Mike Haase - Investor Relations Aneel Bhusri - Chief Executive Officer Mark Peek - Chief Financial Officer.

Jennifer Lowe - Morgan Stanley Nicole Hayashi - Goldman Sachs Tyler Radke - Citi Raimo Lenschow - Barclays Brent Thill - UBS John Di Fucci - Jefferies Katherine Egbert - Piper Jaffray Jason Maynard - Wells Fargo Brian White - Cantor Fitzgerald Steve Ashley - Robert Baird Patrick Falfone - Evercore Ryan McDonald - Sterne Agee.

Welcome to Workday’s Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference. With that, I will hand it over to Mike Haase..

Welcome to Workday’s fourth quarter fiscal 2015 earnings conference call. On the call we have Aneel Bhusri, our CEO and Mark Peek, our CFO. Following their prepared remarks, we will take questions. Our press release was issued after close of market and is posted on our website where this call is being simultaneously webcast.

Statements made on this call include forward-looking statements such as those with the words will, believe, expect, anticipate and similar phrases that denote future expectation or intent regarding our financial results, applications, customer demand, operations and other matters. These statements are subject to risks, uncertainties and assumptions.

Please refer to the press release and the risk factors and documents filed with the Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q for information on risks and uncertainties that may cause actual results to differ materially from those set forth in such statements.

In addition, during today’s call we will discuss non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of Workday’s performance, should be considered in addition to, not as a substitute for or in isolation from GAAP results.

Our non-GAAP measures exclude the effect on our GAAP results of share-based compensation, employer payroll tax related items, on employee stock transactions, debt discount and issuance costs associated with our convertible notes and for fiscal 2015, also exclude amortization of acquisition-related intangible assets.

You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP results in our earnings press release and on the Investor Relations page of our website. Also, the Customer’s page of our website includes a list of selected customers and is updated at the beginning of each month.

The webcast replay of this call will be available for the next 45 days on our company website under the Investor Relations link. Our first quarter quiet period begins at the close of business April 16, 2015. Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2014.

For your planning purposes, we are hosting an Analyst Day on April 15 in San Francisco. I'll send more details including a registration link in the coming days. With that, let me hand it over to Aneel..

Thank you, Mike. I'll spend a couple of minutes on the few highlights for fiscal year 2015 and then share brief outlook of key initiatives for fiscal year 2016 before handing things over to Mark. Last year we continue to see strong cracks on a global level for human capital management.

We welcome to the Workday community Bank of America in the US, Unilever and Rolls Royce in Europe, Fast Retailing in Japan and most recently ING Bank in the Netherlands.

As more customers joined the Workday community, we continue to expand our presence globally and announce our growth plan for Germany and Japan, two very important markets where we see great opportunity. On the financial side we saw a growing momentum over the year and Q4 marked our biggest quarter yet for new financial management customers.

We are extremely pleased to see customer adoption continue to accelerate and we expect more the same in the year ahead. As I said before welcoming new customer is only the first step and the most important work is helping them give live and gaining value on Workday.

At the end of fiscal 2015, more than 70% of our customers are live; in Q4 alone we put 80 customers into production. We are making good progress on this front and there is more work to be done. I'd like to take this moment to thank our service partners who have been instrument to our customer success.

I am also proud to share that we were voted the number one company to work for on a local Bay Area Top Places list for the fourth consecutive year and also voted number one by our employees in the inaugural great rated survey conduced by A Great Place to Work.

Our happy employees are big reason we achieved a 97% customer satisfaction rating for our third consecutive year. As we continue to add talent to Workday, I am pleased to announce that Phil Wilmington has joined our team to lead our worldwide sales organization.

A good friend and PeopleSoft veteran with deep expertise in our core market of finance, HR and analytics. Phil worked closely with our regional leaders to continue to build our global sales team. Phil will report to our President and Chief Operating Officer, Mike Stankey.

On the product front we had another excellent year, driving innovation into our suite of applications. We delivered Workday recruiting last spring with Workday 22 and we since seeing strong demand for that application.

We made significant strides at financial management adding breadth and depth in the product as well as critical industry specific requirement.

Early in fiscal 2015, we announced the acquisition of the identified team to help us enhance our search capabilities and accelerate the delivery of productive analytics and machine learning throughout our suite of application.

With this team, we have created a new series of decision making applications called Workday inside Applications which we announced Workday Rising and which will begin to hit the market this year. Looking forward to 2016, we are very excited about our prospects for great year. Our ATM product continues to be the market leader.

Our financial applications are gaining momentum and our push into analytics is bringing real value to our customers. At the same, we will continue to expand our market coverage across the global and add industry capabilities beyond our current education and government initiative.

In summary, we feel very confident about our business, our team and the opportunities ahead. With that I'll now turn it over to Mark..

Thanks, Aneel. And good afternoon everyone. We finished an outstanding fiscal 2015 with a great fourth quarter generating record revenues, fillings and trailing 12 months operating cash flows. Before I go to details of the fourth quarter and take a look ahead to fiscal 2016, let's spend a little time looking back in our accomplishments this past year.

Fiscal 2015 was a year of tremendous success financially and across our operating metrics. Total revenues increased 68% to $788 million and subscription revenues increased 73% to $613 million. Total unearned revenue for the year increased 53% to $633 million and we generated operating cash flows of more than $100 million for the year.

Non -cancelable subscription backlog at yearend was $965 million so combined with unearned subscription revenue; we have $1,570 million of subscription revenue to be recognized in future period or more than 2.5x our fiscal year 2015 subscription revenue. The year over year increase in total unearned subscription revenue plus backlog was 53%.

We ended the year with nearly $1.9 billion of cash. Operating cash flows for the year were $102 million and free cash flows were a negative $2 million. So we are running a model that is now essentially breakeven including run rate CapEx spent. For the full year, we improved our non-GAAP operating margin to a negative 6.7% from 18.6% last year.

We are making a conscious decision to invest in product and market expansion and do not anticipate this pace of margin improvement in near future. We still believe we are a couple of years away from positive non-GAAP operating margin. However, we expect continued progress in cash flow generation in 2016 ahead of these operating margins.

We added nearly 1,150 net new employees during the year, a 44% increase from the beginning of the year and ended this year with about 3,750 people. We are pleased with our fiscal 2015 accomplishments. We want to thank our employees, our partners and our customers. Now I'll walk you through the financial details.

Total revenues for the fourth quarter were $226 million, an increase 59% from a year ago. The vast majority of our sales are currently in US dollar so there is a minimal impact from exchange rate.

In fiscal 2016, we are offering subscription contracts in six foreign currencies and expect a higher percentage of non US dollar bookings than in prior years. Subscription revenues for our cloud applications were $182 million, an increase of 64% from last year. The weighted average duration of new contracts signed in our fourth quarter was 3.9 years.

This was higher than our historical pattern driven by several large contracts with longer term. Our professional services revenue was $44 million, an increase of 43% compared to last year. Job one continues to be the successful deployment of our cloud applications whether by our ecosystem partners or us.

We mentioned last quarter that we are targeting a very aggressive goal of 75 customers going live during Q4. We exceeded this goal with 80 go live and over 70% of our customers are now live in production. Total unearned revenue at quarter end was $633 million, up 25% sequentially and 53% from a year ago.

Over 90% of our unearned revenue was from subscription fees. Short-term unearned revenue was $547 million, an increase of 24% sequentially and 64% from last year. Long-term unearned revenue was $86 million, increases of 28% sequentially and 6% from last year.

As compared to the third quarter, the cash billed on the first year as a percent of the annual contract value increased about 400 basis points, adding about $4 million to the derived billings calculation. Renewal rates continue to be strong but billings of renewals signed this quarter continue to be less than 10% of total billing.

Also wanted to provide you with color on our subscription backlog. As a reminder, most of our subscription agreements are for three years and are non cancelable. In a typical contract, the first year of a multiyear contract is billed and recorded on our balance sheet as unearned revenue.

The non-cancelable unbilled portion of the contract remains off our balance sheet as backlog until billed. As mentioned in my opening remarks, total non-cancelable subscription backlog as of the end of fiscal 2015 was $965 million, up 52% from $636 million at the end of fiscal 2014.

Total future subscription revenue which include total unearned subscription revenue plus subscription backlog was $1.570 billion, a 53% increase from approximately $1 billion at the end of fiscal 2014.

Looking ahead to the first quarter and full year of fiscal 2016, the strength of our business model and continued momentum provide very good revenue visibility and we expect a solid first quarter. Total revenues for the first quarter are expected to be within the range of $242 million to $245 million, a year-over-year growth of 51% to 53%.

Subscription revenues are anticipated to be within the range of $195 million to $197 million or growth of 58% to 60%. We also anticipate our first quarter derived billing or the sum of revenue plus the sequential change in total unearned revenue to be $255 million to $260 million.

I'll remind you that we face a very difficult comp for the first quarter as compared to last year when we had several significant large signings earlier in the year than expected. For the year, we anticipate total revenues of approximately $1.150 billion to $1.140 billion or growth of 42% to 45%.

Subscription revenues are anticipated to be within the range of $900 million and $920 million reflecting year-over-year growth of 47% to 50%. Derived billings for the year are anticipated to be within a range of $1,340 million and $1.360 billion with just under 60% of total billings expected in the second half of the year.

We ended the year with approximately 3,750 full time employees, an increase of nearly 1,150 for the year. During fiscal 2016, we expect to end the year with more than 5,000 employees; approximately two thirds of our total expenses are employee related. Let's spend a few minutes on operating expenses and our results of operations.

Unless otherwise noted, all references to our expenses and operating results are on a non-GAAP basis and are reconciled in the tables listed on our IR website. Our fourth quarter gross margin was 71.2%, up 165 basis points from the third quarter driven by our mix of subscription revenues growing faster than professional services.

The fourth quarter subscription gross margin increased slightly to 84.8% and includes the costs related to providing our cloud applications, compensation and related expenses for operation staff and data center networking and depreciation.

We expect subscription revenue will increase as a percentage of total revenue over time, but that our gross margin will likely fluctuate from quarter-to-quarter. The professional services gross margin decreased by 540 basis points sequentially.

As we guided last quarter, fourth quarter utilization rates and the professional services gross margin decrease from the third quarter driven by normal holiday season slowing. We anticipate professional services margins will be lower in fiscal 2016 as compared to fiscal 2015 as we invest in programs to ensure ongoing customer success.

Our fourth quarter operating loss was $8.6 million or negative 3.8% of revenue in line with our guidance. Product development expenses in the fourth quarter were $71 million, up 8% sequentially and up 55% from a year ago.

We continue to invest in our product development for solutions such as student and professional services automation as well as strengthening and extending our suite of HR, payroll, and in particular financial management applications. Sales and marketing expenses was $81 million, up 13% sequentially and up 45% from last year.

The sequential increase was driven largely from higher variable comp. General and administrative expense was $18 million, up sequentially and 29% year-over-year. The sequential increase is largely a result of increased headcount and seasonal corporate expenses.

The net loss per share was $0.06 on 186 million weighted average shares, given our net loss all outstanding stock options warrant and common stock equivalent are anti dilutive and not included in the loss per share calculation.

Taking into account our adjustments to GAAP operating income that Mike referenced at the start of the call, we currently expect our fiscal first quarter non-GAAP operating margin to be within the range of negative 4% to negative 6% of total revenue.

For the year, we plan to ramp up our investments and expect a modest improvement in our 2016 non-GAAP operating margin but continuing to operate at a loss for the year. The GAAP operating margin for the first quarter is expected to be approximately 20 to 22 percentage points lower than the non-GAAP margin.

For the full fiscal year 2016, the GAAP operating margin is expected to be approximately 23 to 25 percentage points lower than the non-GAAP margin. Long-term profitability and cash flow generation are important goals but we believe our focus today needs to be on market expansion, continued product innovation and growth.

Other expenses were $2.1 million, up slightly compared to the third quarter. For your modeling, our quarterly non-GAAP interest expense from our convertible notes is approximately $1.6 million.

From a GAAP perspective, the Q1 interest expense including $6.2 million of non-cash amortization reflecting the discount and issuance costs of the notes is approximately $7.8 million. The interest payments on the notes are made during our fiscal second and fourth quarter. Now on to our balance sheet and statement of cash flows.

Cash and short-term investments at quarter were nearly $1.9 billion, up $23 million sequentially. Operating cash flows were $48 million for the fourth quarter and $102 million for the year. Free cash flows for the quarter were $11 million and for the year a negative $2 million.

Capital expenditures during fiscal 2016 are anticipated to be approximately $150 million as we continue building our datacenters to support customer growth and expand our office space. As mentioned before, we acquired a leasehold interest in land in Pleasanton adjacent to our existing office space.

We are actively evaluating our alternatives for this site but potential development costs are not yet factored into our CapEx guidance. To summarize, we are very pleased with our solid fourth quarter performance and our accomplishments during fiscal 2015.

Looking ahead, we are investing for the long-term and see a very large opportunity in front of us. You should expect us to continue making significant investments in our product development and global market expansion to maximize our long term growth opportunities. With that let's begin the Q&A process..

[Operator Instructions] Your first question comes from the line of Jennifer Lowe with Morgan Stanley. .

Great, thank you. Mark or Aneel, I heard you mentioned on the call that up to 70% of your customer were live at this point.

So I was curious if you could give us more granular there and talk about your financial customer go live and to the extent that you have seen more customers go live, what is the feedback been like from those customers as they start to really use the product?.

So I think in the last earnings announcement we mentioned that over 50 of our customers are live on financials. And the feedback has been very positive.

I was actually on a call with the well known financial services company yesterday that I just gone live with HR and financials and very happy, they embrace some of the new mobile capabilities on expenses, very pleased with the analytics and reporting.

So I mean in generally specially given the strength of fourth quarter we are feeling very good about the financial products. .

Great and may be just a follow up on that. I think one other thing you talked about as you get more confident in these implementations being successful on the financial side, there is opportunity is to get more engagement from the partner channel potentially there.

And I was just curious if there is some about the engagement been like with partners and financials. .

Yes. We are seeing a significant uptick in interest from all the partners in financials. And in some cases newer partners are -- who are maybe late to the game in human capital management are now leading with building financials practices. So it is all heading in the right direction. .

Your next question comes from the line of Heather Bellini with Goldman Sachs..

Hi, thanks. This is Nicole Hayashi in for Heather. Thanks for taking my question.

Just had a question around your sales force with Phil as your new head of sales and he is focused on building out a global team, does this change how you are approaching the way you structure your sales force internationally? And could you remind us how the sales team is structured abroad compared to the US?.

No. It really doesn't change much.

Our President Mike Stankey had been running sales, worldwide sales as part of the broader set of responsibilities and that was increasingly taking up quite a bit of his time and so we decided to bring Phil on board to just focus on worldwide sales but the rest of the structure basically stays in place and Phil reports to Mike.

Phil is a seasoned veteran who is terrific with customers, terrific with -- will be terrific with our team and we are very excited to have him on board. And he and Mike have a great working relationship. .

Your next question comes from the line of Walter Pritchard with Citi.

Yes, hi. This is actually Tyler Radke calling in for Walter Pritchard. I just wanted to get a little more color on your billings guidance.

As I look at Q1 I know that you having tough comp but it just seems that there something else that maybe -- I just want to know if there something else that we should be thinking about? If I look at it on sequential basis, it is kind of implying decline 25% to 30%.

So I just wanted to know if there is anything we should be thinking about whether it is a FX or anything else we should be considering. .

Are you specifically talking about the first quarter or for the full year?.

Yes. For Q1.

For Q1. No, it is difficult comp if you recall, Q1 of last year actually grew substantially sequentially over Q4 and we attributed that to a number of contract that we hadn't anticipated would come in during the first quarter and that were -- they pulled forward and so very strong quarter as we laid out a year ago.

But no other than the fact that renewals is beginning to kick in but still is net new renewals in a quarter is still going to be well less than 10% of billings in every given quarter. So most of billings are coming from the existing deferred revenue, backlog rolling in and then new sales that we make. .

Okay.

Great, and then if I could ask one more and maybe I missed this but did you -- can you talk about how performance was on a geographic basis in the quarter and I saw in the press release you are talking about rolling into more markets in Europe and just kind of wondering your thoughts on how you approach then and what's the decision process looked like..

Well, I am pleased to say that performance was strong across all regions in the fourth quarter. We were lumpy during the rest of the year but the fourth quarter was strong in North America, it was strong in Europe and it was strong in Asia Pac. Asia Pac had a particularly strong fourth quarter. So really it was an across the board success.

The big new market that we announced earlier this year was Germany and we are beginning to ramp up of resource and we believe our products are ready for the German market. And as you know it is the biggest economy of Europe.

And we are winning of Fast Retailing in Japan; we are also beginning to gain traction in Japan which is -- which for us is our biggest economy in Asia. .

Your next question comes from the line of Raimo Lenschow with Barclays.

Thanks for taking my questions. Couple of quick ones if I may. First, Aneel, can you talk a little bit about what are you seeing in your customer conversation? You talk about the bigger guys, about their thinking of standardizing on Workday.

I remember back in the old PeopleSoft days you guys were kind of little bit to standard so you wouldn't get fired to kind of pick Workday while all the other guys were at little bit of risk and little extra work involved there.

Are you back at the same kind of level again that Workday is kind of the factor standard so if you have a conversation with the client that's kind of you are the one who is making the first call. .

Well, I like to think about so as the fact of standard, I like the way you characterize it. Our existing customers specific to your question are very happy. We run a 97% customer satisfaction.

I think what has evolved over time as we go through renewals as they get live on Workday, they are definitely coming back and looking at additional modules, whether it is expanding into payroll or recruiting or expenses, expenses in particular has been a hot product the last few quarters. They are definitely expanding their Workday footprint.

We see the early signs of what we call platform deals where customers are either buying HR and financials together upfront or expanding out of HR into financial realm.

So this all comes down to getting customer into production and customers being happy, if they are live and they are happy they will come back to as a vendor for more products and I think it is in many ways there is a lot of noise out there about lots of other things but this is all about making customers successful and it is a pretty simple formula.

.

And then just two quick ones for Mark. And first on modeling for the professional services part, we are hearing more and more from the partner ecosystem about them kind of gearing up et cetera.

Should we start thinking at some point that the growth for your service business should be slowing down more meaningfully?.

I think when you derive growth for professional services after you back out subscription, you will see that there is some deceleration but that's that -- we are still going to continue to aggressively grow our own service providers.

Part of this is that we have some customers in HCM and in platform that just want to use Workday to have one provider and just to have one supplier to go live. But then in products such as financials we are still continuing to do about 50% of the new implementation and new deployment.

And so as financials continues to grow we will still continue to have a large presence in professional services. .

Sorry, and one last quick one for me, sorry about that.

Lot of clients are asking on the operating cash flow for Q4 and it looks like receivables was the big drag there, can you talk a little bit was there anything specific going on?.

No. It was really just the result of the seasonal volumes for the fourth quarter. Our DSO as we calculated which is based on -- which includes the change in deferred revenue was essentially the same as it was a year ago in the low 30 days category, so no concerns for receivable. .

Your next question comes from the line of Brent Thill with UBS. .

Aneel, I just wanted to follow up on Phil coming into run sales. I mean historically when you have a change in sales management it seems there is always been a transitional period and it sounds, if I interpret your comment in the call correctly that there are really no major changes in quotas or alignment of sales force as Phil rolls on.

I just wanted to be clear that, that was the case..

Yes, no. Mike Stankey continues to run our worldwide field operations. We have not had the role of worldwide sales before, so think of it is an insertion of a new layer given how big the scale of our worldwide operations is now today. But nothing else changes. .

Okay. And maybe if you could talk a little bit through the advancement is move to Europe.

What are you seeing? I know you laid out few of the countries that you like to become bigger and but now that when your primary competitors have declared the cloud is the way to go, is this a sense evangelizing helping potentially some of the sales cycle move along little faster than perhaps in the past for the traditional professional vendors really didn't evangelized at the level of that, that are moving now..

Yes, no. I think it is a very good question and absolutely no one is debating cloud versus on premise anymore. It is about the validity of different vendors cloud, cloud strategy and actually cloud offerings not just what they say they are going to do but what they can actually do now. And that's really where we are today.

We can demonstrate customer success with customers in production and in every part of the world. And our competitors will struggle with that. .

Your next question comes from the line of John Di Fucci with Jefferies. .

Thanks. Quick question for Mark and then one for Aneel.

Mark, just back to the accounts receivables that Raimo mentioned, you got sequential uptick of about $70 million versus last couple of years is more like $5 million, would it be logical to assume that this is because you have an uptick in larger deals this year relative to last two, I know it is your fiscal fourth quarter and I see you are doing more large deals and most of your deals are large deals anyway.

Did you see a difference this year? And should we assume that to be supportive this uptick, this greater uptick to be supportive of cash flow next quarter. .

Yes.

It is certainly -- our expectations, John, it will be clearly a tailwind for us cash flow for Q1 because we will collect all of that increase, in addition to just increase volume that we had in the fourth quarter as we mentioned on the call, there is about 400 basis points more cash billed upfront on contracts this quarter which also had gave us a little bit lift in both billings and accounts receivable..

And was the sequential uptick did have anything to do with more large deals and greater mix of large deals this year than larger deals than the last couple. .

More that -- we have always experienced in quarter seasonality towards the back part of the quarter. And so there is always an impact of it, if it didn't -- if it didn't get book before January is going to end up in accounts receivable.

And so we had a heavier volume, heavier percentage of seasonality in the quarter touch in January this year than last. .

Okay, great. And Aneel on the expansion and some of the movement into Germany specifically as the largest economy or I don't know if the UK is the largest but it is one of the largest economies in Europe.

Can you remind us where your datacenters are? I know at one point I think you had some operations in Amsterdam but can you remind us where they are in Europe and if that is an issue at all, if you have anything in Germany or if you plan to put anything in Germany, is that been an issue at all for customers as to where your datacenter is actually reside?.

I believe we have -- our two datacenters are in the Netherlands and in Dublin. And to date those have not been -- it is not been an issue selling to German companies. It is early on for us. So we will find out more and we will go from there. But so far so good.

They are far focused on the datacenters not being in the US rather than where they are in Europe. .

The next question comes from the line of Katherine Egbert with Piper Jaffray. .

Hi, good afternoon. At the risk of beating dead horse, I just wanted to ask one more question about Europe. How big of a market expansion would you say as if you to go into Germany and Japan? And then also does your guidance for this fiscal year contemplate any FX as you move to more currencies. .

So on the first one if you loo at the G8 countries, Germany and Japan are both on that list. And a good proxy for the size of the market opportunity for us to the size of the economy. So obviously those are two very big geographies that we really do not have much of presence the last few years.

In both cases we actually have large multinationals running big population of employees or their finances in those countries, big changes that we are pursuing companies headquarter in those countries. And we had a very big win in Japan with Fast Retailing. I think you will see us announce some big wins in Germany in the upcoming months.

And the criteria are the same. These companies are frustrated with their legacy systems, are looking for a better way and they are looking for way to ensure that they get into production with their system relatively quickly and we think we've got great story for them and a great solution for them. .

And Katherine with respect to currency and guidance, it really relates more to billings frankly than revenue just because of the subscription model.

We plan in local currency and we have a plan rate that doesn't change for each of the theater leaders but then we guided, we move to spot rate and then our plan as we take down contracts that are denominated in foreign currency will be to hedge the future billings so that we don't have a lot of exposure outside of -- when the contract was signed as to future billings.

.

Okay. So it sounds like guidance does take some of that into account. .

Yes. At least as spot rate..

Your next question comes from the line of Jason Maynard with Wells Fargo..

Hey, good afternoon, guys. And congratulation on a good close out to the end of the year. Aneel, I really had two questions. And they were centered on first just cross selling of additional products into the base.

And I apologize if you had cover this at the start of the call, but I was just curious is there any data points or metrics and trends that you are seeing in terms of uptick by your existing customers of recruiting analytics into that nature.

And then the second piece of the question is cross selling of financials into HR and their customer buying behavior, are they looking to buy both product simultaneously or do you still see customers are -- are you seeing customers look to do HCM first then move to the cloud and then go with financials, are we hit that point yet in the cycle or customers who are looking to take decision on both fronts? Thank you..

I would segment the market into the medium size companies or the mid market versus the large Fortune 500 companies. The medium sized companies are probably more prone to buy things as a platform. They've got simpler businesses, for them having one solution covering all function areas from one vendor is easy.

Large companies tend to do the projects separately. We’ve seen some of the large companies do them together, but I think post the ERP wave people are more focused on doing one thing at a time and getting them successful. In terms of attach rate whether it’s part of the initial sale or a follow-on sale recruiting has done extremely well.

Recruiting and payroll are our strongest products in terms of add-ons to HR. We had a very good quarter in the fourth quarter for our analytics. We signed up 12 new analytics, 12 new customers for analytics, far and away our best quarter and our view is that, that’s because of the announcement of the inside applications.

Previous to that the Big Data platform was really a set of tools but our customers were really looking for applications. With the emergence of the Insight application they see real value from those solutions that they can use in the same way that they use the Workday apps for HR and Finance.

And so I would expect the trend on the analytics side to continue to improve and gain momentum. .

Your next question comes from the line of Brian White with Cantor Fitzgerald..

Yes, Aneel, I wonder maybe if you could set the stage for fiscal 2016 in terms of what Workday plans to accomplish in overseas markets and how do we think about the growth overseas relative to the companies total revenue guidance of up 42% to 45%. .

I will leave the second part for Mark. Our strategy as we go into new market is very simple. We will land four or five accounts. We will get them successful, meaning we will get them live, we will get them very reference full and happy and then they help us open up the rest of the market. It’s the way we opened up the UK.

It’s the way that we are opening up -- the way we opened up the Netherlands, it’s the way we are opening France, and France is Lafarge and Sanofi. And it’s the same way we will open up Germany.

So it’s critical for us to land those handfuls of accounts and very importantly get them into production quickly and happy because a happy customer is your best sales advocate. So that’s what we are doing both in Germany and Japan.

And on the growth rates?.

Yes, on the growth rates it’s relatively straightforward. We’ve established quotas for each of the geographies and each of the -- to the extent that we have verticals in E&G and in financials the core HCM product is still the lion’s share of the overall quota in North America.

However, the growth rate is slower there just because of the product has been out there longer and it’s a much larger number and so the growth rates in Europe and in APAC will be stronger but it won’t necessarily be reflected in revenue for some period of time until it builds. .

I’d say the other dynamic that’s happening is that the partners, especially our large global partners are embracing us around the globe, much more so than several years ago.

So as we go into a new market like Germany whether it’s our big partners like Accenture, Deloitte, IBM and Hewitt, PwC, KPMG, they don’t need convincing that Workday is going to be successful in that market. They are ready to make the investment and ramp their skills in that market. And that’s also a key enabler for future growth. .

Your next question will come from the line Steve Ashley with Robert Baird. Steve, your line is open; please proceed with your question..

Well, thank you so much. I would just like to ask on the core HCM product, how much mobile usage are you seeing from customers, as in, if you were to take a given cohort, does the amount of mobile usage from a customer change over time? Thanks..

I think it’s really customer by customer and it really depends on the IT elasticity of rolling out mobile capabilities. We have customers; Mike Stankey mentioned that the MGM has 80% mobile in their use of Workday.

So we have people ranging that high and then there are other customers where they have been frankly slow to roll out mobile independent of Workday, and so it really is based on, based on that I can tell you within Workday I personally do almost everything off the iPad and the iPhone.

I probably get on the desktop two or three times a month and I think that’s what we aim for, that for most of the work you need to do you can do it on the mobile devices. Our big -- the biggest improvement over the last few updates has been the push in on mobile expenses.

We really can do everything you need to do for expenses on your phone, whether it’s an Android or an iPhone and that was high in the list and that we are seeing once again growing traction of expenses product..

Certainly, your next questions come from the line of Kirk Materne with Evercore. .

Hi, this is actually Patrick Falfone [ph] on for Kirk. Congratulations on a nice a fiscal year. You all talked about on some of your initial inside apps will be generally available and how are you all thinking about pricing that? Thanks..

So they are going to -- the first wave we are going to roll out during the rest of the year. They don’t necessarily have to be tied to a specific update but they probably will be. So you will see them coming out with Workday 25 in more earnest.

We’ve got one right now in preview with customers which are our retention application and when it’s ready for release we will put it out there. Much like we priced our other add-on modules, the way we will prices these inside applications will be a percentage of HCM for the HCM apps, will be a percentage of the finance suite for finance apps.

And you will get access to whatever inside apps is relevant to the underlying applications that you’ve already subscribed to. .

Your final question comes from the line of Rob Breza for Sterne Agee..

Hi, this is Ryan McDonald on for Rob Breza.

First of all, can you discuss if you are seeing any changing dynamics in the competitive landscape and particularly with SAP as their integration of Concur is taking place?.

I would say we really haven’t seen any real change. They are both very aggressive on price. I would say that if there is anything to pay attention to and I’d encourage all of you are to dig in and see where these two companies have production references.

We now have our first wave of companies that failed deploying one of the two legacy cloud applications and then came to Workday and that’s a good -- that’s a trend that bodes well for us.

So it again it’s not just about selling applications, it’s getting customers live and we’ve seen some of their projects at the legacy vendors sale and those customers will come back to Workday. .

Great and finally as you discussed the head count increases that you are expecting to make for fiscal 2016.

Can you talk about what the primary areas you will be adding headcount to this year?.

Sure it’s on -- it’s largely when you look at the P&L it’s largely across the board. But the focus will be on market expansion and so in -- on a percentage basis, so in Europe, Asia Pacific and also in product development as we continue to focus on financials and inside apps and professional services automation and our other products.

And so we are just continuing to grow and as I mentioned on the prepared remarks we expect to be to 5,000 people by the end of next year. .

Okay, thanks everyone. We look forward to seeing you April 15th at our Analysts Day. .

Again we thank you for your participation in today’s earnings call. You may now disconnection and have a great day..