What changed in this filing

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Item 1. Financial Statements

2024-05-29 compared with 2023-11-28 · 235 added, 260 removed, 489 unchanged (50% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands)

October 31, 2023 January 31, 2023

(in millions)

April 30, 2024 January 31, 2024

Current assets:

9 unchanged sentences

Acquisition-related intangible assets, net 351 233

Deferred tax assets 1,056 1,065

Goodwill 3,257 2,846

25 unchanged sentences

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

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

2023 2022 2023 2022

(in millions, except number of shares which are reflected in thousands and per share data)

Three Months Ended April 30,

Subscription services $ 1,815 $ 1,528

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

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

2023 2022 2023 2022

Three Months Ended April 30,

Costs of subscription services $ 38 $ 29

7 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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

2023 2022 2023 2022

(in millions)

Three Months Ended April 30,

Net income (loss) $ 107 $ 0

Other comprehensive income (loss):

Other comprehensive income (loss), net of tax:

Net change in foreign currency translation adjustment ( 2 ) ( 1 )

Net change in unrealized gains (losses) on available-for-sale debt securities ( 4,634 ) ( 13,232 ) ( 16,204 ) ( 23,513 )

Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision (benefit) of $( 9 ) and $ 0 , respectively

Net change in unrealized gains (losses) on cash flow hedges, net of tax provision of $ 1 and $ 2 , respectively

48,472 57,483 ( 323 ) 125,923

Other comprehensive income (loss) 39,987 41,153 ( 19,844 ) 96,405

Other comprehensive income (loss), net of tax ( 4 ) ( 10 )

Comprehensive income (loss) $ 103 $ ( 10 )

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Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

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

2023 2022 2023 2022

(in millions, except number of shares which are reflected in thousands)

Three Months Ended April 30,

Common stock:

Balance, beginning of period $ 0 $ 0

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 1 1 5 5

Settlement of convertible senior notes — 1 — 1

Issuance of common stock under employee equity plans 0 0

Shares withheld related to net share settlement of equity awards 0 0

Balance, end of period 0 0

1 unchanged sentence

Balance, beginning of period 10,400 8,829

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes ( 4,804 ) 709 82,488 84,997

Issuance of common stock under employee equity plans 0 1

Shares withheld related to net share settlement of equity awards ( 274 ) ( 3 )

Share-based compensation 386 369

Exercise of convertible senior notes hedges — 97,794 — 97,916

Settlement of convertible senior notes — ( 39 ) — ( 40 )

Balance, end of period 10,512 9,196

1 unchanged sentence

Balance, beginning of period ( 608 ) ( 185 )

Exercise of convertible senior notes hedges — ( 97,794 ) — ( 97,915 )

Common stock repurchases under share repurchase program ( 147,786 ) — ( 286,434 ) —

Common stock repurchases under share repurchase programs ( 134 ) 0

Balance, end of period ( 742 ) ( 185 )

8 unchanged sentences

Total stockholders’ equity $ 8,163 $ 5,942

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

2023 2022 2023 2022

Common stock (in shares):

Three Months Ended April 30,

Common stock shares:

Balance, beginning of period 263,862 257,991

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 1,363 1,198 5,865 5,474

Settlement of convertible senior notes — 634 — 635

Purchase of treasury stock from the exercise of convertible senior notes hedges — ( 634 ) — ( 635 )

Issuance of common stock under employee equity plans 2,876 2,434

Shares withheld related to net share settlement of equity awards ( 1,018 ) ( 17 )

Common stock repurchased ( 502 ) 0

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(in thousands)

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

2023 2022 2023 2022

(in millions)

Three Months Ended April 30,

Cash flows from operating activities:

7 unchanged sentences

Accretion of discounts on marketable debt securities, net ( 33 ) ( 34 )

Deferred income taxes 6 2

Other 1 ( 5 )

11 unchanged sentences

Sales of marketable securities 17 22

Owned real estate projects ( 1,424 ) ( 181 ) ( 3,112 ) ( 446 )

Capital expenditures, excluding owned real estate projects ( 58,524 ) ( 58,665 ) ( 181,053 ) ( 286,013 )

Capital expenditures ( 81 ) ( 59 )

Business combinations, net of cash acquired ( 512 ) 0

1 unchanged sentence

Purchases of non-marketable equity and other investments 0 ( 11 )

Sales and maturities of non-marketable equity and other investments 54 4,513 54 11,674

Net cash provided by (used in) investing activities ( 258 ) ( 713 )

Cash flows from financing activities:

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

Repayments and extinguishment of debt — ( 1,149,622 ) — ( 1,843,605 )

Payments for debt issuance costs — — — ( 7,220 )

Repurchases of common stock ( 128 ) 0

Proceeds from issuance of common stock from employee equity plans, net of taxes paid for shares withheld ( 4,803 ) 710 82,493 85,002

Other ( 69 ) ( 161 ) ( 474 ) ( 538 )

Proceeds from issuance of common stock from employee equity plans 0 1

Taxes paid related to net share settlement of equity awards ( 239 ) ( 3 )

Net cash provided by (used in) financing activities ( 367 ) ( 2 )

4 unchanged sentences

See Notes to Condensed Consolidated Financial Statements

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

2023 2022 2023 2022

Three Months Ended April 30,

Supplemental cash flow data:

3 unchanged sentences

Purchases of property and equipment, accrued but not paid 37 54

As of October 31,

Accrued taxes related to net share settlement of equity awards

As of April 30,

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

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and its subsidiaries unless the context indicates otherwise.

Amounts in this report may not recalculate due to rounding.

Year-over-year comparisons, operating margin, and net income (loss) per share are calculated using unrounded data.

Overview and Basis of Presentation

Company and Background

Description of the Business

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.

Basis of Presentation

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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, 2023, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2024.

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, 2023, filed with the SEC on February 27, 2023.

The results of operations for the three months ended April 30, 2024, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2025.

Certain prior period amounts reported in our unaudited condensed 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, 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.

Significant estimates, judgements, and assumptions include, but are not limited to, the identification of distinct performance obligations for revenue recognition, 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.

In February 2023, we completed an assessment of the useful lives of our data center equipment, including servers, network equipment, and integrated complete server and network racks.

Due to advances in technology, as well as investments in software that increased efficiencies in how we operate our data center equipment, we determined we should increase the estimated useful lives of data center equipment from 3 years to 5 years.

This change in accounting estimate was effective beginning fiscal 2024.

Based on the carrying amount of data center equipment that was in-service as of January 31, 2023, this change decreased depreciation expense by $ 22 million and $ 77 million for the three and nine months ended October 31, 2023, respectively.

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 identification of distinct performance obligations for revenue recognition, the determination of the period of benefit for deferred commissions, the realizability of deferred tax assets, the measurement of uncertain tax positions, 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, judgments, 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 a chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance.

For the nine months ended October 31, 2023, our co-chief executive officers together served as CODM for purposes of segment reporting.

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

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

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

Significant Accounting Policies and Accounting Standards

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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 financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, debt securities, derivative instruments, 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 October 31, 2023, or January 31, 2023.

No customer individually accounted for more than 10% of total revenues during the three and nine months ended October 31, 2023, or 2022.

Other than the United States, no country individually accounted for more than 10% of total revenues during the three and nine months ended October 31, 2023, or 2022.

No customer individually accounted for more than 10% of trade and other receivables, net as of April 30, 2024, or January 31, 2024.

No customer individually accounted for more than 10% of total revenues during the three months ended April 30, 2024, or 2023.

Other than the United States, no country individually accounted for more than 10% of total revenues during the three months ended April 30, 2024, or 2023.

In order to reduce the risk of disruption 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.

We serve our customers and users from data center facilities operated by third parties, located in North America and Europe.

We have internal procedures to restore services in the event of disruption 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.

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

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

We are also exposed to concentration of risk in our equity investments portfolio, which consists of marketable equity investments and non-marketable equity investments measured using the measurement alternative.

As of both October 31, 2023, and January 31, 2023, we held one marketable equity investment with a carrying value that was individually greater than 10% of our total equity investments portfolio.

Recently Issued Accounting Pronouncements

2 unchanged sentences

Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

We are currently evaluating the impacts of the new standard.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The standard requires retrospective application to all prior periods presented in the financial statements.

We do not intend to early adopt, and are currently evaluating the impacts of the new standard.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Disclosures , which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The standard allows for adoption on a prospective basis, with a retrospective option.

We do not intend to early adopt, and are currently evaluating the impacts of the new standard.

Debt Securities

As of October 31, 2023, debt securities consisted of the following (in thousands):

As of April 30, 2024, debt securities consisted of the following (in millions):

Amortized Cost Unrealized Gains Unrealized Losses Aggregate Fair Value

6 unchanged sentences

Included in Marketable securities $ 5,457 $ 1 $ ( 28 ) $ 5,430

As of January 31, 2023, debt securities consisted of the following (in thousands):

As of January 31, 2024, debt securities consisted of the following (in millions):

Amortized Cost Unrealized Gains Unrealized Losses Aggregate Fair Value

6 unchanged sentences

Included in Marketable securities $ 5,794 $ 15 $ ( 8 ) $ 5,801

The contractual maturities of debt securities were as follows (in thousands):

October 31, 2023

The fair values of debt securities, by remaining contractual maturity, were as follows (in millions):

April 30, 2024

Due within 1 year $ 3,346

4 unchanged sentences

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.

As of October 31, 2023, and January 31, 2023, the fair values of debt securities in an unrealized loss position were $ 4.3 billion and $ 3.1 billion, respectively, the majority of which had been in a continuous unrealized loss position for less than 12 months.

As of April 30, 2024, and January 31, 2024, the fair value of debt securities in an unrealized loss position totaled $ 4.6 billion and $ 2.4 billion, respectively, the majority of which had been in a continuous unrealized loss position for less than 12 months.

Unrealized losses on debt securities primarily resulted from changes in market interest rates.

We do not intend to sell these debt securities and it is not more likely than not that we will be required to sell the debt securities before recovery of their amortized cost bases, which may be at maturity.

We did not recognize any credit or non-credit related losses related to our debt securities during the periods presented.

We sold $ 24 million and $ 20 million of debt securities during the three months ended October 31, 2023, and 2022, respectively.

We sold $ 42 million and $ 48 million of debt securities during the nine months ended October 31, 2023, and 2022, respectively.

We sold $ 17 million and $ 12 million of debt securities during the three months ended April 30, 2024, and 2023, respectively.

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, 2023 January 31, 2023

Equity investments consisted of the following (in millions):

Condensed Consolidated Balance Sheets Location April 30, 2024 January 31, 2024

Money market funds Cash and cash equivalents $ 873 $ 1,017

Non-marketable equity investments measured using the measurement alternative Other assets 240 248

Marketable equity investments Marketable securities 29,173 80,766

Total equity investments $ 1,113 $ 1,265

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,

2023 2022 2023 2022

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

Three Months Ended April 30,

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

$ ( 807 ) $ 4,514 $ 1,984 $ ( 365 )

Net unrealized gains (losses) recognized on equity investments held as of the end of the period ( 8 ) ( 8 )

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These investments are recorded at cost and are adjusted for observable transactions for same or similar securities of the same issuer or impairment events.

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

October 31, 2023 January 31, 2023

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

April 30, 2024 January 31, 2024

Total initial cost $ 213 $ 213

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Carrying value $ 240 $ 248

During the three months ended October 31, 2023, we recorded impairment losses of $ 9 million to the carrying value of non-marketable equity investments.

During the three months ended October 31, 2022, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 2 million, impairment losses of $ 2 million, and a gain of $ 4 million upon exiting a non-marketable equity investment.

During the nine months ended October 31, 2023, we recorded impairment losses of $ 22 million to the carrying value of non-marketable equity investments.

During the nine months ended October 31, 2022, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 8 million, impairment losses of $ 10 million, and a net loss of $ 2 million upon exiting a non-marketable equity investment.

During the three months ended April 30, 2024, and 2023, we recorded impairment losses on our non-marketable equity investments of $ 8 million and $ 3 million, respectively.

Marketable Equity Investments

We hold marketable equity investments with readily determinable fair values over which we do not own a controlling interest or exercise significant influence.

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

October 31, 2023 January 31, 2023

Total initial cost $ 14,817 $ 38,449

Cumulative net unrealized gains (losses) 14,356 42,317

Carrying value

$ 29,173 $ 80,766

During the three months ended October 31, 2023, we sold marketable equity investments for proceeds of $ 22 million.

We did no t sell any marketable equity investments during the three months ended October 31, 2022.

During the nine months ended October 31, 2023, and 2022, we sold marketable equity investments for proceeds of $ 52 million and $ 5 million, respectively.

The realized gains and losses from the sales were immaterial.

For the marketable equity investments held as of the end of each period, we recorded unrealized net losses of $ 4 million during the three months ended October 31, 2023, no material unrealized net gains or losses during the three months ended October 31, 2022, and unrealized net losses of $ 2 million and $ 17 million during the nine months ended October 31, 2023, and 2022, respectively.

We may hold marketable equity investments with readily determinable fair values over which we do not own a controlling interest or exercise significant influence.

As of April 30, 2024, and January 31, 2024, we did not hold any such investments.

During the three months ended April 30, 2023, we recorded unrealized net losses of $ 5 million on our marketable equity investment balance held as of the end of the period of $ 66 million.

Additionally, we sold marketable equity investments for proceeds of $ 10 million with an immaterial corresponding realized gain.

Fair Value Measurements

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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, 2023 (in thousands):

Level 1 Level 2 Level 3 Total

4 unchanged sentences

Money market funds 873 0 0 873

Marketable equity investments 29,173 — — 29,173

Foreign currency derivative assets 0 64 0 64

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Total liabilities $ 0 $ 20 $ 0 $ 20

Level 1 Level 2 Level 3 Total

4 unchanged sentences

Money market funds 1,017 0 0 1,017

Marketable equity investments 80,766 — — 80,766

Foreign currency derivative assets 0 46 0 46

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Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $ 640 million and $ 612 million as of October 31, 2023, and January 31, 2023, respectively.

Amortization expense for the deferred costs was $ 54 million and $ 45 million for the three months ended October 31, 2023, and 2022, respectively, and $ 155 million and $ 127 million for the nine months ended October 31, 2023, and 2022, respectively.

Deferred costs, which consist of deferred sales commissions, were $ 721 million and $ 741 million as of April 30, 2024, and January 31, 2024, respectively.

Amortization expense for the deferred costs was $ 59 million and $ 49 million for the three months ended April 30, 2024, and 2023, respectively.

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

Property and Equipment, Net

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

October 31, 2023 January 31, 2023

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

April 30, 2024 January 31, 2024

Computers, equipment, and software $ 1,337 $ 1,387

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Property and equipment, net $ 1,238 $ 1,234

Depre ciati on expense totaled $ 52 million and $ 69 million for the three months ended October 31, 2023, and 2022, respectively, and $ 149 million and $ 207 million for the nine months ended October 31, 2023, and 2022, respectively.

Depre ciati on expense totaled $ 56 million and $ 48 million for the three months ended April 30, 2024, and 2023 .

Business Combination

HiredScore Acquisition

On March 29, 2024, we acquired all outstanding stock of HiredScore, Inc.

(“HiredScore”), a provider of AI-powered talent orchestration solutions.

With HiredScore, Workday provides customers with a comprehensive, transparent, and intelligent talent acquisition and internal mobility offering, helping them better address their ever-evolving people needs.

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

The total acquisition-date fair value of the purchase consideration was $ 530 million, which was paid in cash.

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 be subject to change over the measurement period as additional information is received and certain tax matters are finalized.

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 preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows (in millions):

Acquisition-related intangible assets 135

Other liabilities

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

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

Developed technology $ 111 8

Customer relationships 23 14

Total acquisition-related intangible assets

The goodwill recognized was primarily attributable to the assembled workforce and the expected synergies from integrating HiredScore’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 HiredScore have not been presented as the effect of this acquisition was not material to our financial results.

Acquisition-Related Intangible Assets, Net

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

October 31, 2023 January 31, 2023

Acquisition-related intangible assets, net consisted of the following as of April 30, 2024 (in millions):

Gross Carrying Amount

Accumulated Amortization

Net Book Value

Developed technology $ 429 $ ( 266 ) $ 163

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Trade name 14 ( 13 ) 1

Acquisition-related intangible assets, gross 665,400 681,300

Less accumulated amortization ( 416,158 ) ( 375,835 )

Acquisition-related intangible assets, net $ 249,242 $ 305,465

Amortization expense related to acquisition-related intangible assets was $ 16 million and $ 21 million for the three months ended October 31, 2023, and 2022, respectively, and $ 58 million and $ 64 million for the nine months ended October 31, 2023, and 2022, respectively.

As of October 31, 2023, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

$ 792 $ ( 441 ) $ 351

Acquisition-related intangible assets, net consisted of the following as of January 31, 2024 (in millions):

Gross Carrying Amount

Accumulated Amortization

Net Book Value

Developed technology $ 318 $ ( 256 ) $ 62

Customer relationships 311 ( 140 ) 171

Backlog 15 ( 15 ) 0

Trade name 13 ( 13 ) 0

$ 657 $ ( 424 ) $ 233

Amortization expense related to acquisition-related intangible assets was $ 17 million and $ 21 million for the three months ended April 30, 2024, and 2023, respectively.

As of April 30, 2024, the future estimated amortization expense related to acquisition-related intangible assets was as follows (in millions):

Fiscal Period:

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Thereafter 97

Total $ 249,242

Other Noncurrent Assets

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

October 31, 2023 January 31, 2023

Other assets consisted of the following (in millions):

April 30, 2024 January 31, 2024

Non-marketable equity and other investments $ 240 $ 248

Derivative assets 37,725 21,757

Contract assets 31 21

Technology patents and other intangible assets, net 25 26

Derivative assets 24 14

Prepayments for goods and services 13 14

Net deferred tax assets 7,105 12,650

Deposits 6,038 5,819

Other 6,445 13,274

Total other assets $ 353 $ 337

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

As of October 31, 2023, the future estimated amortization expense was as follows (in thousands):

As of April 30, 2024, the future estimated amortization expense was as follows (in millions):

Fiscal Period:

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Thereafter 10

Total $ 27,175

Derivative Instruments

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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 October 31, 2023, we estimate that $ 33 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 October 31, 2023, and January 31, 2023, the notional values of the cash flow hedges that we held to buy U.S.

As of April 30, 2024, we estimate that $ 27 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, 2024, and January 31, 2024, the notional values of the cash flow hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 2.7 billion and $ 2.5 billion, respectively.

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

dollars in exchange for other currencies were $ 369 million and $ 324 million as of October 31, 2023, and January 31, 2023, respectively.

dollars in exchange for other currencies were $ 393 million and $ 399 million as of April 30, 2024, and January 31, 2024, respectively.

All contracts had maturities of less than 59 months.

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Cash flows from the settlement of these forward contracts are classified as operating activities on the Condensed Consolidated Statements of Cash Flows.

As of October 31, 2023, and January 31, 2023, the notional values of the non-designated hedges that we held to buy U.S.

As of April 30, 2024, and January 31, 2024, the notional values of the non-designated hedges that we held to buy U.S.

dollars in exchange for other currencies were $ 68 million and $ 237 million, respectively, and the notional values of the non-designated hedges that we held to sell U.S.

dollars in exchange for other currencies were $ 49 million and $ 11 million, respectively.

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

Condensed Consolidated Balance Sheets Location October 31, 2023 January 31, 2023

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

Condensed Consolidated Balance Sheets Location April 30, 2024 January 31, 2024

Derivative assets:

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Non-designated hedges Accrued expenses and other current liabilities 1 1

Non-designated hedges Other liabilities — 1

Total derivative liabilities $ 20 $ 27

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

Three Months Ended October 31,

Condensed Consolidated Statements of Operations Location 2023 2022

Total Gains (losses) related to cash flow hedges Total Gains (losses) related to cash flow hedges

Revenues $ 1,865,675 $ 15,625 $ 1,599,103 $ 5,647

Costs and expenses 1,777,820 839 1,625,424 ( 11,852 )

Provision for (benefit from) income taxes

15,534 — 52,563 ( 3,220 )

Nine Months Ended October 31,

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

Three Months Ended April 30,

Condensed Consolidated Statements of Operations Location 2024 2023

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Costs and expenses 1,926 ( 2 ) 1,704 ( 1 )

Provision for (benefit from) income taxes

25,459 — 59,021 ( 3,220 )

Pre-tax gains (losses) associated with 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,

2023 2022 2023 2022

Pre-tax gains (losses) associated with cash flow hedges were as follows (in millions):

Condensed 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 $ 30 $ 1

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Gains (losses) reclassified from AOCI into income (effective portion) Costs and expenses ( 2 ) ( 1 )

Gains (losses) reclassified from AOCI into income (effective portion) Provision for (benefit from) income taxes

— ( 3,220 ) — ( 3,220 )

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

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

2023 2022 2023 2022

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

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

Gains (losses) related to non-designated hedges Other income (expense), net $ 1 $ 2

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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, 2023, information related to these offsetting arrangements was as follows (in thousands):

As of April 30, 2024, information related to these offsetting arrangements was as follows (in millions):

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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Counterparty E 3 0 3 ( 1 ) 0 2

Counterparty F 1 0 1 0 0 1

Total $ 64 $ 0 $ 64 $ ( 20 ) $ 0 $ 44

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Counterparty E 1 0 1 ( 1 ) 0 0

Counterparty F 0 0 0 0 0 0

Total $ 20 $ 0 $ 20 $ ( 20 ) $ 0 $ 0

Outstanding debt consisted of the following (in thousands):

October 31, 2023 January 31, 2023

Outstanding debt consisted of the following (in millions):

April 30, 2024 January 31, 2024

2027 Notes $ 1,000 $ 1,000

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Debt, noncurrent $ 2,981 $ 2,980

As of October 31, 2023, the future principal payments for the outstanding debt were as follows (in thousands):

As of April 30, 2024, the future principal payments for the outstanding debt were as follows (in millions):

Fiscal Period:

Remainder of 2025 $ 0

2028 1,000,000

Thereafter 2,000

1 unchanged sentence

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, which commenced in October 2022.

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

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

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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 October 31, 2023, we were in compliance with all covenants associated with the Senior Notes.

As of April 30, 2024, 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.

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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 October 31, 2023, the total estimated fair value of the Senior Notes was $ 2.6 billion.

As of April 30, 2024, and January 31, 2024, the total estimated fair value of the Senior Notes was $ 2.7 billion and $ 2.8 billion, respectively.

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.

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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 fiscal 2023.

As of October 31, 2023, we had no outstanding revolving loans under the 2022 Credit Agreement.

As of April 30, 2024, 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.

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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 October 31, 2023, we were in compliance with all covenants included in the 2022 Credit Agreement.

Convertible Senior 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 were unsecured, unsubordinated obligations, and interest was payable in cash in arrears at a fixed rate of 0.25 % on April 1 and October 1 of each year.

During the third quarter of fiscal 2023, the 2022 Notes were converted by note holders, and we repaid the $ 1.15 billion principal balance in cash.

We also distributed approximately 0.6 million shares of our Class A common stock to note holders during fiscal 2023, which represented the conversion value in excess of the principal amount.

In connection with the issuance of the 2022 Notes, we entered into convertible note hedge transactions (“Purchased Options”) which gave 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.

During the third quarter of fiscal 2023, we received approximately 0.6 million shares of our Class A common stock from the exercise of the Purchased Options, which offset the economic dilution to our Class A common stock upon conversion of the 2022 Notes.

These shares were recorded as Treasury stock on the Condensed Consolidated Balance Sheets.

The Purchased Options were separate transactions and were not part of the terms of the 2022 Notes, and expired on October 1, 2022.

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 of our Class A common stock over 60 scheduled trading days beginning in January 2023 at an exercise price of $ 213.96 per share.

During the first quarter of fiscal 2024, the Warrants fully expired without exercise.

As of April 30, 2024 and January 31, 2024, we were in compliance with all covenants included in the 2022 Credit Agreement.

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,

2023 2022 2023 2022

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

Three Months Ended April 30,

Contractual interest expense $ 28 $ 28

Interest cost related to amortization and write-off of debt discount and issuance costs 955 1,557 2,866 6,000

Interest cost related to amortization of debt discount and issuance costs 1 1

Total interest expense $ 29 $ 29

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

Operating lease right-of-use assets were $ 266 million and $ 249 million as of October 31, 2023, and January 31, 2023, respectively, and operating lease liabilities were $ 297 million and $ 273 million as of October 31, 2023, and January 31, 2023, respectively.

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

As of October 31, 2023, and January 31, 2023, 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,

2023 2022 2023 2022

Operating lease right-of-use assets were $ 323 million and $ 289 million as of April 30, 2024, and January 31, 2024, respectively, and operating lease liabilities were $ 363 million and $ 316 million as of April 30, 2024, and January 31, 2024, respectively.

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

Three Months Ended April 30,

Operating lease cost $ 29 $ 29

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Total operating lease cost $ 39 $ 41

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

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

2023 2022 2023 2022

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

Three Months Ended April 30,

Cash paid for operating lease liabilities $ 23 $ 28

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Other information related to our operating leases was as follows:

October 31, 2023 January 31, 2023

April 30, 2024 January 31, 2024

Weighted average remaining lease term (in years) 6 5

Weighted average discount rate 3.97 % 3.95 %

As of October 31, 2023, maturities of operating lease liabilities were as follows (in thousands):

As of April 30, 2024, maturities of operating lease liabilities were as follows (in millions):

Fiscal Period:

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Total operating lease liabilities $ 363

As of October 31, 2023 , we have additional operating leases for data centers and office space that had not yet commenced with total undiscounted lease payments of $ 71 million.

These operating leases will commence between fiscal 2024 and fiscal 2026, with lease terms ranging from approximately three to six years .

As of April 30, 2024 , we have additional operating leases for data centers and office space that had not yet commenced with total undiscounted lease payments of $ 41 million.

These operating leases will commence in fiscal 2025 and fiscal 2026, with lease terms ranging from approximately two to seven years .

Commitments and Contingencies

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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 nine months ended October 31, 2023, 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, 2023.

During the three months ended April 30, 2024, 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, 2024.

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, 2023, 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, 2024, 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, 2023, there were 209 million shares of Class A common stock, net of treasury stock, and 54 million shares of Class B common stock outstanding.

As of April 30, 2024, there were 212 million shares of Class A common stock, net of treasury stock, and 53 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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Each share of Class B common stock can be converted into a share of Class A common stock at any time at the option of the holder.

Share Repurchase Program

In November 2022, our Board of Directors authorized the repurchase of up to $ 500 million of our outstanding shares of Class A common stock (the “Share Repurchase Program”).

We may repurchase shares of Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in accordance with applicable securities laws and other restrictions.

The timing and total amount of stock repurchases will depend upon business, economic, and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.

Share Repurchase Programs

In November 2022, our Board of Directors authorized the repurchase of up to $ 500 million of our outstanding shares of Class A common stock (“2022 Share Repurchase Program”).

As of April 30, 2024, we had completed the purchase authorization under this program.

In February 2024, our Board of Directors authorized a new program under which we may repurchase up to an additional $ 500 million of our outstanding shares of Class A common stock (“2024 Share Repurchase Program”).

We may repurchase shares of Class A common stock from time to time through open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, or by other means, in accordance with applicable securities laws and other restrictions.

The timing and total amount of share repurchases under this program will depend upon business, economic, and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.

The 2024 Share Repurchase Program has a term of 18 months, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of Class A common stock.

During the three and nine months ended October 31, 2023, we repurchased approximately 0.7 million and 1 million shares of Class A common stock for approximately $ 148 million and $ 286 million, at an average price per share of $ 218.35 and $ 218.34 , respectively.

During the three months ended April 30, 2024, we repurchased a total of approximately 0.5 million shares of Class A common stock for approximately $ 134 million at an average price per share of $ 267.09 .

Of the shares repurchased, $ 2 million were acquired under the 2022 Share Repurchase Program, with the remainder acquired under the 2024 Share Repurchase Program.

All repurchases were made in open market transactions.

As of October 31, 2023, we were authorized to purchase a remaining $ 139 million of our outstanding shares of Class A common stock under the Share Repurchase Program.

No shares were repurchased during the three months ended April 30, 2023.

As of April 30, 2024, we were authorized to repurchase a remaining $ 369 million of our outstanding shares of Class A common stock under the 2024 Share Repurchase Program.

Employee Equity Plans

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Prior awards granted under the 2012 Plan continue to be subject to the terms and provisions of the 2012 Plan.

As of October 31, 2023, we had 21 million shares of Class A common stock available for future grants.

Shares that are withheld in connection with the net share settlement of RSUs or forfeited are added to the reserves of the 2022 Plan.

As of April 30, 2024, we had 17 million shares of Class A common stock available for future grants.

In June 2022, our stockholders approved the Amended and Restated 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, 2023, 4 million shares of Class A common stock were available for issuance under the ESPP.

As of April 30, 2024, 4 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 .

RSU activity during the nine months ended October 31, 2023, was as follows (in thousands, except per share data):

RSU activity during the three months ended April 30, 2024, was as follows (in thousands, except per share data):

Number of Shares Weighted-Average Grant Date Fair Value

Balance as of January 31, 2023 14,099 $ 206.38

Outstanding balance as of January 31, 2024 15,020 $ 203.94

RSUs granted 5,535 254.94

RSUs vested ( 1,836 ) 195.81

RSUs forfeited ( 1,269 ) 203.10

Balance as of October 31, 2023 16,123 201.22

As of October 31, 2023, there was a total of $ 2.5 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 .

RSUs forfeited and canceled (1)

( 1,210 ) 201.71

Outstanding balance as of April 30, 2024 17,509 221.07

(1) Includes shares withheld in connection with the net share settlement of RSUs.

As of April 30, 2024, there was a total of $ 3.0 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 .

Market-Based Restricted Stock Units

In December 2022, 0.3 million shares of market-based RSUs were granted to our newly appointed Co-CEO that vest based on appreciation of the price of our Class A common stock over a multi-year period and upon continued service (“PVU Award”).

In December 2022, 0.3 million shares of market-based RSUs were granted to Mr.

Eschenbach in connection with his appointment as Co-CEO that vest based on appreciation of the price of our Class A common stock over a multi-year period and upon continued service (“PVU Award”).

We estimated the fair value of the PVU Award on the grant date using the Monte Carlo simulation model with the following assumptions:

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However, the number of shares that ultimately vest can vary significantly with the achievement of the specified market criteria.

As of October 31, 2023, there was a total of $ 23 million in unrecognized compensation cost related to the PVU Award, which is expected to be recognized over approximately four years .

As of April 30, 2024, there was a total of $ 16 million in unrecognized compensation cost related to the PVU Award, which is expected to be recognized over approximately four years .

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 .

Stock option activity during the nine months ended October 31, 2023, was as follows (in thousands, except aggregate intrinsic value, which is reflected in millions, and per share data):

Outstanding Stock Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Balance as of January 31, 2023 115 $ 30.36 $ 17

Stock options exercised ( 17 ) 35.03

Stock options canceled — —

Balance as of October 31, 2023 98 29.58 18

Vested and expected to vest as of October 31, 2023 98 29.58 18

Exercisable as of October 31, 2023 98 29.58 18

As of October 31, 2023, all stock options were fully vested with no remaining unrecognized compensation cost.

Unearned Revenue and Performance Obligations

As of April 30, 2024, there were 0.1 million options outstanding and exercisable with a weighted-average exercise price of $ 29.18 , and an aggregate intrinsic value of $ 18 million.

All stock options were fully vested, with no remaining unrecognized compensation cost.

Contract Balances and Performance Obligations

Contract Balances

Contract assets and unearned revenue balances were as follows (in millions):

Condensed Consolidated Balance Sheets Location

April 30, 2024 January 31, 2024

Contract assets:

Contract assets, current

Trade and other receivables, net $ 298 $ 240

Contract assets, noncurrent

Other assets 31 21

Total contract assets

Unearned revenue (1) :

Unearned revenue primarily consists of amounts we have the right to invoice in advance of performance under a customer contract.

Total unearned revenue was $ 3.3 billion and $ 3.6 billion as of October 31, 2023, and January 31, 2023, respectively.

Included in this balance are amounts related to professional services that are subject to cancellation and pro-rated refund rights of $ 70 million and $ 68 million as of October 31, 2023, and January 31, 2023, respectively.

Subscription services revenues of $ 1.4 billion and $ 1.2 billion were recognized during the three months ended October 31, 2023, and 2022, respectively, that were included in the unearned revenue balances as of July 31, 2023, and 2022, respectively.

Subscription services revenues of $ 3.0 billion and $ 2.7 billion were recognized during the nine months ended October 31, 2023, and 2022, respectively, that were included in the unearned revenue balances as of January 31, 2023, and 2022, respectively.

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

Unearned revenue, current

Unearned revenue $ 3,552 $ 4,057

Unearned revenue, noncurrent

Unearned revenue, noncurrent 61 70

Total unearned revenue

$ 3,613 $ 4,127

(1) Included in the unearned revenue balance are amounts related to professional services that are subject to cancellation and pro-rated refund rights of $ 74 million and $ 76 million as of April 30, 2024, and January 31, 2024, respectively.

Revenues of $ 1.5 billion and $ 1.3 billion were recognized during the three months ended April 30, 2024, and 2023, respectively, that were included in the unearned revenue balances as of January 31, 2024, and 2023, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of October 31, 2023, approximately $ 18.4 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

As of April 30, 2024, approximately $ 20.7 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts.

We expect to recognize revenues on approximately $ 6.6 billion and $ 11.6 billion of these remaining performance obligations over the next 12 and 24 months, respectively, with the balance recognized thereafter.

Revenues from remaining performance obligations for professional services contracts as of October 31, 2023, were not material.

Revenues from remaining performance obligations for professional services contracts as of April 30, 2024, 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,

2023 2022 2023 2022

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

Three Months Ended April 30,

Interest income $ 93 $ 63

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( 29 ) ( 29 )

( 10,081 ) 2,537 ( 14,999 ) ( 25,458 )

Total other income (expense), net $ 59 $ 27

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For further information, see Note 3, Investments .

We reported an income tax provision of $ 25 million and $ 59 million for the nine months ended October 31, 2023, and 2022, respectively.

The income tax provision for the nine months ended October 31, 2023, was primarily attributable to income tax expenses in profitable foreign jurisdictions and an increase in U.S.

We reported an income tax provision of $ 16 million and $ 7 million for the three months ended April 30, 2024, and 2023, respectively.

The income tax provision for the three months ended April 30, 2024, was primarily attributable to earnings in U.S.

and profitable foreign jurisdictions, offset by the excess tax benefit from stock-based compensation.

The income tax provision for the three months ended April 30, 2023, was primarily attributable to income tax expenses in profitable foreign jurisdictions and an increase in U.S.

taxes due to capitalized research and development expenditures.

The income tax provision for the nine months ended October 31, 2022, was primarily attributable to a taxable gain recognized from integrating intellectual property, income tax expenses in profitable foreign jurisdictions, and an increase in state taxes due to capitalized research and development expenditures.

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

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Due to our history of tax losses, all years remain open to tax audit.

We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative.

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

Given our current and anticipated future earnings, we may release a significant portion of our valuation allowance if there is sufficient positive evidence that outweighs the negative evidence.

The release of the valuation allowance would result in the recognition of certain deferred tax assets and a corresponding decrease to income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance to be released is uncertain.

As of October 31, 2023, we continue to maintain a full valuation allowance on our deferred tax assets in certain jurisdictions.

We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative.

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 April 30, 2024, we continue to maintain valuation allowances related to tax credits in certain state jurisdictions and net operating loss in certain foreign jurisdictions.

We will continue to evaluate the need for valuation allowances for our deferred tax assets.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) 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 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.

We determine the dilutive effect of outstanding share-based awards and warrants using the treasury stock method, and the dilutive effect of shares underlying our convertible senior notes using the if-converted method.

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

We determine the dilutive effect of outstanding share-based awards and warrants using the treasury stock method.

The net income (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 income (loss) for the period had been distributed.

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

Basic and diluted net loss per share was the same for the three and nine months ended October 31, 2022, as the inclusion of potentially outstanding weighted-average shares of common stock would have been anti-dilutive due to the incurrence of net loss during these periods.

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,

2023 2022 2023 2022

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

The computation of the diluted net income 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.

The following table presents the calculation of basic and diluted net income (loss) per share (in millions, except number of shares, which are reflected in thousands, and per share data):

Three Months Ended April 30,

Class A Class B Class A Class B

Net income (loss) per share, basic:

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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,

2023 2022 2023 2022

Three Months Ended April 30,

Shares related to outstanding share-based awards 72 3,909

Shares related to the convertible senior notes — 5,182 — 6,928

Shares subject to warrants related to the issuance of convertible senior notes 0 2,108

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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,

2023 2022 2023 2022

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

Three Months Ended April 30,

United States $ 1,493 $ 1,264

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Long-Lived Assets

Our long-lived assets, which primarily consist of property and equipment and operating lease right-of-use assets, are attributed to a country based on the physical location of the assets.

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

October 31, 2023 January 31, 2023

Our long-lived assets are attributed to a country based on the physical location of the assets.

We define long-lived assets as property and equipment and operating lease right-of-use assets because many of these assets cannot be readily moved and are relatively illiquid, subjecting them to geographic risk.

None of our other assets are subject to significant geographic risk.

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

April 30, 2024 January 31, 2024

United States $ 1,208 $ 1,199

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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, such as those arising from the impact of recent macroeconomic events, including inflation, increased interest rates, instability in the global banking system, and the remaining effects of the coronavirus ( “ COVID-19 ” ) 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, such as those arising from the impact of recent macroeconomic events, including inflation, increased interest rates, and geopolitical factors, 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