Carl Eschenbach: Yes, I’ll take that, and thanks for the question, Keith. I hope you’re well. Listen, the teams are doing really good already selling back into the customer base. I think it has to do with the motion that Doug and Patrick are driving with two different, if you will, sales forces, one selling only to customer base and the other selling net new. And because we have that focus on customer-based sales, I think the teams are driving these new SKUs back into our customers. Specifically as it relates, can we do things differently. Potentially — we are looking at different ways to price and package our products in the future to make it easier and more consumable for our customers and make it easier for our sales reps to sell — but right now, we don’t have any, if you will, new plays that we’re running.
I think the team is executing well. Our customers clearly see the value of the additional SKUs that we have in the market. and clearly see a total cost of ownership play by consolidating on top of our platform. So I don’t think you’ll see any short-term change here, Keith. But we’re always looking for ways to innovate on go-to-market and one of them would be through some type of pricing and packaging in the future.
Doug Robinson: Keith, I would just add, we continue to obviously invest in this area. It’s one of tremendous opportunity for us. and we spend a fair amount of time looking at it and thinking about what’s the next best opportunity for the customer to recognize value and, of course, in turn for us to do the same. So it’s an area that we continue to see good progress on.
Keith Weiss: Excellent. It’s very helpful. Thank you.
Operator: Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.
Brent Thill: Carl, earlier in the year, you unveiled a new partner referral program. Maybe too early to see the fruits of this new program, but curious if what you’re seeing and ultimately what over the next six to nine months with this partner program?
Carl Eschenbach: Yes, sure. Thanks, Brent. Good to hear from you. We did launch a new partner program. There’s many facets to it. including technology arrangements and collaboration on the technology front, including co-sell, including resell. And also, we rolled out a referral program. And I will say we’re seeing early signs of the customers really leaning into this new program. And they’re also getting value because they’re innovating on top of Workday, leveraging things like Extend to expand their market opportunity with us as well. So the resell program, that’s Phase 2, but the co-sell and referral program has kicked off, and we’re seeing a nice uplift in referrals from our partners on a global basis. Another thing we did is we launched a partnership, if you recall, Brent, with AWS, and we’re selling to the marketplace.
And we have seen a number of opportunities in Q2 that were driven from that partnership with AWS as people are looking to burn down the credits they have with AWS today. So Overall, we’re very excited about the partner program. We had a big partner conference just last month. We had over 3,000 people joining us at our Altitude conference where we spent more time articulating our new program. and sharing with them how they can both monetize the Workday platform to sell more services and innovative solutions and also help us drive net new outcomes and get paid for it.
Brent Thill: Thank you.
Operator: Our next question comes from the line of Karl Keirstead with UBS. Please proceed with your question.
Karl Keirstead: Thank you. Welcome aboard Zane, I’ll direct this one to you. As you just alluded to, the gap between the 24-month backlog and the sub revs growth has historically been pretty narrow, but it’s widened out a lot in recent quarters to 3 to 4 points. I’m just curious — why is that? And over what time frame do you think that gap will close? Maybe it’s partly due to the early renewals you mentioned, but maybe there are other factors. Thanks for unpacking that for us.
Zane Rowe: Yes, of course, Karl, great to hear from you. As we mentioned, we’re really pleased with the program we have behind that and the additional backlog and the performance we’ve seen on RPO has even exceeded our expectations over the last number of quarters. And it’s driven by a number of variables. I think both Carl and Doug talked about the relationship with the customer, as well as our opportunity to expand those SKUs and that relevance with our customers. So we’re pleased with the performance there. Now some of the variability we talked about education and gov we tend to see longer duration with those contracts. So that will have a natural extension. And in many cases, especially if you look at the top line growth of backlog and RPO we see significant increases driven by that mix shift.
And then the other dynamic is, of course, the early renewal that we talked about, where it’s another opportunity to engage with the customer to go deeper into the platform, as well as sell more of our SKUs. So it’s — as I pointed out in the third quarter, we feel like the second quarter was higher, at least our current expectations at the second quarter and the activity we saw there would be higher than what we see in the third quarter. Part of it is also Doug’s team and just where they spend their energy, and we’ve obviously leading up to a seasonally strong fourth quarter. So we like the motion. We encourage the motion. It’s an opportunity for us to lean in and have a longer and more durable relationship with our customer base. And we believe you’ll see that reflected in the numbers.
But to your point, it may create a little bit of variability if you looked at backlog and the variance between backlog and subscription revenue. But we’re solely focused on driving continued growth in the business and particularly focused on that subscription — that long-term subscription revenue line. Hopefully, that helps.
Karl Keirstead: Yes, it does Zane. Thank you.
Zane Rowe: Great.
Operator: Our next question comes from the line of Brad Zelnick with Deutsche Bank. Please proceed with your question.
Brad Zelnick: Great, thanks very much for taking my question. There’s a lot of goodness in the results and the message. So I’ll echo my welcome to Zane and congrats to you all. My question actually for you, Zane, is in your comments, you’ve said that Workday plans on maintaining a disciplined approach of investing in long-term growth while expanding margins, which I think is music to everyone’s ears. But can you expand on what that means to you? And if there’s any sort of framework or even rule of thumb that we should consider in the years ahead? Thanks.
