as a CFO, are your partners aligned with you now in terms of being able to go in there both planning and financials to have a little bit of a broader based discussion because it seems like that's where the market wants to go. I was just kind of curious, I know you all are there, but you think your partner base is with you at this point?
Zara, you want to comment on that? Yes.
Definitely, they are. I mean, the interest on our partners in terms of enabling training resources, both in planning and now in procurement has been increasing significantly. We're pretty happy now with our vertical strategy well that is much easier to align towards the go to market for our partners.
That's super. Thank you all.
Thank you. Our next question comes from the line of Brad Zelnick with Credit Suisse. Please proceed with your question.
Great. And I'll echo my congratulations on a great finish to the year. I wanted to ask a question, a competitive question of perhaps Aneel or Chano, specifically relative to Oracle because while we're all very familiar with your success replacing legacy HR systems, We more recently picked up a couple of significant Oracle HCM cloud displacements, which stood out to us just because this is their current generation product. Can you give us a sense of how prevalent these conversions are and what might be in common when you come across them?
I'm not going to comment on how prevalent they are. I would just say that as it relates to all of our legacy competitors, they were slow to move to the cloud. They have not had the success on the deployment side. They might have done a good job on some of the sales opportunities, but the deployment side hasn't worked out. And so those accounts come back to market.
And that's happened with Oracle accounts. It's happened with SAP accounts. And what we hang our hat on is a great experience for our customers, first in the deployment and then once they're in deployment, in their production phase. And that is how customers measure the success of these projects. It's not about what they buy, it's what they get live and what they get value from, and that's going to continue to be the case.
Thanks so much. And if I can follow-up with one for Robin. I just wanted to check on the variability from your preliminary view of 14% non GAAP op margin in 'twenty one to now 14.5%. What areas in the business gave you the flexibility? Can you speak to the levels of investment into Scout or sales and marketing?
How should we think about that? Thanks.
Yes. So our raise in the margin guide is really the top line over performance in the business in Q4 and running that through the year and the raise in the guidance that we had for sub revenue. But we do expect to continue to get efficiencies across all areas of the business. But one of the things you're going to see this year and going forward, which is different, is given our scale, we do expect to start getting efficiencies
out of R and D in FY
'twenty one and beyond, even as we
Thank you. Our next question
Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs. Please proceed with your question. Ms. Bellini, can you check to see if your line is on mute?
Our next question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your
This is Josh Baer on for Keith. There have been a couple of large acquisitions in the HCM HCM space recently, and I'm just wondering how you expect those changes in the market to impact the competitive environment for you in HR?
I think the 2 are probably Cornerstone and Saba. I don't really see any impact on us. We have displaced both of those learning products over time. I don't really see anything except upside for Workday on that one. As it relates to Cronos and Ultimate, time will tell.
I have a lot of respect for Aaron, a lot of respect for the Ultimate team. I think bringing together 2 companies of that scale and that and different cultures is not an easy thing to do. But again, Aaron is a proven excellent CEO. The ultimate team was strong. So time will tell.
It's definitely not a negative. Could there be some disruption that gives Workday some benefits? Yes, but we're not going to count on that.
Great. That's helpful. And I'm just wondering, do you anticipate any disruption from canceling your
we can virtually and at the appropriate time we'll get the people together in person. There will be in person meetings across the globe. It just will not involve travel and that what we want to do is minimize while we're in this kind of uncertainty, minimize plane travel and I'd say international plane travel. But you'll see clusters of folks getting together in all parts of the U. S.
As we do this virtually. I don't know, Sean, if you want to add anything.
No, nothing to add. We're really excited about the virtual experience that we are creating for our colleagues across the world and as well in some of the EMEA offices, they will be getting together. We're pretty positive we can deliver most of the content enablement and the strategy we have to through the period to a mode that we are creating.
I actually think it's is no silver lining in a virus that's affecting so many lives, but it's going to cause us to learn how to do things on a virtual basis that, frankly, we haven't thought about before. And I think that will be something we'll learn and use in the future.
That's really interesting. Are there any costs that are shifting around associated with that? Or is it not big enough to show up in a meaningful way?
Not really.
Got it. Thank you very much.
Thank you. Our next question comes from the line of Ari Tirjanian with Cleveland Research Company. Please proceed with your question.
Hi, all. Thanks for taking the question. Just hoping wondering if you could give a little bit more color on international performance this quarter, any specific geos of outperformance? And then, just which areas you're most excited about for FY 'twenty one? Thank you.
Yes. Thanks for your question. International remains a very big focus for us. We continue to see healthy subscription growth out of the international markets. I mean, we saw great growth in terms of net new in Q4.
In terms of the areas mainly to highlight, I would say, our DACH, which are Germany, Austria and Switzerland markets as well as some of the continental markets did great performance. Our ANZ region in the other side, Australia and New Zealand were some of the markets maybe I would like to highlight in Q4. But overall, we saw a healthy subscription net new ACV growth in Q4.
Any new areas to focus on for FY 2021?
From a geographical and onwards.
All right. Sounds great. Thanks so much.
Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.
Hi. This is Love Souda on Brent Thill. I wanted to ask maybe it was impressive to me that you saw Prism Analytics becoming part of the net adds. Maybe could you talk about what you saw specifically in terms of deal flow in that and what it represents for the future?
We saw 100 new accounts add Prism Analytics this past quarter, which is a really strong showing again for a relatively young new product area. I think as we bring out more specific solutions like people analytics and we go into finance analytics and spend analytics, I think it's going to be even more powerful. But the idea that you can plan, execute, analyze in one system and not have to worry about how data goes back and forth between the different systems and can do it in a real time basis, It's resonating. And as a result, people look at Prism as a really great extension to gain not just better transformation from the business process side, but better insight into their business.
And then one quick follow-up, if I may, on the Workday cloud platform. I was wondering if what the customer feedback has been and when will it become generally available for deployment?
The customer feedback has been very positive. As we get ready, I'd say stay tuned. You'll hear about our general availability fairly soon in the coming quarters. We are very focused on a set of repeatable use cases that we discovered in terms of working with our first wave of customers, and we're just making sure that the platform is really ready for prime time with those set of use cases. And so stay tuned.
You'll see it fairly shortly.
Great. Thank you.
Thank you. Our next question comes from the line of Matt Pfau with William Blair. Please proceed with your question.
Hey, guys. Thanks for getting me on. Just wanted to ask on the vertical strategy for financials. It seems like some of the efforts that you've put forth, especially in healthcare and financial services yielded some nice results in your fiscal Any plans or update on additional verticals that you plan to work on building out over fiscal 2021?
Hi, Matt. This is Chano speaking. As Anil mentioned, I mean, healthcare has been a vertical. We've now been working for the last 3 or 4 years highly successfully on the back of inventory management as a unique value proposition. And then clearly customers taking on to financials and HCN on top of.
Education and government is another vertical we've been quite for a long time now. And the latest to our financial services, whereas you say, we are some good success with customers like KeyBanc and some others on the back of our accounting center solution. And Anil also mentioned, professional business services is becoming another significant one that we're going to start tacking from a go to market perspective and a product perspective as soon as this year.
And just one follow-up, have those vertical efforts resulted in larger enterprises, whether being signed or in the pipeline in those specific verticals that you've put that effort into?
Yes, definitely. We are setting our vertical strategy, as I said, on the back of our unique value proposition that we have a good product and strategy for it and then we put our go to market efforts in terms of aligning towards our customers. And yes, you are right on saying that that is pursuing more larger customers more with financial solution offering onto those verticals and customers.
Our next question comes from the line of Karl Keirstead with Deutsche Bank.
Maybe 2 for Robin. Robin, just to start, the growth rate of deferred revs and the growth rate of your subscription revenue backlog have been relatively similar through the 1st three quarters of the fiscal year just ended. But in the Q4, Doctor grew by 18%, backlog by 23%. So the gap widened a little bit. I just love to ask you what might have happened in terms of invoicing duration or anything interesting around contract structure, maybe more back end loaded deals, something that might have caused that spread to widen a little bit?
Thank you.
Yes. Karl, there's no really one thing for us to point to. I mean, these metrics are going to vary with occasionally deferred revenue growth being above sub revenue and sometimes it being backlog, sometimes it being below. As you mentioned, it really does vary with invoicing and contractual terms and renewals. So don't read anything into the difference in those growth rates and you'll continue to see some disconnects in those going forward just based on contractual invoicing terms.
Yes. Okay, got it. And then my second one for you, Robin, is thank you for the beginning of fiscal year guidance around the seasonality and subscription revenue growth. When we look at it and try to compare it to the sub revs growth seasonality you experienced in the last couple of years, it's a little bit tricky given that you've had some acquisitions that might have distorted that. So do you mind just taking a moment and just maybe qualitatively reflecting on how seasonality might be changing in fiscal 'twenty one on the revenue growth line?
Thank you.
Yes. I think the one thing I would point out is we've got an interesting dynamic in Q1 when we look at sequential growth from Q4 to Q1 this year. And there's really two things behind that. First of all, Q4 linearity within the quarter was actually more pronounced than what we've seen in FY 2020. And so that's going to increase the step up in revenue from Q4 to Q1.
And then layering on top of that is the fact that we are in a leap year. And so we get one extra day of revenue recognition in Q1 as well. And so that's changing the sequential dynamics from Q4 to Q1 and then also from Q1 to Q2. But that's really the only thing that I would point out as being different this year.
Yes, got it. Okay, thanks Robin.
Thank you. Our next question comes from the line of Mark Marcon with Baird. Please proceed with your question.
Good afternoon. Let me add my congratulations with regards to the strong end of the year. Obviously, this is occurring real time and it's very fluid. But I'm just wondering to what extent COVID-nineteen ended up being factored into the guidance. And there have been other periods of uncertainty that we've gone through together over the years.
Just wondering how you think that ends up playing out? I know it's obviously this is different, but how are you thinking about how it could end up impacting things? And then I've got a couple of vertical questions.
So Mark, we really approach guidance this year the same way that we have every single year, right? And so we think we've provided realistic view based on what we know today. We today to date have not seen an impact to our business so far. But as you mentioned, it's really early in this situation. We're going to continue to monitor, and we'll obviously update you as we go through the year.
Great. And then with regards to financials, sometimes you give us client counts and you've had some really nice wins. Can you talk a little bit about like KeyBanc who you ended up beating out, key reasons why they went with you? And I think there's a few other companies within the Fortune 500 that you ended up winning within financials over the recent few months. Just the progress that you're seeing there?
Without getting into the deal by deal basis, the 2 major competitors we see on everything are SAP and Oracle for Financials. The more cloud centric opportunities favor Workday and if there's a second one we see is Oracle. The more cloud, essentially, people are looking at it, SAP tends to fall away. So you can you'll have to talk account by account. As the cloud continues to mature in the finance marketplace, I think we'll see more of Oracle than we will of SAP.
Great. And any update on the number of clients on Financials now?
We did 90 in the quarter, which was our most adds ever in any given quarter. So we're really pleased with that result.
Terrific. Thank you.
Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs. Please proceed with your
Great. Thank you so much. I wanted to touch a little bit on the success that you guys have had with planning. You gave some stats in the quarter about how many customers you've added. I guess if you could share with us kind of if you were since the acquisition, if you could tell us kind of the number of customers, if you could kind of give that to us on a cumulative basis, if you have it.
So just as if you could give us a sense as you look to this year, how you think about the growth of this add on and the penetration you're seeing into your installed base, right? If you can you've given us some stats in the past about like payroll penetration into the installed base and learning and things like that. I'm just wondering if you could share with us kind of the momentum you're seeing there with the planning product. Thank you.
Yes. Heather, this is Tom. And we continue to see combination of customers that we're selling Planning First as well as customers that we're selling into the Workday installed base. I'd say that it's we're very pleased with the progress we've made, particularly with larger enterprise customers, both as they look at financial planning and for workforce planning applications as well. So 6 quarters into the acquisition, I think we're really pleased with the progress.
There continues to be significant opportunity in the Workday installed base in terms of selling planning into that base, as well as penetration both for large enterprise and middle enterprise customers.
And just if I may, just one quick follow-up. Any commentary on kind of are you typically seeing greenfield opportunities, legacy opportunities or is it head to head versus kind of newer companies such as Anaplan?
We see both. I think there are customers who are converting from legacy on premise solutions and they want a cloud solution for planning. And they are typically coming from an Oracle or an SAP solution. There are also customers who have used, we see spreadsheets in many parts of their enterprises. Even if they have a legacy planning solution, the model and business logic is in spreadsheets.
And we're a great solution to bring that planning process into the cloud. So, it's typically Anaplan or Oracle for our cloud competes
and we
do exceptionally well in those competes.
Thank you.
If I could just add 2 things. In my prepared remarks, I mentioned 350 new planning customers for the Q4. That was really an outstanding performance. And the growth rate for the Business Planning Cloud is significantly faster than the rest of Workday.
Thank you. Our final question comes from the line of Alex Zukin with RBC Capital. Please proceed with your question.
Hey, guys. Thanks for squeezing me in. I guess, Aneel, when you think about the durability of the growth rate in your HCM business and you think about the tailwinds there, maybe even beyond next year, but over a longer time duration, which is going to add more of a growth tailwind in your mind, going down market and seeing kind of continued success there, selling into the base or new additional functionality that we haven't seen yet?
I would definitely say the biggest opportunity, least in my mind, is bringing the medium enterprise solution to the rest of the world. We've been doing that in the past 12 months where we brought the medium enterprise offering, which is a different pricing and packaging and lower cost services. We've taken it to places like the U. K. A lot of the rest of the world is a medium enterprise marketplace, so that's a big opportunity.
And it's largely a greenfield opportunity. I combine that with we're still largely underpenetrated in almost all parts of the world outside the U. S. Where the market was first hot for cloud. So we still have a tremendous amount of opportunity.
There's always the ability to sell back into the base. But when but landing the new accounts is what drives the longer term growth and durability of the growth because you need to first land the account before you can sell back into them. And so we're still very focused on that. Charles, do you want to add anything?
No. I think the only thing obviously is kind of the financial plus opportunities that I think the combination with those just to recap medium enterprise totally with you, Anil. Selling into the base, we had a very strong record quarter this past Q4, Alex, with over 50 percent growth in add on ACV. That was really good. And clearly, me personally, I'm very excited about the rest of the world opportunity joining with
EMEA. That's super helpful. And maybe just as a final one. If we think about the sales tweaks and changes that you make every year around this time, what's the best way to characterize kind of the go forward kind of the or the focus areas that you're looking at for 2020 and kind of giving us a bit of a help on the magnitude of the changes made this year versus previous?
Alex, it's a great question. I think we try to always keep an evolution more than a revolution on our go to market and it's supporting our growth opportunities. So if you characterize those changes, clearly, one is the verticalization that we talk on our Analyst Day and we've been talking on this call and that is more to support our financials plus opportunity. I think with strengthening our motion into the selling of the base during last year, I just commented on some of the results in Q4, and you're going to see that going on and happening. And clearly, last but not least, Anil is saying, and in the U.
S. So we've been taking go to market decisions to support some of these growth opportunities and motions. And as I said, it's been more an evolution with Sun is strengthening onto the talent that we have in some of the markets we need to do so.
Perfect. Thank you, guys. Congratulations.
Thank you. Ladies and gentlemen, thank you for your participation on today's conference. This does conclude Workday's 4th quarter fiscal year 2020 earnings conference call. Thank you again for joining us. You may disconnect your lines and have a wonderful day.