Welcome to Workday's First Quarter, Full Year 2026 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. I will now hand it over to Justin Furby, Vice President of Investor Relations. Thank you, Operator. Welcome to Workday's first quarter fiscal 2026 earnings conference call. On the call, we have Carl Eschenbach, our CEO; Zane Rowe, our CFO; and Gerrit Kazmaier, our President, Product and Technology. 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 in the documents we file with the Securities and Exchange Commission, including our fiscal 2025 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, the transcript of this call and our quarterly investor presentation will be posted on our investor relations website following this call. Our second quarter fiscal 2026 quiet period begins on July 15th, 2025. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2025. With that, I'll hand the call over to Carl. Thank you, Justin, and hello to everyone joining us on our call today. I'm pleased to report that Workday delivered a solid first quarter. We drove 13% subscription revenue growth and a non-GAAP operating margin of 30%. This performance was fueled by strong customer adoption across key verticals, geographies, and customer segments. We all know the economic environment remains a bit uncertain, but I'm incredibly proud of how our teams are staying focused on our customer success, and that is driving our results. Workday's value proposition remains highly relevant in today's market. The CEOs I meet have three key priorities. They want to drive efficiencies. They need to be agile and responsive to market shifts, and they want to unlock growth with innovation. From our perspective, they're turning to Workday for all three. We help manage and optimize their most critical assets. That is their people and money on one platform with AI at the core. This unified approach reduces total cost of ownership and helps them move faster with greater precision. Our customers trust that Workday's AI is powered by the largest and cleanest finance and HR data set. Our AI is fueled by more than 70 million users under contract and 1 trillion transactions processed on the platform last year, which gives us a deep understanding of how people work. This enables us to deliver highly differentiated value to our customers. I'll speak more about that in a moment. First, let's turn to our customer highlights for the quarter. In Q1, we established new HCM relationships with United Airlines, Pilot Travel Centers, and Mutual of Omaha Insurance Company. It was another strong quarter of expansions with customers such as FedEx, CVS Health, ASDA Stores, and Chipotle. Our investments in financials continue to pay off, with solid growth in both net new ACV and customers. More than 30% of our net new wins this quarter were once again full sweep. In our focused industries of SLED and healthcare, it was more than 50%. We also had some strategic financials go live this quarter, including BJ's Restaurants, Essentia Health, and Genesis Cloud Services. Our AI innovation continues to gain traction. New ACV across our AI products more than doubled year over year in Q1. Roughly 25% of our customer expansions in the quarter included one or more of these products, such as Recruiting Agent, Talent Mobility Agent, Evisort, and Extend Pro. Fantastic companies including Visa, LabCorp, and Aeon all selected our AI products. I'm also excited about the momentum we're building with the Office of the CIO. We're driving increasing demand for Extend Pro, which enables our customers to build AI applications on top of our platform. This continues to be one of our fastest-growing products, and it's amplifying innovation for our customers. While Workday serves more than 60% of the Fortune 500, 75% of our customers have fewer than 3,500 employees. We see a significant growth opportunity in the emerging and medium enterprise markets. In Q1, we launched Workday Go specifically for these companies. It gets them up and running on our enterprise-grade platform fast. We're talking implementations in as little as 30-60 days with pre-configured deployments. It's not just the software. They get the full support of our partner ecosystem in a clear, fixed pricing model. It really moved the needle for us in Q1, helping our emerging and medium enterprise teams deliver a strong quarter. Now, let's talk about industries. I'm excited to share that we now have five industries exceeding $1 billion in annual recurring revenue. Manufacturing and tech and media, two industries that had a solid quarter in Q1, recently reached this milestone. They joined our three other billion-dollar industries: financial services, retail and hospitality, and professional and business services. Like I've mentioned many times, this shows the strength and diversity of our business. Our focus on the federal sector continues to pay off. We are building a foundation for long-term growth in this market. This was clear in the huge success of our third annual federal forum. Attendance was up 65% at this year's event, and we had some great conversations with senior government leaders about the critical need for transforming the federal workforce, especially in the key areas such as AI, security, and skills. We're also very proud of our leadership in higher education. We were just named a leader in the first-ever Gartner Magic Quadrant for Higher Education Student Information Systems Software as a Service. In Q1, we were thrilled to welcome Centre College, Bow Valley College, and Gannon University as new customers. We are seeing great success with Workday Student go-lives, including the University of Arkansas system, which is now fully live at 14 institutions across the entire state. In an environment where everyone is trying to do more with less, Workday gives our customers the ultimate advantage. AI is built directly into our platform and is always on. Greater than 60% of our customers are already leveraging Workday Illuminate AI. We are excited by the adoption we are seeing, but we are even more excited about the strong ROI our customers are getting from our AI solutions. Look at Western Union, a longtime Evisort customer. Using Evisort's AI-powered contract management solution, which was made available through Workday in Q1, they were able to process contracts 65% faster while reducing associated outside legal spend by almost 70%. Just incredible results. The Evisort team had a fantastic Q1, and they're just getting started. Customers are clearly willing to pay for these types of results, which opens up significant new AI monetization opportunities to help fuel our long-term growth and set us apart from the competition. When we look at our roadmap, our focus is on delivering innovations that drive meaningful ROI for our customers. In fact, our agents must meet specific TCO, or total cost of ownership, requirements with our early adopter customers before we even bring them to market. Just this week, we announced a wave of new AI agents that harness the power of our unmatched data set to help amplify talent potential, reduce costs, accelerate decision-making, and mitigate risk. To keep us at the forefront of AI innovation, we're really excited to welcome Peter Bailis as our new Chief Technology Officer. Peter will lead our AI and ML initiatives, driving our vision forward. With his background at Stanford and Google Cloud, he has a proven track record of AI innovation at scale, and I could not be more excited he chose Workday. Partners continue to be a critical driver of our success, extending the power of our platform, fueling pipeline growth, and bringing new innovations to our customers. In Q1, we once again saw great contributions from our partners, with more than 20% of our net new ACV in the quarter coming from partner-sourced pipeline. Partners are also critical in helping us expand into new markets and meet the diverse needs of our global customers. In Q1, we signed our first volume managed service provider partnership with the Mutual Group to serve the mutual insurance industry. Additionally, our Global Payroll Connect program now supports payroll delivery in 187 countries and territories, thanks to 29 partners building integrations. Through our partnership with Strada, our customers can manage up to 60 global payrolls all under a single Workday contract. On the innovation front, we're seeing strong momentum in our built-on Workday program. In Q1 alone, we added 25 new partner apps to the Workday marketplace. Our community of customer and partner developers has nearly doubled over the past year, a testament to the power of building on the Workday platform. In just two weeks, we'll host thousands of them at our developer conference, DevCon, in Las Vegas. Our investments in our global strategy are helping us better serve our existing customers, attract new ones, and make our operations even more efficient. In Q1, we saw solid growth across EMEA, Asia-Pacific, and Japan. In EMEA, we had notable net new wins with Opella Healthcare and global manufacturer Georg Fischer, and we expanded with semiconductor equipment manufacturer ASML and insurance provider Aviva. We also had a major financials expansion with Decathlon as this relationship continues to grow. As part of our ongoing investment in the U.K., we went live on the AWS U.K. public cloud, making it possible for our customers to access Workday solutions locally. We also announced a new location for our EMEA headquarters in Dublin, which will bring our local workforce of more than 2,000 employees together. APAC had a strong start too, with wins at Swinburne University of Technology, the University of Melbourne in Australia, Collins Foods, and PPL Pharma. Finally, Japan kicked off the year with new wins at Mitsubishi Motors, TEPCO, and Rigaku. In Q1, we saw the diversity and durability of our business firsthand, with multiple levers driving long-term growth. Looking ahead, we're staying close to our customers as they navigate the macro environment. No company is immune to these challenges, and we are watching it across particular markets such as SLED and our international business. That said, we've got a compelling value proposition, and our teams are focused on controlling what we can, and that is delivering innovation and strong ROI for our customers. The future of work has evolved. During the pandemic, it was about where people worked and how they collaborated. Today, it's about how humans and AI agents work together and how companies manage the human and digital workforce as one. I believe no company is better positioned than Workday to lead this shift. With our expertise, our unparalleled data, and a platform built with AI at its core, we're ready to shape the future of work. I want to give a heartfelt thank you to our customers for their continued trust in Workday, to our incredible partners, and especially to our workmates around the world. Your hard work and commitment gave us such a solid start to the year, and I couldn't be more grateful. With that, I'll turn it over to Zane. Thanks, Carl, and thank you to everyone for joining today's call. Our solid Q1 results highlight the ongoing progress across our strategic growth areas and the continued efficiencies we're driving throughout the business. Turning to results, subscription revenue in the first quarter was $2.059 billion, up 13%, or 15% when adjusted for the leap year compare. Professional services revenue was $181 million, resulting in total revenue of $2.24 billion, growth of 13%. From a geographic perspective, U.S. revenue in Q1 totaled $1.68 billion, up 13%, and international revenue totaled $559 million, also up 13%. The 12-month subscription revenue backlog, or cRPO, was $7.63 billion at the end of Q1, increasing 15.6%. This includes approximately half a point of growth from subscription contracts related to implementation and testing environments, which we refer to as tenants. While these short-term contracts have and continue to be part of our subscription revenue, we are now including them in cRPO as they have grown with the business. Total subscription revenue backlog at the end of the quarter was $24.62 billion, up 19%, and gross revenue retention rates remained a strong 98%. Non-GAAP operating income for the quarter was $677 million, representing a non-GAAP operating margin of 30.2%. The outperformance versus guidance was the result of moderated headcount growth, along with revenue outperformance. GAAP operating income in the quarter of $39 million was impacted by a $166 million charge related to the restructuring which occurred earlier in the year. Q1 operating cash flow was $457 million, growth of 23%. We repurchased $293 million of our shares during the quarter and had $509 million in remaining authorization as of April 30. In addition, our board has approved a new $1 billion open-ended buyback authorization. We ended the quarter with $8 billion in cash and marketable securities. Our current headcount, which incorporates the previously announced restructuring, stands at approximately 19,300. Now turning to guidance, our Q1 subscription revenue performance and progress across key initiatives Carl highlighted earlier positions us well for the year, and we're reiterating our subscription revenue guidance of $8.8 billion. Our outlook benefits from our diverse set of opportunities and the important role our platform plays across our customer base and partner ecosystem. While there's heightened macro uncertainty, particularly across certain markets and verticals, we haven't seen this meaningfully impact our business and our growth prospects. Though it's early in the year and the environment remains fluid, we remain focused on execution and our strategic initiatives. We anticipate Q2 FY 2026 subscription revenue to be approximately $2.16 billion, growth of 13%. We continue to expect a slightly faster pace of subscription revenue growth in the second half of the year, particularly in Q4, driven in part by revenue from product deliverables associated with previously closed deals. We expect cRPO to increase between 15% and 16% in Q2. This includes approximately a point of growth from the previously discussed tenant contracts. We expect a similar quarterly impact of approximately one percentage point to cRPO growth for the remainder of the year. We continue to expect FY 2026 professional services revenue of approximately $700 million. For Q2, we expect professional services revenue of $180 million. We expect FY 2026 non-GAAP operating margin of approximately 28.5%. This outlook accounts for Q1 outperformance along with continued investments across key growth areas, including AI, our partner ecosystem, and targeted international markets. In addition, it includes our ongoing efforts on growing efficiently. We continue to position the business to drive long-term growth and margin expansion. For Q2, we expect non-GAAP operating margin of 28%. We expect GAAP operating margins to be approximately 20 and 21 points lower than our Q2 and full year FY 2026 non-GAAP operating margins, respectively. The FY 2026 non-GAAP tax rate is expected to be 19%. We are maintaining our FY 2026 operating cash flow outlook of $2.75 billion, and we continue to expect FY 2026 capital expenditures of approximately $250 million. Entering Q2, our teams remain dedicated to delivering value to our customers, driving innovation, and strategically investing in our key growth areas to deliver on our medium and long-term objectives. With that, I'll turn it back over to the operator to begin Q&A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate alignment is in for the question and answer session. If you'd like to remove your question, please press star two. Please hold while we pull for questions. Our first question comes from the line of Kirk Materne with Evercore ISI. Please proceed with your question. Yeah, thanks very much, and congrats on the solid start to the year, guys. Carl, can you just talk a little bit about the environment out there? Obviously, you guys are keeping your guidance. You mentioned you're keeping an eye on EMEA and the sled markets. International is up sort of in line with the U.S. this quarter. I think people are going to have a question of, "I realize there's some mechanical reasons why revenue accelerates in the back half of the year, but why do you guys—what are you seeing in either your pipeline or your backlog that gives you the confidence to sort of reiterate the full year guide, given what seems to be a more choppy macro versus three months ago?" Thanks. Hi, Kirk. Thanks for the question. Before I dive in and answer that, I just want to take a quick minute to thank all my workmates, our partners, and customers for a really solid start to FY 2026. As you can see by our results, we're really seeing the value of the Workday platform come to life. In our new wins and expansions, we continue to accelerate AI innovation and adoption with our customers, and the growth of our partner ecosystem was once again quite strong. Specific to your question, let's just talk about the macro to start. We have continuously said that the Workday value proposition resonates, whether we're in times of a headwind or a tailwind, because of the strong ROI and TCO we bring our customers. Our customers are looking to continuously consolidate on top of the Workday platform, and at the same time as we go through this AI revolution, they're investing in us because they know a path to leveraging AI is through the Workday platform. We did say there's a couple of industries we're keeping our eye on, specifically SLED, as well as we're keeping our eye on the international business. Let me talk about SLED first. As you know, higher ed is always one of our strong industry verticals, and once again, that was the case in Q1. At the same time, we also know there is some headwind in that industry based on some of the grants and some of the funding they get from the federal government. It is just something we're keeping our eye on. It did not necessarily have an impact on us in Q1, and there could be some adjacent impact also on healthcare if a healthcare system is part of a bigger university. On international, as I indicated in my prepared remarks, we had a really solid quarter once again internationally. We saw solid results out of EMEA, and we saw solid results out of APAC, but it is something we know that could get impacted depending on what is going on in the macro environment. That is why we just want to give some color as to how we are thinking about the rest of the year. What gives us conviction? It is more of the same, if you will, Kirk. We continue to see progress across many of our key initiatives and investment areas, whether it is AI, where we talk about 100% year-over-year growth in AI, 25% of our sales back to our customer base, including an AI solution, or whether it is how we are pushing financials deeper into the market, and that includes full suite lands, which once again represented more than 30% of our new wins were full suite. In our really key industries, we are seeing more than 50% full suite lands like healthcare and higher education. We continue to get benefit from our partners. This quarter, our partners grew their impact on our business by more than 20%. Think about that. Two years ago, if we said that comment, it would be 0%. We continue to focus on our international operation because of the big opportunity there. Also, we're really excited about the early momentum since we've doubled down our efforts around the U.S. federal government. All of that comes together to help us feel confident to reiterate the guide of 8.8% for the rest of the year. Hey, Kirk, this is Zane. I'll just add, obviously, we came in ahead of our guide in Q1, so we feel really good about the starting point here for the year. I'll point out we will benefit from some FX tailwind. If you recall, last quarter, we talked about $20 million of headwind. We've now got about $10 million of tailwind as we look out for the remainder of the year. Again, as you pointed out, tied to product deliverables, and the team are doing a great job in those areas, whether it's wellness or our DIA contract, we expect to see increased year-over-year subscription revenue growth improvements by the quarter heading into the fourth quarter. We feel good about the setup here for the year, notwithstanding the fact, obviously, it is an uncertain macro. Okay. Thanks, guys. I appreciate the answer. Thanks, Kirk. Thank you. Our next question comes from the line of Brad Sills with Bank of America. Please proceed with your question. Oh, great. Thank you so much. I wanted to ask a question on Workday Go. It sounds like an exciting opportunity here. What could this do to unlock the medium enterprise given these shorter implementation cycles? Is there a certain segment that you're targeting, Workday Go, more specifically within medium enterprise, that we should think about? Yeah. Hi, Brad. Hope you're well. Thanks for the question. As you know, we've continuously talked about the importance of the medium enterprise or what we also describe as the emerging enterprise. Last quarter, we have doubled down our efforts, and we've now launched our Workday Go as our campaign to focus on these new markets and emerging markets for us. It brings together better pricing and packaging. It brings together more services both by us and our partners, allowing us to deploy faster. It also brings to market all of the enterprise strength we have with the Workday platform, but taking it down market into this very big opportunity. It's something we've been investing in for quite some time, both on the go-to-market side as we carved out a sales force to focus on it, and we're doing the same as we focus on how to make the product much more deliverable for that market segment, both through pricing, packaging, and the acceleration of deployment. Deployments now between us and our partners can be done in as little as 60 days, which is a significant change from what we've seen in the past. This is all being encompassed under the Workday Go initiative that we launched last quarter. Wonderful. Thanks, Carl. One more, if I may, please, just on the macro. Is there any difference in kind of tone or outlook with the office of CFO versus HR? Are you seeing any differences there with regard to kind of your comments on the macro? No, I don't think so, Brad. I wouldn't delineate between the two. I think this is an environment we've been dealing with. Last year, I think I called it, "This is the new norm." I think that played out exactly the same in Q1 as it has in the past. There's no doubt every now and again we have to double-click on things for our customers as they navigate the choppiness in the market, but I don't think there's any difference between the buying centers we're selling into. Wonderful. Thank you, Carl. Thank you. Our next question comes from the line of Mark Murphy with JP Morgan. Please proceed with your question. Yeah, thank you so much. First off, Carl, wondering if you can comment on the adoption of Extend and Extend Pro. Are you seeing signs of customers building deeper customizations there, or are you seeing any ecosystem revenue turning on from ISVs and partners, or the kind of ability to go after adjacencies without having to do that direct product investment? Just love to hear about how you're feeling about that Extend opportunity. Yeah, thanks for the question, Mark. We are absolutely really excited about what's happening around Extend and Extend Pro. For the last couple of years, we've been talking about opening up the aperture of the Workday platform to allow our customers and partners to innovate on top of our platform, and that is paying off. Last quarter, our Extend Pro SKU more than doubled year-over-year, and we're seeing more and more both customers and partners leverage that to drive innovation and drive AI applications on the Workday platform. Where that shows up is it shows up in our Workday marketplace where we had a nice extension of our partners bringing more and more applications into it to sell back to our customers. We are absolutely excited about the platform approach that we have here at Workday. We think it's very significant. If you think about it, it's not just Extend and Extend Pro. It's a Workday Wellness platform where we can now partner closer with our benefits partners. It's things like our Global Payroll Connect. We're now, through a number of different partners, able to integrate into the Workday platform a global payroll platform that can service up to 180 countries around the world. There are many ways we're thinking about how we can leverage a platform and how we can extend innovation both to our customers and partners, and at the same time, we're actually monetizing it too. That's great to hear. Then, Zane, just as a quick follow-up, you mentioned some pretty impressive new logos in HCM and I think elsewhere. Is there any approximation for the growth rates in HCM versus FINS+ or the spread between the two? I'm just wondering if you see the FINS dedicated sales specialists maybe ramping the bookings in a way where structurally where you think the FINS would be outgrowing HCM the next couple of years or not? Yeah, I would just say, look, we're focused candidly on full suite as a great sales motion and one of our many strengths. Both the FINS and HCM have both performed really well. In particular, this quarter, we had, as you point out, a number of FINS and FINS+ opportunities and just a great sales motion there. Yeah. And Mark, I'll double-click on the FINS. As you know, we built out a sales force over the last couple of years to focus on selling FINS, and we saw this quarter really good success in our FINS ins sales motion, both in number of new units, both in new ACV growth year-over-year, and most importantly, to Zane's point, what we're seeing is that pull-through in full suite wins, which was 30% of our new wins and in our bigger markets, greater than 50% in new sales were full suite, which include both HCM and financials. We are definitely seeing it pay off. Yeah. Congrats on that and also the amazing margin performance. Thanks, Mark. Thanks, Mark. Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question. Good afternoon. Zane, when you went through the reduction in force, I think you indicated that you hope to hire all those employees back. One of the questions we're getting is, given the environment we're in and some of the uncertainty, is that still the plan? You had really good margin upside. How do you think about cost control in this environment? Sure, Brent. I mean, as always, we believe we can continue to scale the business, and we're consistently looking for efficiencies in the business. All that being said, as Carl mentioned on the last call, I believe our intention is to grow back. We're very thoughtful in those hires, and Carl mentioned a couple of key hires that we've made over the last number of weeks and continue to focus on key growth areas in the business, in particular in AI and within our P&T organization. We continue to focus on organic growth and continue to build out the workforce. We feel good about that. All that being said, we're very prudent about where we're hiring, how we're hiring, and in the areas we're growing. Yeah. I'd just add, Brent, the one thing we are doing is we continue to invest in the business. We see a tremendous opportunity around AI. We're investing heavily in our product and technology organization, and we also continue to invest heavily on the go-to-market side so we get better quota-carrying capacity and coverage around the world. Our investments aren't slowing down at all. Okay. Just a quick follow-up, Carl. Last quarter, you mentioned a number of really impressive wins in Europe, and I know that's been an area that you're really focused on improving your efficiency. Can you give us an update on what you saw in Europe, what the pipeline looks like, and how you're thinking about that? Thanks. Yeah. Sure, Brent. If you recall, last quarter, we talked about having a really solid growth quarter in Europe. To be honest, most of last year we had a tougher year internationally. We saw a nice rebound, and we came right back at the beginning of this year with a solid quarter in Q2, or I'm sorry, in Q1 here. That was both in EMEA as well as in APAC. We expect that to continue throughout the year. At the same time, I did call out it's one of the areas we're going to keep a close eye on because we do understand there could be more of a macro headwind in those markets should things change materially as people start to think about whether they're going to invest in U.S.-centric or U.S.-headquartered technology companies. Right now, we're really pleased with the performance. I will tell you, our competitive win rates are very strong. I always say when customers finally decide to move forward with a big project around either HR or finance or a full platform, the win rates we have are incredibly strong. We're really pleased with what's going on, and we're going to keep forging ahead because of the incredible opportunity we see both in EMEA and APAC, and also, I should say, Japan as well. Great. Thanks. Thank you. Our next question comes from the line of Michael Turrin with Wells Fargo. Please proceed with your question. Hey, great. Thanks very much. Appreciate you taking the question. I realize there's more focus on the cRPO metric, and results there came in fairly strong for the quarter and for the Q2 guide. The billings growth we're looking at looks maybe a touch lighter in terms of Q1. I realize it tends to step down seasonally, but were there any impacts from some of the different deal types you've mentioned we should be mindful of? Maybe just walk us through the delta we're seeing between backlog and billings and how that could progress throughout the rest of the year. Yeah, Michael, the key there is, first off, it was in line with our expectation. As you pointed out, we actually feel very good about cRPO and cRPO growth. As you also mentioned, billings itself does vary on a quarter-to-quarter basis, and those growth rates will vary based on things like payment terms and invoices and things like that. If you look over the last number of quarters, many of the industries that we've been growing into are those where they either have longer deployment times or otherwise we allow more flexible payments like education and a lot of the growth areas that we've seen in the business. For that reason, you tend to see a little bit of a drag as it relates to the growth in billings or unearned revenue. We feel good about it. I mean, it's in line with what our expectations were. It's in line with our OCF guide for the full year. We're very comfortable with the growth that we're seeing in those industries and in those businesses. Just as a follow-up, if I may, Zane, you mentioned there's a new buyback for an additional $1 billion. Can you just walk through how you're thinking about capital allocation and a more fluid backdrop? It sounds to us like you're seeing good success with the hired score recruiting agent capabilities. Just how you're thinking about use of capital in the current environment. Sure. First and foremost is organic growth and the investments that Carl and I have been talking about for a number of years now into the business. First and foremost, we're focused on that. We remain very inquisitive and I think have been quite successful in a number of the strategic inorganic growth opportunities that we've had. All that being said, we keep a high bar to that, and we consider that part of our broader strategy, but something that we're obviously closely following and keep an eye on. In addition to that, we're always looking at dilution and returning capital to shareholders through buybacks. That's how we think about it in that order. Pleased to obviously have the opportunity to add to the buyback amount. As you know, we've got just over $500 million left in the prior buyback, and we thought the timing was good to add to that this quarter. Thank you. Our next question comes from the line of Brad Zelnick with Deutsche Bank. Please proceed with your question. Great. Thank you so much for taking the question. With 25% of customer expansions involving AI and with more products coming down the pipe, what level can that number maybe get to? What are you hearing from customers about their agentic AI plans and how Workday fits into that? Thanks. Yeah, sure, Brad. Yeah, we're pleased with our ability to sell the existing AI solutions back into our customer base. The last three quarters, it's varied from 25%-30% of our sales back to base, including an AI SKU. Our customers clearly are seeing the value that we're bringing them. As you stated, just this week, we announced seven new agents that we'll be bringing to market over the next three to six months as well. What we're hearing from customers is, "Hey, we see Workday as an incredible platform that has a clean set of data, the context behind the data, and we also are in the middle of the workflow of everything they do in Workday." They are saying to us, "We see that value. We know we're going to bet on Workday as an investment in the future of our AI strategy." We're pretty excited about the future of AI, both in our agent strategy as well as our agent system of record to deliver AI to our customers. They're betting on us with their wallets, as you can see by our growth on a year-over-year basis. It was up 100%, and we continue to have the opportunity to sell back into our customer base. That's very helpful. Just a quick point of clarification, Zane, if I may, because I've gotten this question from a couple of folks. The half a point of contribution to cRPO from services and implementation that you mentioned, people are asking if that was already contemplated in the guide that you had given us and if that was in Q4. Any further clarification I think would be helpful. Thank you. Sure. No, it's a good call out. Again, these are the tenants, so they have not been included and were not included in the forecast, and they'll be included prospectively through the course of FY 2026. As I mentioned, it was about half a point in the first quarter and about a point for the second quarter. We'd expect it to continue on at that run rate beyond the second quarter for the remainder of the year. These are short-duration contracts. We're actually including it in part because it's going to become part of the sales motion. We believe that it can grow with the business, and we also would expect that duration to increase as the sales teams have opportunity to focus on it as well. Makes perfect sense. Thanks again. Thank you. Thank you. Our next question comes from the line of Karl Keirstead with UBS. Please proceed with your question. Okay. Great. I'll take it back to AI. Carl and Zane, congrats on the ACV performance around AI products. I just wanted to ask how you're advising investors to think about the timeframe when you'll see real monetization of these AI products, when it can be needle-moving. Is it later this year? Are you pointing people to next year? Some thoughts there would be helpful. Thanks. Yeah. Thanks for the question, Karl. Listen, I think we're already seeing strong adoption of our AI solutions by our customers. The growth is up 100% year-over-year. Our customers and our ability to sell back into our customer base is largely driven by AI because they see the value of the agents we have out there today, whether it's a recruiting agent, whether it's talent optimization, whether it's leveraging Extend Pro for them to build AI solutions on top of the Workday platform. Just last quarter, for the first time, we fully integrated Evisort into Workday, and we saw significant growth in that platform last quarter, more than 100% year-over-year. We think it's already moving the needle for us, and we're really pleased with the traction we have and the value our customers are seeing from our AI solutions. It's only going to get stronger as we bring to life our agent system of record and the additional seven agents that we announced earlier this week become readily available in the second half of the year. Okay. Thanks. And then maybe for Zane, if you don't mind, I can go back to the margins. Obviously, 30%, pretty outstanding. You're already at the fiscal 2027 target. At first blush, it's easy to conclude that maybe that out-year target has an upward bias. Maybe you could talk through how you and Carl are thinking about that growth margin trade-off in the next two years and your desire to let more of that revenue upside flow through the bottom line. Thank you. Yeah. Sure, Karl. I'd say, first off, it wasn't just a one-point isolated point out there, but I appreciate the call out on Q1. We continue to do a number of things to drive efficiencies in the business. All that being said, as we've highlighted earlier, part of the first quarter's success was around those investments that we're making in the business. We have outlined the guide for 28.5%. We have obviously thought about what that looks like through the course of the year as we continue to invest. We're well on track and on our way to the 30% that we've called out for our upcoming fiscal year. I don't want to get ahead of ourselves as far as our ability to achieve that because we see tremendous returns on investment in the business and are obviously working with an uncertain macro. All that being said, we remain focused on growth and margin expansion and expect to grow that beyond the 30% in future fiscal years as well. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Rishi Jaluria, RBC. Please proceed with your question. Oh, wonderful. Thanks so much for taking my questions. And nice to see kind of continued resilience in the business. I hate to keep sticking to the macro, but it's obviously an important inbound that we keep getting. Maybe two macro-focused questions. Number one, just to be clear, if we think about trends you saw within the quarter, would you characterize anything different you saw in the month of April, especially because that was post-Liberation Day and the institution of tariffs? Just anything to call out there and maybe what you've seen so far this month. Just another quick follow-up on the macro. Yeah. Thanks for the question, Rishi. I tried to capture all of this in my opening comments and then the earlier question. It didn't have any material impact on the quarter. As you can see, we had really solid results and a great start to the year. I don't think much changed as we exited the quarter or here early in this quarter. As I said, we are keeping an eye on certain industries where we do have a large footprint and we have a lot of momentum. That's around state, local government, and higher ed, as well as we're keeping an eye on the international market to see if there's any blowback from some of the things we're doing at the macro level here in the U.S. I wouldn't say any big change at this time. As we always say, no one's immune to the potential headwinds that we're facing. We're keeping our eye on them. Let's go back to the value proposition we have. It's extremely strong. People see the ROI in Workday. They see us as a consolidation platform, and they see us as a safe bet for their AI strategy going forward. Okay. No, thanks. That's really helpful. Maybe just to continue on that line of thinking, as an uncertain macro means customers are going to be a little bit more uncertain, you do have a pretty distinct and clear ROI story that you can tell. Especially now leveraging a lot of the agentic AI that you're building in, there's an opportunity to drive real cost savings and efficiency gains. Maybe how should we be thinking about your ability or how you are thinking about adapting to go to market, adapting your messaging kind of around those value propositions and maybe leaning into that more just given what we're seeing out there? Thank you. Yeah, Rishi. I'd say we continue to drive a strong narrative and a strong value proposition into our customers, both existing and net new, around an ROI and a total cost of ownership business benefit in the Workday platform. When you do have more headwinds, more people want to consolidate on a platform and a platform they trust. They do it with Workday. They also want to make sure that they're betting on the future of AI and they're betting on that future with Workday. Everywhere we look in every conversation with our customers, the ROI and total cost of ownership narrative comes up, and we have one of the strongest in the industry. I think that shows through in our results here in Q1 and shows the start to the year. I think that narrative will play out the rest of the year as well. Very helpful. Thank you. Thank you. Our next question comes from the line of Alex Zukin with Wolfe Research. Please proceed with your question. Hey, guys. Thanks for taking the question. I guess maybe just with respect to some of the AI and agentic launches, Carl, that you talked about already seeing some tailwinds in terms of adoption in your customer base. Maybe where are you guys most enthusiastic on that front? Where do you expect that to start to drive maybe not obviously the next two quarters, but over the next 12 months? Where do you maybe see the potential for materiality for growth acceleration? And do you think that it will be kind of more adopted maybe down market or up market in terms of your customer base? Yeah. Thanks for the question, Alex. I'm actually going to bring Gerrit, our new President in Product and Technology, into the mix here and have him talk about the excitement he has around our AI strategy. Then I'll talk about the growth vectors. Yeah. Sounds great. I am really excited. We are really excited because we are broaching AI in a unique way. We are not just driving automation over existing APIs, but really going to the core of the business process and innovating it at the core. We talked about how we're doing this in the recruiting space, which applies to small and large customers with our Recruiting Agent. Customers get a net 54% increase in recruiter capacity out of that, no matter the business size. We talked about our Contract Intelligence Agent, which basically speeds up the work of any legal or document-driven accounting work. We have customers like NetApp who analyzed more than 90,000 contracts this way and solved thousands of hours in outside legal spend. We honestly do not see any limited applicability in our price broadly. We introduced now with our 12 agents every key leverage point in the business process from hire to retire, as well as in procure to pay and order to cash. We are intentionally covering the full value lifecycle and bringing it broadly to market. Thanks, Gerrit. As far as growth, we see it across all of our market segments and industries. I do not think it is highly differentiated in one versus the other. We are seeing adoption across all of the segments of our AI solutions, and we expect that to continue as we bring more and more agents and our agent system of record to life over the next 6-12 months. Excellent. Maybe just as a follow-up, Zane, I guess from a capital allocation perspective, how are you looking or thinking about increasingly tuck-ins or strategic opportunities in the context of accelerating any of these AI or agentic solutions as they come up increasingly? Yeah, Alex, I mean, we remain highly inquisitive. Gerrit and team are always looking at opportunities to accelerate the technology to bring in additional talent. Of course, I'm always looking for more returns. I think it complements well. We remain very active in complementing the terrific team we have here at Workday with tuck-ins and other potential acquisitions. Nothing changed on the philosophy there. I think we've got a good track record, and we'll continue to keep a high bar, but look for some great opportunities. Excellent. Thank you, guys. Thank you. We have time for two more questions. Our next question comes from the line of Derrick Wood with TD Cowen. Please proceed with your question. Great. Thanks. Carl, I know that U.S. federal business is still small, but you have been making bigger investments into this vertical over the last year. In light of DOGE, can you just give us a sense of how the opportunities are shaping up? Is this something that may take a little longer to get off the ground, or are there perhaps some new transformation opportunities opening up? Just curious how you see the U.S. Fed opportunity trending both near and longer term. Yeah. Thanks, Derrick. You're right. Over the last couple of years, we have leaned much more aggressively into the federal market. We hired a new leader last year, and I think Lynn is having a tremendous impact on our go-to-market initiatives and driving our product and technology teams to deliver a highly secure platform for the federal government. I will tell you, we're very pleased with the level of conversations we're having and the depth of conversations we're having across all civilian agencies, DOD, and the intelligence community. They absolutely see the value of Workday to help them modernize an antiquated infrastructure that sits on premises today. We think that represents a really huge opportunity for us going forward. We should remember, GE does not mean government elimination. It means government efficiencies. In our conversations with them, they're saying they're willing to invest to drive efficiencies in the federal business and create a new employee experience for our U.S. federal employees. Great. Real quick for Zane, is the restructuring complete? And are there any other meaningful charges to be expected beyond Q1? Yes and no. So primarily complete. No additional charges beyond Q1. Great. Thank you. Thank you. And our last question comes from Scott Berg with Needham & Company. Please proceed with your question. Hi, everyone. Thanks for taking my questions. I guess just one for me. With the release of agents and more agents on the platform, are these technologies today I guess, how are these technologies impacting your sales cycles? One hand can see them slowing sales cycles down because it's something new to evaluate, trying to understand how it fits into a customer's business process. But on the other hand, it could speed up a sales process with the company's ability to get to the final efficiency output more quickly. How are you seeing these kind of impact those sales cycles today? Yeah. Let's start with selling back to our customer base. We actually see it accelerating our sales cycle. We now have the ability we've talked in the past about creating and closing opportunities within the same quarter or within a 90-day window. We're seeing that happen in large part because of the agents we have available and the value our customers see in them. It actually accelerates our ability to sell back into our customer base. On net new opportunities, I don't think it's elongating at all our sales cycles. Again, I just want to reiterate, our customers tell us they're betting on their AI strategy with Workday because they understand the value of our data, the context of the data, and the fact that the workflow is built directly into the Workday platform. AI is built in. It's not bolted on Workday, and they're all leaning into us for the future of their AI strategy. Thank you. We have reached the end of the question and answer session. Therefore, thank you for your participation. I'll now turn it over to Mr. Eschenbach for final comments. Thank you, operator. Again, thank you all for joining the call today. I'm pleased with our start to FY 2026 as we delivered another solid quarter. The diversity of our business continues to be a powerful asset driving balanced performance across new and existing customers, industries, and geographies. Our Illuminate strategy is strongly resonating as more customers recognize that investing in the Workday platform is a strategic investment in their AI future built on one of the largest and cleanest HR and financial data sets in our industry. With that, I'll turn the call back over to the operator to close out. Thank you. Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a great day.