What changed in this filing

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Item 1. Financial Statements

2022-05-26 compared with 2021-11-18 · 234 added, 379 removed, 461 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands)

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Current assets:

38 unchanged sentences

(in thousands, except per share data)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Subscription services $ 1,272,076 $ 1,032,169

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Net income (loss) $ ( 102,173 ) $ ( 46,522 )

Net income (loss) per share, basic $ 0.17 $ ( 0.10 ) $ 0.42 $ ( 0.89 )

Net income (loss) per share, diluted $ 0.17 $ ( 0.10 ) $ 0.40 $ ( 0.89 )

Weighted-average shares used to compute net income (loss) per share, basic 248,468 238,059 246,348 235,685

Weighted-average shares used to compute net income (loss) per share, diluted 254,760 238,059 253,917 235,685

Net income (loss) per share, basic and diluted $ ( 0.41 ) $ ( 0.19 )

Weighted-average shares used to compute net income (loss) per share, basic and diluted 251,743 243,739

(1) Costs and expenses include share-based compensation expenses as follows:

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Costs of subscription services $ 26,230 $ 20,717

3 unchanged sentences

General and administrative 45,219 36,056

Total share-based compensation expenses $ 311,506 $ 264,635

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Net income (loss) $ ( 102,173 ) $ ( 46,522 )

2 unchanged sentences

Net change in unrealized gains (losses) on available-for-sale debt securities ( 8,924 ) ( 898 )

Net change in market value of effective foreign currency forward exchange contracts 25,389 3,044 38,316 ( 22,485 )

Net change in unrealized gains (losses) on cash flow hedges 46,246 ( 4,771 )

Other comprehensive income (loss) 35,400 ( 5,451 )

4 unchanged sentences

(in thousands)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Common stock:

1 unchanged sentence

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 2 4

Settlement of convertible senior notes — — — 2

Balance, end of period 253 246

3 unchanged sentences

Share-based compensation 311,506 264,605

Settlement of warrants — ( 34,118 ) — ( 34,118 )

Exercise of convertible senior notes hedges 119 39

5 unchanged sentences

Exercise of convertible senior notes hedges ( 117 ) ( 36 )

Settlement of warrants — 34,118 — 34,118

Balance, end of period ( 12,584 ) ( 12,420 )

9 unchanged sentences

Total stockholders’ equity $ 4,780,807 $ 3,405,441

See Notes to Condensed Consolidated Financial Statements

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Common stock (in shares):

1 unchanged sentence

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 2,470 3,562

Settlement of warrants — 186 — 186

Settlement of convertible senior notes 1 —

Purchase of treasury stock from the exercise of convertible senior notes hedges ( 1 ) —

Issuance of restricted stock awards 43 — 125 —

Balance, end of period 253,679 246,311

3 unchanged sentences

(in thousands)

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of deferred costs 39,427 31,614

Amortization of debt discount and issuance costs 997 12,098 2,991 41,466

Non-cash lease expense 22,048 22,230

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Cash flows from financing activities:

Proceeds from borrowings on Term Loan, net of debt discount and issuance costs — — — 747,795

Payments on convertible senior notes ( 9 ) — ( 80 ) ( 249,946 )

Payments on Term Loan ( 9,375 ) ( 9,375 ) ( 28,125 ) ( 9,375 )

Proceeds from issuance of debt, net of debt discount 2,978,077 —

Repayments and extinguishment of debt ( 693,953 ) ( 9,426 )

Payments for debt issuance costs ( 7,220 ) —

Proceeds from issuance of common stock from employee equity plans, net of taxes paid for shares withheld 990 ( 1,357 )

6 unchanged sentences

See Notes to Condensed Consolidated Financial Statements

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Supplemental cash flow data:

3 unchanged sentences

Purchases of property and equipment, accrued but not paid 119,007 78,468

As of October 31,

Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:

As of April 30,

Reconciliation of cash, cash equivalents, and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows:

Cash and cash equivalents $ 2,776,336 $ 959,358

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Company and Background

Workday delivers financial management, spend management, human capital management, planning, and analytics applications designed for the world’s largest companies, educational institutions, and government agencies.

We offer innovative and adaptable technology focused on the consumer internet experience and cloud delivery model.

Our applications are designed for global enterprises to manage complex and dynamic operating environments.

We provide our customers highly adaptable, accessible, and reliable applications to manage critical business functions that help enable them to optimize their financial and human resources.

Workday delivers applications for financial management, spend management, human capital management, planning, and analytics.

With Workday, our customers have a unified system that can help them plan, execute, analyze, and extend to other applications and environments, thereby helping them continuously adapt how they manage their business and operations.

We were originally incorporated in March 2005 in Nevada, and in June 2012, we reincorporated in Delaware.

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All such adjustments are of a normal, recurring nature.

The results of operations for the three and nine months ended October 31, 2021, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2022.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on March 2, 2021.

There have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, other than the adoption of an accounting pronouncement as described in Note 2, Accounting Standards.

The results of operations for the three months ended April 30, 2022, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2023.

Certain prior period amounts reported in our consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Significant estimates, judgments, and assumptions include, but are not limited to, the determination of the fair value and useful lives of assets acquired and liabilities assumed through business combinations, the period of benefit for deferred commissions, the fair value of certain equity awards, and the valuation of non-marketable equity investments.

Actual results could differ from those estimates and such differences could be material to our condensed consolidated financial statements.

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgements, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

For revenue recognition, examples of significant estimates, judgements, and assumptions include the identification of distinct performance obligations and the assessment of the standalone selling price for each performance obligation identified.

Other significant estimates, judgements, and assumptions include, but are not limited to, the determination of the period of benefit for deferred commissions, the fair value and useful lives of assets acquired and liabilities assumed through business combinations, and the valuation of non-marketable equity investments.

Actual results could differ from those estimates, judgements, and assumptions, and such differences could be material to our condensed consolidated financial statements.

Segment Information

We operate in one operating segment, cloud applications.

Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by chief operating decision makers (“CODMs”) in deciding how to allocate resources and assessing performance.

For the nine months ended October 31, 2021, our CODMs were our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez.

Our CODMs allocate resources and assess performance based upon discrete financial information at the consolidated level.

Accounting Standards

Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by a chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance.

For the three months ended April 30, 2022, our CODM was our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez.

Our CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level.

Significant Accounting Policies and Accounting Standards

Significant Accounting Policies

There have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Concentrations of Risk and Significant Customers

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, debt securities, and trade and other receivables.

Our deposits exceed federally insured limits.

No customer individually accounted for more than 10% of trade and other receivables, net as of April 30, 2022, or January 31, 2022.

No customer individually accounted for more than 10% of total revenues during the three months ended April 30, 2022, or 2021.

Other than the United States, no country individually accounted for more than 10% of total revenues during the three months ended April 30, 2022, or 2021.

In order to reduce the risk of down-time of our cloud applications, we have established data centers in various geographic regions.

We serve our customers and users from data center facilities operated by third parties, located in the United States, Canada, and Europe.

We have internal procedures to restore services in the event of disaster at one of our data center facilities.

Even with these procedures for disaster recovery in place, our cloud applications could be significantly interrupted during the implementation of the procedures to restore services.

In addition, we rely upon third-party hosted infrastructure partners globally, including Amazon Web Services (“AWS”), Google LLC, and Microsoft Corporation, to serve customers and operate certain aspects of our services.

Given this, any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

Under ASU No.

2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital.

Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives.

The new guidance also requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

We adopted this standard effective February 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted.

We applied the provisions of this guidance to our 0.25 % convertible senior notes due October 1, 2022 (“2022 Notes”).

Upon adoption, we recorded a decrease to Accumulated deficit of $ 136 million, a decrease to Additional paid-in capital of $ 220 million, an increase to Debt, current of $ 79 million, and a decrease to Property and equipment, net of $ 5 million, which represented non-cash interest previously capitalized.

For further information, see Note 11, Debt.

Recently Issued Accounting Pronouncements

2020-04 and ASU No.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate to alternative reference rates.

In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848) , which refines the scope of Topic 848 and clarifies some of its guidance.

We may elect to apply the amendments prospectively through December 31, 2022.

The impact on our condensed consolidated financial statements from the adoption of this standard is expected to be immaterial.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts.

Prior to the adoption of the new standard, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date.

We early adopted ASU No.

2021-08 on a prospective basis effective February 1, 2022.

The adoption had no impact on our condensed consolidated financial statements during the three months ended April 30, 2022, and any financial impact will be dependent on the magnitude and nature of future business combinations.

Debt Securities

As of October 31, 2021, debt securities consisted of the following (in thousands):

As of April 30, 2022, debt securities consisted of the following (in thousands):

Amortized Cost Unrealized Gains Unrealized Losses Aggregate Fair Value

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We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the Condensed Consolidated Balance Sheets.

Debt securities included in Marketable securities on the condensed consolidated balance sheets consist of securities with original maturities at the time of purchase greater than three months, and the remainder of the securities is included in Cash and cash equivalents.

The unrealized losses associated with our debt securities were immaterial as of October 31, 2021, and January 31, 2021, and we did not recognize any credit losses related to our debt securities during the three and nine months ended October 31, 2021, or 2020.

We did not have any sales of debt securities during the three months ended October 31, 2021, or 2020.

We sold $ 10 million and $ 5 million of debt securities during the nine months ended October 31, 2021, and 2020, respectively.

The realized gains and losses from the sales were immaterial.

Debt securities included in Marketable securities on the Condensed Consolidated Balance Sheets consist of securities with original maturities at the time of purchase greater than three months, and the remaining securities are included in Cash and cash equivalents.

No debt securities held as of April 30, 2022, and January 31, 2022, were in a continuous unrealized loss position for greater than 12 months, and we did not recognize any credit losses related to our debt securities during the periods presented.

We did not have any sales of debt securities during the three months ended April 30, 2022.

We sold $ 10 million of debt securities during the three months ended April 30, 2021, and the realized gains and losses from the sales were immaterial.

Equity Investments

Equity investments consisted of the following (in thousands):

Condensed Consolidated Balance Sheets Location October 31, 2021 January 31, 2021

Condensed Consolidated Balance Sheets Location April 30, 2022 January 31, 2022

Money market funds Cash and cash equivalents $ 604,004 $ 607,640

Equity investments accounted for under the equity method Other assets — 48,222

Non-marketable equity investments measured using the measurement alternative Other assets 257,586 256,643

2 unchanged sentences

Total realized and unrealized gains and losses associated with our equity investments consisted of the following (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Net realized gains (losses) recognized on equity investments sold (1)

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(1) Reflects the difference between the sale proceeds and the carrying value of the equity investments at the beginning of the period.

Equity Investments Accounted for Under the Equity Method

We determine at the inception of each arrangement whether an investment or other interest is considered a variable interest entity (“VIE”).

Investments in VIEs for which we are not the primary beneficiary or do not own a controlling interest but can exercise significant influence over the investee are accounted for under the equity method of accounting.

During fiscal 2021, we made an equity investment of $ 50 million in a limited partnership, which represented an ownership interest of approximately 6 %.

We determined that the limited partnership was a VIE because the at-risk equity holders, as a group, lacked the characteristics of a controlling financial interest.

We did not have majority voting rights nor the power to direct the activities of this entity, and therefore, we were not the primary beneficiary.

The investment was accounted for under the equity method of accounting as it was considered to be more than minor and we had the ability to exercise significant influence over the entity.

Under the equity method, our share of earnings and losses of the investee was not material and there was no impairment loss recorded for the periods presented.

In June 2021, the limited partnership was liquidated and shares of common stock in a corporation were distributed to the partners.

Immediately thereafter, the corporation completed its initial public offering (“IPO”).

We no longer exercise significant influence over the entity and therefore we accounted for our interest in the common stock received as a marketable equity investment measured at fair value.

Concurrent with the IPO, we sold a portion of our investment for proceeds of $ 5 million, resulting in a realized gain of $ 3 million.

Our remaining investment, which had a carrying value of $ 134 million as of October 31, 2021, is subject to a lock-up agreement which restricts our ability to sell the securities until December 2021 at the earliest.

We recorded an unrealized loss of $ 7 million and an unrealized gain of $ 91 million related to this investment for the three and nine months ended October 31, 2021, respectively.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

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The carrying values for our non-marketable equity investments are summarized below (in thousands):

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Total initial cost $ 204,717 $ 192,694

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Carrying value $ 257,586 $ 256,643

We recorded upward adjustments to the carrying value of non-marketable equity investments of $ 20 million and no material impairment losses for the three months ended October 31, 2021.

In addition, as discussed in Note 7, Business Combinations, we recognized a $ 12 million non-cash gain related to our acquisition of Zimit.

No material adjustments or impairment losses were recorded for the three months ended October 31, 2020.

We recorded upward adjustments of $ 34 million and impairment losses of $ 2 million for the nine months ended October 31, 2021.

We recorded no material adjustments and $ 3 million of impairment losses for the nine months ended October 31, 2020.

During the three months ended April 30, 2022, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 3 million and impairment losses of $ 14 million.

During the three months ended April 30, 2021, we recorded upward adjustments to the carrying value of these investments of $ 8 million and impairment losses of $ 2 million.

Marketable Equity Investments

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The carrying values for our marketable equity investments are summarized below (in thousands):

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Total initial cost $ 38,936 $ 40,739

2 unchanged sentences

$ 102,293 $ 104,318

(1) As of October 31, 2021, investments with a carrying value of $ 134 million are subject to a lock-up agreement through December 2021.

There were no sales of marketable equity investments during the three months ended October 31, 2021.

During the nine months ended October 31, 2021, we sold marketable equity investments for proceeds of $ 17 million which had an initial cost of $ 7 million.

This includes the $ 5 million sale of the investment previously accounted for under the equity method described above.

There were no sales of marketable equity investments during the comparative prior year periods.

During the three months ended April 30, 2022, we sold marketable equity investments for proceeds of $ 5 million with a corresponding realized gain of $ 1 million.

During the three months ended April 30, 2021, we sold marketable equity investments for proceeds of $ 2 million with a corresponding realized loss of $ 2 million.

During the three months ended April 30, 2022, and 2021, we recorded unrealized gains on marketable equity investments of $ 3 million and unrealized losses of $ 7 million, respectively.

Fair Value Measurements

We measure our cash equivalents, marketable securities, and foreign currency derivative contracts at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

We measure our cash equivalents, marketable securities, and foreign currency derivative contracts at fair value at each reporting period using a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

In addition, we measure our non-marketable equity investments for which there has been an observable price change from an orderly transaction for identical or similar investments of the same issuer at fair value.

A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of October 31, 2021 (in thousands):

Level 1 Level 2 Level 3 Total

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Fair Value Measurements of Other Financial Instruments

In April 2020, we entered into a credit agreement (“Credit Agreement”) pursuant to which the lenders extended to Workday a senior unsecured term loan facility in an aggregate principal amount of $ 750 million (“Term Loan”) and an unsecured revolving credit facility in an aggregate principal amount of $ 750 million (“Revolving Credit Facility”).

The carrying value of the Term Loan was $ 702 million and $ 729 million as of October 31, 2021, and January 31, 2021, respectively.

The estimated fair value of the Term Loan, which we have classified as a Level 2 financial instrument, approximates its carrying value because it is a floating rate facility.

There were no outstanding borrowings under the Revolving Credit Facility during the periods presented.

For further information, see Note 11, Debt.

In September 2017, we completed an offering of $ 1.15 billion of 0.25 % convertible senior notes due October 1, 2022.

The carrying value of the 2022 Notes was $ 1.1 billion as of October 31, 2021, and January 31, 2021, and the estimated fair value of the 2022 Notes was $ 2.2 billion and $ 1.8 billion as of October 31, 2021, and January 31, 2021, respectively.

The estimated fair value of the 2022 Notes, which we have classified as a Level 2 financial instrument, was determined based on the quoted bid price in an over-the-counter market on the last trading day of each reporting period.

For further information, see Note 11, Debt.

We carry our debt at face value less unamortized debt discount and issuance costs on our Condensed Consolidated Balance Sheets and present the fair value for disclosure purposes only.

All of our debt obligations are categorized as Level 2 financial instruments.

For further information on the fair values of our debt and the inputs used in the calculations, see Note 10, Debt .

Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $ 423 million and $ 395 million as of October 31, 2021, and January 31, 2021, respectively.

Amortization expense for the deferred costs was $ 36 million and $ 29 million for the three months ended October 31, 2021, and 2020, respectively, and $ 101 million and $ 82 million for the nine months ended October 31, 2021, and 2020, respectively.

Deferred costs, which consist of deferred sales commissions, were $ 497 million and $ 494 million as of April 30, 2022, and January 31, 2022, respectively.

Amortization expense for the deferred costs was $ 39 million and $ 32 million for the three months ended April 30, 2022, and 2021, respectively.

There was no impairment loss in relation to the costs capitalized for the periods presented.

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Property and equipment, net consisted of the following (in thousands):

October 31, 2021 January 31, 2021

Land and land improvements $ 80,553 $ 37,065

Buildings 683,966 494,599

April 30, 2022 January 31, 2022

Computers, equipment, and software $ 1,174,084 $ 1,071,141

Furniture and fixtures 55,329 54,193

Buildings 708,149 691,896

Leasehold improvements 165,113 158,037

Land and land improvements 80,553 80,553

Furniture, fixtures, and transportation equipment 81,626 79,723

Property and equipment, gross 2,209,525 2,081,350

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Property and equipment, net $ 1,186,004 $ 1,123,075

Depreciation expense totaled $ 66 million and $ 58 million for the three months ended October 31, 2021, and 2020, respectively, and $ 194 million and $ 170 million for the nine months ended October 31, 2021, and 2020, respectively.

Related-Party Transactions

During fiscal 2021, we entered into an agreement with an affiliate of our Co-Founder, Director, and Chairman Emeritus, David Duffield, for an option to purchase certain leased office space (“Property”) within our corporate headquarters at a price based on third-party appraisals and negotiation between Workday and the affiliated party (“Leased Property Purchase Option”).

In deciding to enter into and subsequently exercise the Leased Property Purchase Option, our Board of Directors considered the benefits to Workday of purchasing the Property, including the importance of obtaining control of the Property, which is part of Workday’s headquarters campus, and the long-term cost savings from ownership as compared to continuing to lease the Property.

Our Board also considered independent appraisals, comparable transaction data, and the extent and nature of Mr.

Duffield’s interest in the transaction.

In the first quarter of fiscal 2022, we exercised the Leased Property Purchase Option at a purchase price of $ 173 million in cash, reduced by a $ 2 million fee paid for the Leased Property Purchase Option in the prior fiscal year.

The carrying value of the Property upon purchase was $ 158 million, calculated as the purchase price less approximately $ 15 million which represents the difference between the carrying values of the right-of-use asset and lease liability of the Property immediately prior to the purchase.

For further information, see Note 12, Leases.

Business Combinations

On September 28, 2021, we acquired all outstanding stock of Zimit, a configure, price, quote (CPQ) solution built for services industries.

We believe the acquisition of Zimit will accelerate our ability to deliver a comprehensive quote-to-cash process automation offering that will provide services organizations increased visibility across the entire revenue cycle.

We have included the financial results of Zimit in our condensed consolidated financial statements from the date of acquisition.

The acquisition-date fair value of the purchase consideration was $ 76 million, attributable to cash consideration of $ 62 million and the fair value of a previously held equity interest of $ 14 million.

We recorded developed technology intangible assets of $ 7 million (to be amortized over an estimated useful life of 4 years), customer relationships intangible assets of $ 3 million (to be amortized over an estimated useful life of 13 years), and goodwill of $ 67 million.

Goodwill was primarily attributable to the expected synergies from integrating Zimit’s technology into our product portfolio.

The goodwill is not deductible for income tax purposes.

The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received.

The measurement period will end no later than one year from the acquisition date.

We invested $ 2 million in Zimit prior to the acquisition, which was accounted for as a non-marketable equity investment.

We recognized a non-cash gain of approximately $ 12 million as a result of remeasuring our prior equity interest in Zimit held before the business combination.

The gain is included in Other income (expense), net on the condensed consolidated statement of operations.

Separate operating results and pro forma results of operations for Zimit have not been presented as the effect of this acquisition was not material to our financial results.

On March 9, 2021, we acquired all outstanding stock of Peakon ApS (“Peakon”), an employee success platform that converts feedback into actionable insights, for $ 702 million.

With Peakon, Workday will provide organizations with a continuous listening platform, including real-time visibility into employee experience, sentiment, and productivity, to help drive employee engagement and improve organizational performance.

We have included the financial results of Peakon in our condensed consolidated financial statements from the date of acquisition.

The acquisition-date fair value of the purchase consideration consisted of the following (in thousands):

Cash paid to stockholders, warrant holders, and vested option holders $ 683,788

Transaction costs paid by Workday on behalf of Peakon 17,960

Total $ 701,748

Additionally, we granted certain Peakon employees restricted stock awards (“RSA”) with service conditions, which totaled 81,695 shares of our Class A common stock.

The aggregate grant date fair value of the RSAs will be accounted for as post-acquisition share-based compensation expense.

The purchase consideration was preliminarily allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill.

The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received.

The primary areas that are subject to change include income taxes payable and deferred taxes.

The measurement period will end no later than one year from the acquisition date.

The updated preliminary purchase consideration allocation inclusive of measurement period adjustments was as follows (in thousands):

Acquisition-related intangible assets $ 170,500

Goodwill 542,201

Other assets 34,639

Deferred tax liability ( 20,517 )

Other liabilities ( 25,075 )

Total $ 701,748

The fair values and weighted-average useful lives of the acquired intangible assets by category are as follows (in thousands, except years):

Estimated Fair Values Weighted-Average Useful Lives (in Years)

Developed technology $ 94,000 5

Customer relationships 72,000 13

Backlog 4,000 3

Trade name 500 1

Total acquisition-related intangible assets $ 170,500 8

The goodwill recognized was primarily attributable to the assembled workforce and the expected synergies from integrating Peakon’s technology into our product portfolio.

The goodwill is not deductible for income tax purposes.

Separate operating results and pro forma results of operations for Peakon have not been presented as the effect of this acquisition was not material to our financial results.

Depreciation expense totaled $ 67 million and $ 63 million for the three months ended April 30, 2022, and 2021, respectively.

Acquisition-Related Intangible Assets, Net

Acquisition-related intangible assets, net consisted of the following (in thousands):

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Developed technology $ 346,300 $ 346,300

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Acquisition-related intangible assets, net $ 369,387 $ 391,002

Amortization expense related to acquisition-related intangible assets was $ 19 million and $ 14 million for the three months ended October 31, 2021, and 2020, respectively, and $ 57 million and $ 46 million for the nine months ended October 31, 2021, and 2020, respectively.

As of October 31, 2021, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

Amortization expense related to acquisition-related intangible assets was $ 22 million and $ 18 million for the three months ended April 30, 2022, and 2021, respectively.

As of April 30, 2022, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

Fiscal Period:

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Total $ 369,387

Other assets consisted of the following (in thousands):

October 31, 2021 January 31, 2021

Other noncurrent assets consisted of the following (in thousands):

April 30, 2022 January 31, 2022

Non-marketable equity and other investments $ 260,553 $ 256,759

$ 194,597 $ 85,868

Derivative assets 41,757 16,618

Prepayments for goods and services 24,028 25,927

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Deposits 6,352 6,701

Derivative assets 13,034 173

Equity investments accounted for under the equity method — 48,222

Other 2,965 813

Total other assets $ 368,497 $ 341,252

(1) Included in non-marketable equity and other investments are investments in loan receivables of privately held companies, which are carried at amortized cost.

The carrying values of these loan receivables were $ 25 million and $ 13 million as of October 31, 2021, and January 31, 2021, respectively.

The allowance for credit losses on loan receivables was immaterial for the periods presented.

Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis.

As of October 31, 2021, the future estimated amortization expense was as follows (in thousands):

As of April 30, 2022, the future estimated amortization expense was as follows (in thousands):

Fiscal Period:

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Derivative Instruments

We conduct business on a global basis in multiple foreign currencies, subjecting Workday to foreign currency risk.

We conduct business on a global basis in multiple foreign currencies, subjecting Workday to foreign currency exchange risk.

To mitigate this risk, we utilize derivative hedging contracts as described below.

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Our foreign currency contracts are classified within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.

Foreign Currency Forward Contracts Designated as Cash Flow Hedges

We are exposed to foreign currency fluctuations resulting from customer contracts denominated in foreign currencies.

We have a hedging program in which we enter into foreign currency forward contracts related to certain customer contracts.

Cash Flow Hedges

We enter into foreign currency forward contracts to hedge a portion of our forecasted revenue and expense transactions (“cash flow hedges”).

We designate these forward contracts as cash flow hedging instruments since the accounting criteria for such designation have been met.

Foreign currency forward contracts designated as cash flow hedges are recorded on the condensed consolidated balance sheets at fair value.

Cash flow hedges are recorded on the Condensed Consolidated Balance Sheets at fair value.

Cash flows from such forward contracts are classified as operating activities.

Gains or losses resulting from changes in the fair value of these hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and will be subsequently reclassified to the related revenue line item on the condensed consolidated statements of operations in the same period that the underlying revenues are earned.

As of October 31, 2021, we estimate that $ 7 million of net losses recorded in AOCI related to our foreign currency forward contracts designated as cash flow hedges will be reclassified into income within the next 12 months.

As of October 31, 2021, and January 31, 2021, we had outstanding foreign currency forward contracts designated as cash flow hedges with total notional values of $ 1.4 billion and $ 1.3 billion, respectively.

The notional value represents the amount that will be bought or sold upon maturity of the forward contract.

All contracts have maturities of less than 49 months.

Foreign Currency Forward Contracts Not Designated as Hedges

We also enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets and liabilities.

These forward contracts are intended to offset the foreign currency gains or losses associated with the underlying monetary assets and liabilities and are recorded on the condensed consolidated balance sheets at fair value.

Gains or losses resulting from changes in the fair value of these hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets and are subsequently reclassified to the same line item as the hedged transaction on the Condensed Consolidated Statements of Operations in the same period that the hedged transaction affects earnings.

As of April 30, 2022, we estimate that $ 5 million of net gains recorded in AOCI related to our cash flow hedges will be reclassified into income within the next 12 months.

As of April 30, 2022, and January 31, 2022, the notional values of the forward contracts designated as cash flow hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 1.5 billion and $ 1.4 billion, respectively.

The notional values of the forward contracts designated as cash flow hedges that we held to sell U.S.

dollars in exchange for other currencies were $ 300 million and $ 355 million as of April 30, 2022, and January 31, 2022, respectively.

All contracts had maturities of less than 47 months.

Non-Designated Hedges

We also enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets and liabilities (“non-designated hedges”).

These forward contracts are intended to offset foreign currency gains or losses associated with the underlying monetary assets and liabilities and are recorded on the Condensed Consolidated Balance Sheets at fair value.

These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore all changes in the fair value of these forward contracts are recorded in Other income (expense), net on the Condensed Consolidated Statements of Operations.

Cash flows from such forward contracts are classified as operating activities.

As of October 31, 2021, and January 31, 2021, we had outstanding forward contracts not designated as hedges with total notional values of $ 91 million and $ 175 million, respectively.

As of April 30, 2022, and January 31, 2022, the notional values of the forward contracts not designated as hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 100 million and $ 217 million, respectively, and the notional values of the forward contracts not designated as hedges that we held to sell U.S.

dollars in exchange for other currencies were $ 14 million and $ 8 million, respectively.

The fair values of outstanding derivative instruments were as follows (in thousands):

Condensed Consolidated Balance Sheets Location October 31, 2021 January 31, 2021

Condensed Consolidated Balance Sheets Location April 30, 2022 January 31, 2022

Derivative assets:

Foreign currency forward contracts designated as cash flow hedges Prepaid expenses and other current assets $ 10,806 $ 2,073

Foreign currency forward contracts designated as cash flow hedges Other assets 13,029 173

Foreign currency forward contracts not designated as hedges Prepaid expenses and other current assets 326 975

Foreign currency forward contracts not designated as hedges Other assets 5 —

Cash flow hedges Prepaid expenses and other current assets $ 50,316 $ 21,337

Cash flow hedges Other assets 41,757 16,618

Non-designated hedges Prepaid expenses and other current assets 2,669 1,076

Non-designated hedges Other assets — —

Total derivative assets $ 94,742 $ 39,031

Derivative liabilities:

Foreign currency forward contracts designated as cash flow hedges Accrued expenses and other current liabilities $ 13,291 $ 23,647

Foreign currency forward contracts designated as cash flow hedges Other liabilities 9,559 24,586

Foreign currency forward contracts not designated as hedges Accrued expenses and other current liabilities 1,326 1,162

Foreign currency forward contracts not designated as hedges Other liabilities 21 61

Cash flow hedges Accrued expenses and other current liabilities $ 20,800 $ 7,512

Cash flow hedges Other liabilities 3,261 5,175

Non-designated hedges Accrued expenses and other current liabilities 595 336

Non-designated hedges Other liabilities 47 16

Total derivative liabilities $ 24,703 $ 13,039

The effect of foreign currency forward contracts designated as cash flow hedges on the condensed consolidated statements of operations was as follows (in thousands):

Condensed Consolidated Statements of Operations Location Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Total revenues Revenues $ 1,327,263 $ 1,105,960 $ 3,762,657 $ 3,186,312

Amount of gains (losses) related to foreign currency forward contracts designated as cash flow hedges Revenues ( 3,847 ) 5,568 ( 4,996 ) 15,332

Pre-tax gains (losses) associated with foreign currency forward contracts designated as cash flow hedges were as follows (in thousands):

Condensed Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Gains (losses) recognized in OCI Net change in market value of effective foreign currency forward exchange contracts $ 21,542 $ 8,612 $ 33,320 $ ( 7,153 )

The effect of cash flow hedges on the Condensed Consolidated Statements of Operations was as follows (in thousands):

Three Months Ended April 30,

Revenues Costs and Expenses Revenues Costs and Expenses

Total $ 1,434,657 $ 1,507,500 $ 1,175,033 $ 1,213,346

Gains (losses) related to cash flow hedges ( 1,157 ) ( 829 ) 518 —

G ains (losses) associated with cash flow hedges were as follows (in thousands):

Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations Three Months Ended April 30,

Gains (losses) recognized in OCI Net change in unrealized gains (losses) on cash flow hedges $ 44,260 $ ( 4,253 )

Gains (losses) reclassified from AOCI into income (effective portion) Revenues ( 1,157 ) 518

Gains (losses) associated with foreign currency forward contracts not designated as hedges were as follows (in thousands):

Condensed Consolidated Statements of Operations Location Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Foreign currency forward contracts not designated as hedges Other income (expense), net $ 605 $ 151 $ 2,424 $ 1,524

Gains (losses) reclassified from AOCI into income (effective portion) Costs and expenses ( 829 ) —

Gains (losses) associated with non-designated as hedges were as follows (in thousands):

Condensed Consolidated Statements of Operations Location Three Months Ended April 30,

Gains (losses) related to non-designated hedges Other income (expense), net $ 3,966 $ ( 192 )

We are subject to netting agreements with all of the counterparties of the foreign exchange contracts, under which we are permitted to net settle transactions of the same currency with a single net amount payable by one party to the other.

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We manage our exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

As of October 31, 2021, information related to these offsetting arrangements was as follows (in thousands):

As of April 30, 2022, information related to these offsetting arrangements was as follows (in thousands):

Gross Amounts of Recognized Assets Gross Amounts Offset on the Condensed Consolidated Balance Sheets Net Amounts of Assets Presented on the Condensed Consolidated Balance Sheets Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets Net Assets Exposed

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Outstanding debt consisted of the following (in thousands):

October 31, 2021 January 31, 2021

Term Loan, net of unamortized debt discounts of $ 1,379 and $ 1,682 , respectively, and unamortized debt issuance costs of $ 127 and $ 155 , respectively

$ 701,619 $ 729,413

2022 Notes, net of unamortized debt discounts of $ 0 and $ 79,562 , respectively, and unamortized debt issuance costs of $ 3,261 and $ 4,771 , respectively

1,146,590 1,065,601

Total debt 1,848,209 1,795,014

current debt ( 1,212,215 ) ( 1,103,101 )

Total debt, noncurrent $ 635,994 $ 691,913

As of October 31, 2021, contractual repayments and maturities of our outstanding debt were as follows (in thousands):

April 30, 2022 January 31, 2022

2022 Notes $ 1,149,613 $ 1,149,817

2027 Notes 1,000,000 —

2029 Notes 750,000 —

2032 Notes 1,250,000 —

Term loan under the 2020 Credit Agreement — 693,750

Total principal amount 4,149,613 1,843,567

unamortized debt discount and issuance costs ( 28,419 ) ( 3,770 )

Net carrying amount 4,121,194 1,839,797

debt, current ( 1,148,126 ) ( 1,222,443 )

Debt, noncurrent $ 2,973,068 $ 617,354

As of April 30, 2022, the future principal payments for the outstanding debt were as follows (in thousands):

Fiscal Period:

Remainder of 2023 $ 1,149,613

2023 1,224,851

Thereafter 3,000,000

Total $ 4,149,613

In April 2022, we issued $ 3.0 billion aggregate principal amount of senior notes, consisting of $ 1.0 billion aggregate principal amount of 3.500 % notes due April 1, 2027 (“2027 Notes”), $ 750 million aggregate principal amount of 3.700 % notes due April 1, 2029 (“2029 Notes”), and $ 1.25 billion aggregate principal amount of 3.800 % notes due April 1, 2032 (“2032 Notes,” and together with the 2027 Notes and the 2029 Notes, “Senior Notes”).

Interest is payable semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2022.

The Senior Notes are unsecured obligations and rank equally with all existing and future unsecured and unsubordinated indebtedness of Workday.

We may redeem the Senior Notes in whole or in part at any time or from time to time, at specified redemption dates and prices.

In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms.

The indenture governing the Senior Notes also includes covenants (including certain limited covenants restricting our ability to incur certain liens and enter into certain sale and leaseback transactions), events of default, and other customary provisions.

As of April 30, 2022, we were in compliance with all covenants associated with the Senior Notes.

We incurred debt discount and issuance costs of approximately $ 27 million in connection with the Senior Notes offering, which were allocated on a pro rata basis to the 2027 Notes, 2029 Notes, and 2032 Notes.

The debt discounts and issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the contractual term of each arrangement.

The effective interest rates on the 2027 Notes, 2029 Notes, and 2032 Notes, which are calculated as the contractual interest rates adjusted for the debt discount and issuance costs, are 3.67 %, 3.82 %, and 3.90 %, respectively.

As of April 30, 2022, the total estimated fair value of the Senior Notes was $ 2.9 billion.

The estimated fair values of the Senior Notes, which we have classified as Level 2 financial instruments, were determined based on quoted bid prices in an over-the-counter market on the last trading day of the reporting period.

Credit Agreement

In April 2020, we entered into a Credit Agreement pursuant to which the lenders extended to Workday a senior unsecured Term Loan in an aggregate principal amount of $ 750 million and an unsecured Revolving Credit Facility in an aggregate principal amount of $ 750 million.

The Term Loan and Revolving Credit Facility bear interest, at our option, at either (i) a floating rate per annum equal to the base rate plus a margin that ranges from 0 % to 0.625 %, or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market plus a margin that ranges from 1.000 % to 1.625 %.

The base rate is defined as the greatest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50 %, or (iii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market for a period of one month (but not less than zero) plus 1.00 %.

Actual margins under either election will be based on our consolidated leverage ratio, which is measured by dividing (a) our consolidated funded indebtedness as of the end of the fiscal quarter by (b) our consolidated EBITDA as defined in the Credit Agreement for the most recently completed four consecutive fiscal quarters.

In April 2022, we entered into a credit agreement (“2022 Credit Agreement”) which provides for a revolving credit facility in an aggregate principal amount of $ 1.0 billion.

The 2022 Credit Agreement replaced our prior credit agreement entered into in April 2020 (“2020 Credit Agreement”) which provided for a term loan facility in an aggregate original principal amount of $ 750 million and a revolving credit facility in an aggregate principal amount of $ 750 million.

Concurrently with entering into the 2022 Credit Agreement, we paid off the remaining principal balance of $ 694 million on the term loan under the 2020 Credit Agreement and terminated the revolving credit facility under the 2020 Credit Agreement which had no outstanding balance.

The modification to our revolving credit facility and extinguishment of the term loan under the 2020 Credit Agreement did not have a material impact to our Condensed Consolidated Statements of Operations for the three months ended April 30, 2022.

As of April 30, 2022, we had no outstanding revolving loans under the 2022 Credit Agreement.

The revolving loans under the 2022 Credit Agreement may be borrowed, repaid, and reborrowed until April 6, 2027, at which time all amounts borrowed must be repaid.

The revolving loans under the 2022 Credit Agreement will bear interest, at our option, at a base rate plus a margin of 0.000 % to 0.500 % or a secured overnight financing rate (“SOFR”) rate plus 10 basis points, plus a margin of 0.750 % to 1.500 %, with such margin being determined based on our consolidated leverage ratio or debt rating.

We are also obligated to pay an ongoing commitment fee on undrawn amounts.

The 2022 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders.

The financial covenant, based on a quarterly financial test, requires Workday not to exceed a maximum leverage ratio of 3.50 :1.00, subject to a step-up to 4.50 :1.00 at the election of Workday for a certain period following an Acquisition (as defined in the Credit Agreement).

As of October 31, 2021, and January 31, 2021, we were in compliance with all covenants.

The Term Loan matures on April 2, 2025, and provides for quarterly repayment in installments of the principal amount at a rate of 1.25 % of the principal amount per quarter through January 2022, and 2.50 % of the principal amount per quarter thereafter.

The Term Loan may be prepaid or permanently reduced by Workday without penalty or premium.

As of October 31, 2021, the Term Loan had a carrying value of $ 702 million, of which $ 66 million is classified as current and $ 636 million is classified as noncurrent on the condensed consolidated balance sheet.

As of January 31, 2021, the Term Loan had a carrying value of $ 729 million, of which $ 38 million was classified as current and $ 692 million was classified as noncurrent on the condensed consolidated balance sheet.

As of October 31, 2021, and January 31, 2021, the interest rate on the Term Loan was 1.30 % and 1.38 %, respectively, and the effective interest rate was 1.41 % and 1.46 %, respectively.

Revolving Credit Facility

The Revolving Credit Facility may be borrowed, repaid, and reborrowed until April 2, 2025, at which time all amounts borrowed must be repaid.

We may request, no more than two times during the term of the Credit Agreement, that each revolving lender extend the maturity date for the revolving loans for one year.

Additionally, we may request an increase in aggregate revolving commitments of up to $ 250 million at any time prior to April 2, 2025.

The Revolving Credit Facility may be prepaid or permanently reduced by Workday without penalty or premium.

As of October 31, 2021, and January 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility.

The negative covenants include restrictions on the incurrence of liens and indebtedness, certain merger transactions, and other matters, all subject to certain exceptions.

The financial covenant, based on a quarterly financial test, requires that we do not exceed a maximum leverage ratio of 3.50 :1.00, subject to a step-up to 4.50 :1.00 at our election for a certain period following an acquisition.

As of April 30, 2022, we were in compliance with all covenants.

Convertible Senior Notes

In June 2013, we issued 1.50 % convertible senior notes due July 15, 2020, with a principal amount of $ 250 million (“2020 Notes”).

The 2020 Notes were unsecured, unsubordinated obligations, and interest was payable in cash in arrears at a fixed rate of 1.50 % on January 15 and July 15 of each year.

During the second quarter of fiscal 2021, the 2020 Notes were converted by note holders and we repaid the $ 250 million principal balance in cash.

We also distributed approximately 1.7 million shares of our Class A common stock to note holders during fiscal 2021, which represents the conversion value in excess of the principal amount.

In September 2017, we issued 0.25 % convertible senior notes due October 1, 2022, with a principal amount of $ 1.15 billion (together with the 2020 Notes, the “Notes”).

In September 2017, we issued 0.25 % convertible senior notes due October 1, 2022, with a principal amount of $ 1.15 billion (“2022 Notes”).

The 2022 Notes are unsecured, unsubordinated obligations, and interest is payable in cash in arrears at a fixed rate of 0.25 % on April 1 and October 1 of each year.

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We cannot redeem the 2022 Notes prior to maturity.

The terms of the 2022 Notes are governed by an Indenture by and between us and Wells Fargo Bank, National Association, as Trustee (“Indenture”).

The terms of the 2022 Notes are governed by an Indenture by and between us and Computershare Trust Company, as Trustee and successor to Wells Fargo Bank, National Association.

Upon conversion, holders of the 2022 Notes will receive cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at our election.

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On or after June 1, 2022, holders of the 2022 Notes may convert their 2022 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes.

The 2022 Notes were convertible at the option of the holders in the first three quarters of fiscal 2022 and continue to be convertible through the fourth quarter of fiscal 2022 since the trigger for early conversion was met.

Specifically, the last reported sale price of our Class A common stock exceeded 130 % of the conversion price of the 2022 Notes for more than 20 trading days during the 30 consecutive trading days ended October 31, 2021.

The 2022 Notes were convertible at the option of the holders during the first quarter of fiscal 2023 and continue to be convertible in the second quarter of fiscal 2023 since the trigger for early conversion was met.

Through the date of this filing, the amount of the principal balance of the 2022 Notes that has been converted or for which conversion has been requested was not material.

The 2022 Notes are classified as current on the condensed consolidated balance sheets for the periods presented.

As described in Note 2, Accounting Standards, we adopted ASU 2020-06 effective February 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted.

Prior to the adoption of the standard, in accounting for the issuance of the 2022 Notes, we separated them into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that do not have associated convertible features.

The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes.

This difference represented a debt discount that was amortized to interest expense over the term of the 2022 Notes using the effective interest rate method.

The gross carrying amount of the equity component for the 2022 Notes was $ 223 million and was included in Additional paid-in capital on the condensed consolidated balance sheets upon issuance.

The effective interest rate of the liability component of the 2022 Notes was 4.60 %.

Additionally, we separated the total issuance costs incurred into liability and equity components in proportion to the allocation of the initial proceeds, resulting in liability issuance costs of $ 14 million and equity issuance costs of $ 4 million.

Issuance costs attributable to the liability component were amortized on a straight-line basis, which approximated the effective interest rate method, to interest expense over the term of the 2022 Notes.

The issuance costs attributable to the equity component were netted against the equity component in Additional paid-in capital.

Upon adoption of ASU No.

2020-06 on February 1, 2021, we recombined the liability and equity components of the 2022 Notes assuming that the instrument was accounted for as a single liability from inception to the date of adoption.

We similarly recombined the liability and equity components of the issuance costs.

The issuance costs are presented as a deduction from the outstanding principal balance of the 2022 Notes, and are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the 2022 Notes.

As of October 31, 2021, the effective interest rate on the 2022 Notes was 0.55 %.

The standard did not impact the accounting for the 2020 Notes since they were converted and repaid prior to the date of adoption.

In connection with the issuance of the Notes, we entered into convertible note hedge transactions with respect to our Class A common stock (“Purchased Options”).

The Purchased Options are intended to offset potential economic dilution to our Class A common stock upon any conversion of the Notes.

The 2022 Notes are classified as current on the Condensed Consolidated Balance Sheets as of April 30, 2022, and January 31, 2022.

The effective interest rate on the 2022 Notes is 0.56 %.

As of April 30, 2022, and January 31, 2022, the estimated fair value of the 2022 Notes was $ 1.7 billion and $ 1.9 billion, respectively.

In connection with the issuance of the 2022 Notes, we entered into convertible note hedge transactions (“Purchased Options”) which give us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2022 Notes, approximately 7.8 million shares of our Class A common stock for $ 147.10 per share.

The Purchased Options are exercisable upon conversion of the 2022 Notes and will expire on October 1, 2022, if not exercised earlier.

They are intended to offset potential economic dilution to our Class A common stock upon any conversion of the 2022 Notes.

The Purchased Options are separate transactions and are not part of the terms of the 2022 Notes.

The amounts paid for the Purchased Options were included in Additional paid-in capital on the condensed consolidated balance sheets.

The Purchased Options relating to the 2020 Notes gave us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2020 Notes, approximately 3.1 million shares of our Class A common stock for $ 81.74 per share, exercisable upon conversion of the 2020 Notes.

During the second quarter of fiscal 2021, we received approximately 1.7 million shares of our Class A common stock from the exercise of these Purchased Options.

The Purchased Options relating to the 2022 Notes give us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2022 Notes, approximately 7.8 million shares of our Class A common stock for $ 147.10 per share, exercisable upon conversion of the 2022 Notes.

The Purchased Options relating to the 2022 Notes will expire in 2022, if not exercised earlier.

In connection with the issuance of the Notes, we also entered into warrant transactions to sell warrants (“Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 3.1 million shares over 60 scheduled trading days beginning in October 2020 and 7.8 million shares over 60 scheduled trading days beginning in January 2023 of our Class A common stock at an exercise price of $ 107.96 and $ 213.96 per share, respectively.

The amounts paid for the Purchased Options were recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets.

In connection with the issuance of the 2022 Notes, we also entered into warrant transactions to sell warrants (“Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 7.8 million shares over 60 scheduled trading days beginning in January 2023 of our Class A common stock at an exercise price of $ 213.96 per share.

If the Warrants are not exercised on their exercise dates, they will expire.

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The proceeds from the sale of the Warrants were recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets.

During the third and fourth quarters of fiscal 2021, Warrants related to the 2020 Notes were exercised, and we distributed approximately 1.6 million shares of our Class A common stock to warrant holders primarily utilizing treasury stock.

As of October 31, 2021, there were no Warrants outstanding related to the 2020 Notes.

Interest Expense on Debt

The following table sets forth total interest expense recognized related to our debt (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Contractual interest expense $ 11,385 $ 3,148

Interest cost related to amortization of debt discount 101 11,374 303 38,993

Interest cost related to amortization of debt issuance costs 896 724 2,688 2,473

Interest cost related to amortization and write-off of debt discount and issuance costs 2,601 997

Total interest expense $ 13,986 $ 4,145

We have entered into operating lease agreements for our office space, data centers, and other property and equipment.

As of October 31, 2021, and January 31, 2021, operating lease right-of-use assets were $ 270 million and $ 414 million, respectively, and operating lease liabilities were $ 286 million and $ 443 million, respectively.

Operating lease right-of-use assets were $ 252 million and $ 248 million as of April 30, 2022, and January 31, 2022, respectively, and operating lease liabilities were $ 263 million as of both April 30, 2022, and January 31, 2022.

We have also entered into finance lease agreements for other property and equipment.

As of October 31, 2021, and January 31, 2021, finance leases were not material.

As of April 30, 2022, and January 31, 2022, finance leases were not material.

The components of operating lease expense were as follows (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Operating lease cost $ 23,644 $ 24,273

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Supplemental cash flow information related to our operating leases was as follows (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Cash paid for operating lease liabilities $ 25,658 $ 26,622

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Other information related to our operating leases was as follows:

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

Weighted average remaining lease term (in years) 5 5

Weighted average discount rate 2.42 % 2.35 %

As of October 31, 2021, maturities of operating lease liabilities were as follows (in thousands):

As of April 30, 2022, maturities of operating lease liabilities were as follows (in thousands):

Fiscal Period:

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Total operating lease liabilities $ 262,810

As of October 31, 2021, we have additional operating leases for office space that have not yet commenced with total undiscounted lease payments of $ 5 million.

These operating leases will commence in fiscal 2022 and 2023, with lease terms ranging from one to six years .

Related-Party Transactions

As discussed in Note 6, Property and Equipment, Net, during fiscal 2021, we entered into an agreement with an affiliated party which gave us the option to purchase certain leased properties within our corporate headquarters.

We exercised the Leased Property Purchase Option in the first quarter of fiscal 2022 at a purchase price of $ 173 million in cash, reduced by a $ 2 million fee paid for the Leased Property Purchase Option in the prior fiscal year.

Subsequent to the exercise of the Leased Property Purchase Option, the Property is included in Property and equipment, net on the condensed consolidated balance sheet.

As of January 31, 2021, the operating lease right-of-use assets and operating lease liabilities related to these agreements were $ 134 million and $ 146 million, respectively.

We incurred no rent expense under these agreements for the three months ended October 31, 2021, as compared to $ 4 million for the three months ended October 31, 2020.

Rent expense was $ 2 million and $ 12 million for the nine months ended October 31, 2021, and 2020, respectively.

As of April 30, 2022, we have additional operating leases for office space and data centers that had not yet commenced with total undiscounted lease payments of $ 12 million.

These operating leases will commence in fiscal 2023, with lease terms ranging from five to seven years .

Commitments and Contingencies

Third-Party Hosted Infrastructure Platform-Related Commitments

We have entered into noncancelable agreements with third-party hosted infrastructure platform vendors with various expiration dates.

During the second quarter of fiscal 2022, we entered into a six-year , $ 420 million agreement for the use of cloud services.

As of October 31, 2021, future noncancelable minimum payments under these agreements were approximately $ 761 million.

Purchase Obligations

Our purchase obligations are primarily related to agreements for third-party hosted infrastructure platforms, data center equipment and software, business technology software and support, and sales and marketing activities.

During the three months ended April 30, 2022, there were no material changes outside the ordinary course of business to our non-cancelable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Legal Matters

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These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter.

In our opinion, as of October 31, 2021, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

In our opinion, as of April 30, 2022, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

Stockholders’ Equity

As of October 31, 2021, there were 193 million shares of Class A common stock, net of treasury stock, and 57 million shares of Class B common stock outstanding.

As of April 30, 2022, there were 199 million shares of Class A common stock, net of treasury stock, and 55 million shares of Class B common stock outstanding.

The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion.

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Our 2012 Equity Incentive Plan (“EIP”) serves as the successor to our 2005 Stock Plan (together with the EIP, the “Stock Plans”).

As of October 31, 2021, we had 58 million shares of Class A common stock available for future grants.

As of April 30, 2022, we had 52 million shares of Class A common stock available for future grants.

We also have a 2012 Employee Stock Purchase Plan (“ESPP”).

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Options to purchase shares are granted twice yearly on or about June 1 and December 1, and are exercisable on or about the succeeding November 30 and May 31, respectively.

As of October 31, 2021, 4 million shares of Class A common stock were available for issuance under the ESPP.

Pursuant to the terms of the ESPP, the share reserve increased by 2 million shares on March 31, 2022.

As of April 30, 2022, 6 million shares of Class A common stock were available for issuance under the ESPP.

Restricted Stock Units

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RSUs generally vest over four years .

A summary of information related to RSU activity during the nine months ended October 31, 2021, is as follows (in thousands, except per share data):

A summary of information related to RSU activity during the three months ended April 30, 2022, is as follows (in thousands, except per share data):

Number of Shares Weighted-Average Grant Date Fair Value

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RSUs forfeited ( 398 ) 198.14

Balance as of October 31, 2021 12,615 201.44

As of October 31, 2021, there was a total of $ 2.0 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years .

Balance as of April 30, 2022 15,510 214.46

As of April 30, 2022, there was a total of $ 2.6 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years .

Performance-Based Restricted Stock Units

During fiscal 2022, 0.4 million shares of performance-based restricted stock units (“PRSUs”) were granted to employees below the level of vice president that included both service conditions and performance conditions related to company-wide goals.

We expect to grant additional shares related to this program for employees hired in fiscal 2022.

These PRSU awards will vest if the performance conditions are achieved for the fiscal year ending January 31, 2022, and if the individual employee continues to provide service through the vesting date of March 15, 2022.

We recognized compensation cost related to these PRSUs of $ 24 million and $ 35 million during the three and nine months ended October 31, 2021, respectively.

A total of $ 37 million in unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately five months .

During fiscal 2021, 0.6 million shares of PRSUs were granted to all employees other than executive management that included both service conditions and performance conditions related to company-wide goals.

These performance conditions were met and the PRSUs vested on March 15, 2022.

We recognized $ 17 million in compensation cost related to these PRSUs during the nine months ended October 31, 2021.

During the three months ended April 30, 2022, we recognized $ 16 million in compensation cost related to these PRSUs.

We will not continue our company-wide PRSU program in fiscal 2023.

Stock Options

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Stock options issued under the Stock Plans generally are exercisable for periods not to exceed ten years and generally vest over five years .

A summary of information related to stock option activity during the nine months ended October 31, 2021, is as follows (in millions, except number of shares which are reflected in thousands and per share data):

A summary of information related to stock option activity during the three months ended April 30, 2022, is as follows (in millions, except number of shares which are reflected in thousands and per share data):

Outstanding Stock Options Weighted-Average Exercise Price Aggregate Intrinsic Value

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Stock options canceled ( 14 ) 32.58

Balance as of October 31, 2021 576 18.34 156

Vested and expected to vest as of October 31, 2021 575 18.33 156

Exercisable as of October 31, 2021 545 17.23 149

As of October 31, 2021, there was a total of $ 2 million in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately one year .

Balance as of April 30, 2022 261 23.53 48

Vested and expected to vest as of April 30, 2022 261 23.62 48

Exercisable as of April 30, 2022 260 23.56 48

As of April 30, 2022, unrecognized compensation cost related to unvested stock options was not material.

Unearned Revenue and Performance Obligations

Subscription services revenues of $ 1.02 billion and $ 846 million were recognized during the three months ended October 31, 2021, and 2020, respectively, that were included in the unearned revenue balances as of July 31, 2021, and 2020, respectively.

Subscription services revenues of $ 2.18 billion and $ 1.90 billion were recognized during the nine months ended October 31, 2021, and 2020, respectively, that were included in the unearned revenue balances as of January 31, 2021, and 2020, respectively.

Subscription services revenues of $ 1.1 billion and $ 930 million were recognized during the three months ended April 30, 2022, and 2021, respectively, that were included in the unearned revenue balances as of January 31, 2022, and 2021, respectively.

Professional services revenues recognized in the same periods from unearned revenue balances at the beginning of the respective periods were not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of October 31, 2021, approximately $ 10.97 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

As of April 30, 2022, approximately $ 12.7 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

We expect to recognize revenues on approximately $ 8.0 billion of these remaining performance obligations over the next 24 months, with the balance recognized thereafter.

Revenues from remaining performance obligations for professional services contracts as of October 31, 2021, were not material.

Revenues from remaining performance obligations for professional services contracts as of April 30, 2022, were not material.

Other Income (Expense), Net

Other income (expense), net consisted of the following (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

Interest income $ 4,007 $ 2,003

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Total other income (expense), net $ ( 20,163 ) $ ( 9,051 )

(1) Interest expense includes the contractual interest expense of the Term Loan and Notes, and the related non-cash interest expense attributable to amortization of the debt discounts and debt issuance costs.

(1) Interest expense primarily includes the contractual interest expense of our debt obligations, and the related non-cash interest expense attributable to amortization of the debt discounts and issuance costs.

For further information, see Note 1 0 , Debt .

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For further information, see Note 3, Investments .

We reported an income tax benefit of $ 3 million and an income tax expense of $ 4 million for the nine months ended October 31, 2021, and 2020, respectively.

The income tax benefit for the nine months ended October 31, 2021, was primarily attributable to excess tax benefit from stock option deductions in foreign jurisdictions, reversal of previously accrued tax liabilities upon favorable tax audit results, and amortization of intangibles from business combinations.

The income tax benefits were partially offset by state taxes and income tax expenses in profitable foreign jurisdictions.

The income tax expense for the nine months ended October 31, 2020, was primarily attributable to state taxes and income tax expenses in profitable foreign jurisdictions.

We reported an income tax provision of $ 9 million and an income tax benefit of $ 1 million for the three months ended April 30, 2022, and 2021, respectively.

The income tax provision for the three months ended April 30, 2022, was primarily attributable to a taxable gain recognized from an intercompany sale of intellectual property, income tax expenses in profitable foreign jurisdictions, and an increase in state taxes due to capitalized research and development expenditures.

The income tax benefit for the three months ended April 30, 2021, was primarily attributable to excess tax benefit from stock option deductions in foreign jurisdictions.

The 2017 Tax Cuts and Jobs Act requires research and development expenditures incurred for the tax year beginning after December 31, 2021, to be capitalized and amortized ratably over five years for domestic research and fifteen years for international research.

The mandatory capitalization requirement has no material impact to our fiscal 2023 income tax provision due to our tax attributes carryover and full valuation allowance position.

We are subject to income tax audits in the U.S.

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The realization of net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

As of October 31, 2021, we continue to maintain a full valuation allowance on our deferred tax assets except in certain jurisdictions.

Net Income (Loss) Per Share

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock.

Diluted net income (loss) per share is computed by giving effect to all potentially dilutive shares of common stock, including our outstanding stock options, unvested RSUs, PRSUs, and RSAs, convertible senior notes, outstanding warrants, and ESPP obligations.

The net income (loss) per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the income (loss) for the period had been distributed.

As the liquidation and dividend rights are identical, the net income (loss) attributable to common stockholders is allocated on a proportionate basis.

The computation of the diluted net income (loss) per share of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted net income (loss) per share of Class B common stock does not assume the conversion of those shares.

Basic and diluted net loss per share was the same for the three and nine months ended October 31, 2020, as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Class A Class B Class A Class B Class A Class B Class A Class B

Net income (loss) per share, basic:

Net income (loss) $ 33,417 $ 9,995 $ ( 18,199 ) $ ( 6,141 ) $ 78,546 $ 24,080 $ ( 156,526 ) $ ( 54,198 )

Weighted-average shares outstanding, basic 191,259 57,209 178,004 60,055 188,546 57,802 175,071 60,614

Net income (loss) per share, basic $ 0.17 $ 0.17 $ ( 0.10 ) $ ( 0.10 ) $ 0.42 $ 0.42 $ ( 0.89 ) $ ( 0.89 )

Net income (loss) per share, diluted:

Net income (loss) 33,417 9,995 ( 18,199 ) ( 6,141 ) 78,546 24,080 ( 156,526 ) ( 54,198 )

Reallocation of net income and interest expense as a result of conversion of Class B to Class A common stock 9,995 — — — 24,080 — — —

Reallocation of net income and interest expense to Class B common stock — ( 247 ) — — — ( 718 ) — —

Net income (loss) for diluted calculation 43,412 9,748 ( 18,199 ) ( 6,141 ) 102,626 23,362 ( 156,526 ) ( 54,198 )

Weighted-average shares outstanding, basic 191,259 57,209 178,004 60,055 188,546 57,802 175,071 60,614

Conversion of Class B to Class A common stock 57,209 — — — 57,802 — — —

Shares related to outstanding options, unvested RSUs, PRSUs, RSAs, and ESPP obligations 4,933 — — — 6,456 — — —

Shares subject to warrants related to the issuance of convertible senior notes 1,359 — — — 1,113 — — —

Weighted-average shares outstanding, diluted 254,760 57,209 178,004 60,055 253,917 57,802 175,071 60,614

Net income (loss) per share, diluted $ 0.17 $ 0.17 $ ( 0.10 ) $ ( 0.10 ) $ 0.40 $ 0.40 $ ( 0.89 ) $ ( 0.89 )

The weighted-average number of shares outstanding used in the computation of diluted net income (loss) per share does not include the effect of the following potentially outstanding shares of common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net income (loss) per share because the effect would have been anti-dilutive (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Shares related to outstanding options, unvested RSUs, PRSUs, RSAs, and ESPP obligations 151 18,169 189 17,125

As of April 30, 2022, we continue to maintain a full valuation allowance on our deferred tax assets except in certain jurisdictions.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock.

Diluted net loss per share is computed by giving effect to all potentially dilutive shares of common stock, including our convertible senior notes, outstanding warrants related to the issuance of the convertible senior notes, and outstanding share-based awards consisting primarily of unvested RSUs and ESPP obligations.

The net loss per share is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the loss for the period had been distributed.

As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis.

Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

Three Months Ended April 30,

Class A Class B Class A Class B

Net loss per share, basic and diluted:

Net loss $ ( 79,738 ) $ ( 22,435 ) $ ( 35,385 ) $ ( 11,137 )

Weighted-average shares outstanding 196,466 55,277 185,397 58,342

Net loss per share, basic and diluted $ ( 0.41 ) $ ( 0.41 ) $ ( 0.19 ) $ ( 0.19 )

The computation of diluted net loss per share does not include the effect of the following potentially outstanding weighted-average shares of common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net loss per share because the effect would have been anti-dilutive (in thousands):

Three Months Ended April 30,

Shares related to outstanding share-based awards 13,654 14,757

Shares related to the convertible senior notes 7,816 7,817

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Total 29,288 30,392

Disaggregation of Revenues and Geographic Information

Disaggregation of Revenues

Geographic Information

We sell our subscription contracts and related services in two primary geographical markets:

to customers located in the United States and to customers located outside of the United States.

Revenues by geography are generally based on the address of the customer as specified in our master subscription agreement.

Revenues by geography are generally based on the address of the customer as specified in our customer subscription agreement.

The following table sets forth revenues by geographic area (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

2021 2020 2021 2020

Three Months Ended April 30,

United States $ 1,075,045 $ 883,441

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Total revenues $ 1,434,657 $ 1,175,033

No single customer or country other than the United States represented greater than 10% of our total revenues for the three and nine months ended October 31, 2021, or 2020.

Long-Lived Assets

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Aggregate Property and equipment, net and Operating lease right-of-use assets by geographic area was as follows (in thousands):

October 31, 2021 January 31, 2021

April 30, 2022 January 31, 2022

United States $ 1,231,597 $ 1,174,371

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Total long-lived assets $ 1,438,240 $ 1,370,883

Subsequent Event

In November 2021, we entered into a definitive agreement to acquire VNDLY, a provider of a cloud-based external workforce and vendor management technology, for consideration of approximately $ 510 million, consisting principally of cash, subject to adjustments.

The acquisition is expected to close during our fourth quarter of fiscal 2022, subject to the satisfaction of customary closing conditions, including required regulatory approvals.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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We have based these forward-looking statements largely on our current expectations, beliefs, and projections about future events, conditions, and trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control, including those arising from the impact of the coronavirus pandemic, as well as those described in the “Risk Factors” section, which we encourage you to read carefully.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control, including those arising from the impact of the coronavirus pandemic (“COVID-19 pandemic”) and Russia-Ukraine conflict, as well as those described in the “ Risk Factors ” section, which we encourage you to read carefully.

Moreover, we operate in a very competitive and rapidly changing environment.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements