What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-11 compared with 2024-03-08 · 227 added, 256 removed, 942 unchanged (34% of the section changed)

36 unchanged sentences

For these contracts, the Company assesses the performance obligations and accounts for those obligations separately if they are distinct.

In such cases, the transaction price is allocated to the distinct performance obligations on a relative standalone selling price basis.

Auditing the Company’s determination of distinct performance obligations was challenging.

For example, there were nonstandard terms and conditions that required judgment to determine whether the distinct performance obligations were identified and accounted for appropriately.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to identify distinct performance obligations.

Among other audit procedures, we selected a sample of contracts and evaluated whether management appropriately identified and considered the terms and conditions and the appropriate revenue recognition.

As part of our procedures, we evaluated the assessment of distinct performance obligations.

Auditing the Company’s determination of distinct performance obligations related to subscription services contracts was challenging.

For example, there were nonstandard terms and conditions in certain subscription services contracts that required judgment to determine whether the distinct performance obligations were identified and accounted for appropriately.

Among other audit procedures, we selected a sample of subscription services contracts and evaluated whether management appropriately identified and considered the terms and conditions and the appropriate revenue recognition.

As part of our procedures, we evaluated the assessment of distinct performance obligations in these contracts.

/s/ Ernst & Young LLP

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750,000 shares authorized;

213,676 and 204,507 shares issued;

220,938 and 213,676 shares issued, respectively;

215,022 and 210,674 shares outstanding, respectively

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( 1,308 ) ( 608 )

Accumulated other comprehensive income (loss) 21 53

Accumulated other comprehensive income 84 21

Accumulated deficit ( 1,205 ) ( 1,731 )

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General and administrative 820 702 599

Restructuring

Total costs and expenses 8,031 7,076 6,438

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Weighted-average shares used to compute net income (loss) per share, basic

265,257 261,344 254,819

Weighted-average shares used to compute net income (loss) per share, diluted

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

269,205 265,285 254,819

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

Year Ended January 31,

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General and administrative 272 245 210

Total share-based compensation expenses $ 1,416 $ 1,295 $ 1,112

Restructuring

Total share-based compensation expense

$ 1,519 $ 1,416 $ 1,295

See Notes to Consolidated Financial Statements

8 unchanged sentences

Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision of $ 2 , $ 5 , $ 0 , respectively

18 ( 11 ) ( 6 )

Net change in unrealized gains (losses) on cash flow hedges, net of tax provision of $ 3 , $ 2 , and $ 0 , respectively

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2025 2024 2023

Common stock:

Balance, beginning of period $ 0 $ 0 $ 0

Issuance of common stock under employee equity plans 0 0 0

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

Balance, end of period 0 0 0

Additional paid-in capital:

Balance, beginning of period $ 10,400 $ 8,829 $ 7,284

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 155 152 148

Issuance of common stock under employee equity plans 186 177 152

Shares withheld related to net share settlement of equity awards ( 649 ) ( 22 ) 0

Share-based compensation 1,526 1,416 1,295

Exercise of convertible senior notes hedges 0 0 98

Cumulative effect of accounting changes — — ( 220 )

Balance, end of period 11,463 10,400 8,829

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Exercise of convertible senior notes hedges 0 0 ( 98 )

Common stock repurchases under share repurchase program ( 423 ) ( 75 ) —

Common stock repurchases under share repurchase programs ( 700 ) ( 423 ) ( 75 )

Balance, end of period ( 1,308 ) ( 608 ) ( 185 )

Accumulated other comprehensive income (loss):

Accumulated other comprehensive income:

Balance, beginning of period 21 53 8

4 unchanged sentences

Net income (loss) 526 1,381 ( 367 )

Cumulative effect of accounting changes — — 136

Balance, end of period ( 1,205 ) ( 1,731 ) ( 3,112 )

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Balance, beginning of period 263,862 257,991 251,209

Issuance of common stock under employee equity plans, net of shares withheld for employee taxes 7,720 7,156 8,417

Issuance of common stock under employee equity plans 7,959 7,739 7,158

Purchase of treasury stock from the exercise of convertible senior notes hedges 0 0 ( 635 )

Settlement of convertible senior notes 0 0 635

Issuance of common stock in business combination 24 76 76

Shares withheld related to net share settlement of equity awards ( 2,579 ) ( 95 ) ( 2 )

Common stock repurchased ( 2,914 ) ( 1,849 ) ( 450 )

Other — 76 125

Balance, end of period 266,352 263,862 257,991

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Net income (loss) $ 526 $ 1,381 $ ( 367 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 326 282 364

Share-based compensation expenses 1,416 1,295 1,101

Share-based compensation expense 1,519 1,416 1,295

Amortization of deferred costs 251 213 175

Non-cash lease expense 103 96 92

(Gains) losses on investments 19 31 ( 146 )

Losses on investments, net 16 19 31

Accretion of discounts on marketable debt securities, net ( 113 ) ( 149 ) ( 42 )

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Unearned revenue 398 493 452

Net cash provided by (used in) operating activities 2,149 1,657 1,651

Net cash provided by operating activities 2,461 2,149 1,657

Cash flows from investing activities:

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Sales of marketable securities 273 144 104

Owned real estate projects ( 4 ) ( 4 ) ( 171 )

Capital expenditures, excluding owned real estate projects ( 228 ) ( 360 ) ( 264 )

Capital expenditures ( 269 ) ( 232 ) ( 364 )

Business combinations, net of cash acquired ( 825 ) ( 8 ) 0

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Sales and maturities of non-marketable equity and other investments 5 2 12

Net cash provided by (used in) investing activities ( 1,751 ) ( 2,506 ) ( 1,607 )

Net cash used in investing activities ( 1,781 ) ( 1,751 ) ( 2,506 )

Cash flows from financing activities:

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Repurchases of common stock ( 700 ) ( 423 ) ( 75 )

Proceeds from issuance of common stock from employee equity plans, net of taxes paid for shares withheld 155 152 148

Proceeds from issuance of common stock from employee equity plans 186 177 152

Taxes paid related to net share settlement of equity awards ( 636 ) ( 22 ) 0

Net cash provided by (used in) financing activities ( 1,150 ) ( 268 ) 1,204

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Purchases of property and equipment, accrued but not paid 27 52 51

Accrued taxes related to net share settlement of equity awards 13 0 0

As of January 31,

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Notes to Consolidated Financial Statements

As used in this report, the terms “ Workday, ” “ registrant, ” “ we, ” “ us, ” and “ our ” mean Workday, Inc.

and its subsidiaries unless the context indicates otherwise.

Overview and Basis of Presentation

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.

Workday is a leading enterprise platform that provides organizations with solutions for financial management, human capital management (“HCM”), planning, spend management, and analytics.

With Workday, our customers have an artificial intelligence (“AI”)-powered cloud platform that helps them manage their most important assets – their people and money.

Our fiscal year ends on January 31.

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Basis of Presentation

These consolidated financial statements have been prepared in accordance with GAAP and include the results of Workday, Inc.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the results of Workday, Inc.

and its wholly-owned subsidiaries.

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Actual results could differ from those estimates, judgments, and assumptions, and such differences could be material to our 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 $ 93 million for fiscal 2024.

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.

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

For fiscal 2024, our co-chief executive officers together served as CODM for purposes of segment reporting.

Effective February 1, 2024, Mr.

Bhusri stepped down from his role as Co-CEO and assumed the role of Executive Chair, and Mr.

Eschenbach became the sole CEO.

In conjunction with the transition, Mr.

Bhusri no longer serves as CODM for purposes of segment reporting effective February 1, 2024.

Despite the change in the CODM, we determined that no change to segment reporting is necessary as there is no change in the components for which separate financial information are regularly evaluated.

We operate as a single operating and reportable segment:

cloud applications.

Although we offer a variety of enterprise cloud solutions to a diverse global customer base, we operate in one operating segment because our business activities are managed on a consolidated basis, our service offerings all operate on the Workday platform and are deployed in a similar manner, and our Chief Operating Decision Maker (“CODM”), who is our Chief Executive Officer, allocates resources and assesses performance based upon discrete financial information at the consolidated level.

Our CODM assesses performance and decides how to allocate resources based on Net income, as reported on the Consolidated Statements of Operations.

Net income is used to evaluate the overall profitability of the business and to guide decisions on how to invest in and grow the business.

Our CODM also reviews Total assets, as reported on the Consolidated Balance Sheets, and Capital expenditures, as reported on the Consolidated Statements of Cash Flows.

Significant segment expenses include the costs and expenses presented on the Consolidated Statements of Operations.

Other segment items include Other income (expense), net and Provision for (benefit from) income taxes.

Accounting Standards and Significant Accounting Policies

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Revenues are generally recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer.

To date, we have not allocated any significant variable consideration to the transaction price.

Our subscription contracts are generally three years or longer in length and are generally noncancelable.

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Payment terms and conditions vary by contract type and by customer, and payment is generally required within 30 days from date of invoicing.

The timing of revenue recognition may differ from the timing of invoicing customers, and these timing differences result in trade receivables, contract assets, or contract liabilities (unearned revenue) on our Consolidated Balance Sheets.

Trade Receivables and Contract Assets

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Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase.

Our cash equivalents primarily consist of investments in U.S.

treasury securities, U.S.

agency obligations, corporate bonds, commercial paper, and money market funds.

Our cash equivalents generally consist of investments in corporate bonds, commercial paper, and money market funds.

Debt Securities

Debt securities primarily consist of investments in U.S.

Debt securities generally consist of investments in U.S.

treasury securities, U.S.

agency obligations, corporate bonds, and commercial paper.

agency obligations, corporate bonds, commercial paper, and asset-backed securities.

We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date.

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Equity Investments

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

If the investment or other interest is determined to be a VIE, we must evaluate whether we are considered the primary beneficiary.

The primary beneficiary of a VIE is the party that meets both of the following criteria:

(1) has the power to direct the activities that most significantly impact the VIE’s economic performance;

and (2) has the obligation to absorb losses or the right to receive benefits from the VIE.

For investments in VIEs in which we are considered the primary beneficiary, the assets, liabilities, and results of operations of the VIE are included in our consolidated financial statements.

As of January 31, 2024, and 2023, there were no VIEs for which we were the primary beneficiary.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

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They are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the Consolidated Statements of Operations.

As of January 31, 2024, we had no marketable equity investments.

Deferred Commissions

8 unchanged sentences

For derivative instruments designated as cash flow hedges (“cash flow hedges”), which we use to hedge a portion of our forecasted foreign currency revenue and expense transactions, the gains or losses are recorded in AOCI on the Consolidated Balance Sheets and subsequently reclassified to the same line item as the hedged transaction on the Consolidated Statements of Operations in the same period that the hedged transaction affects earnings.

The effectiveness of the cash flow hedges is assessed quantitatively using regression at inception of the hedge and on an ongoing basis.

For derivative instruments not designated as hedging instruments (“non-designated hedges”), which we use to hedge a portion of our net outstanding monetary assets and liabilities, the gains or losses are recorded in Other income (expense), net on the Consolidated Statements of Operations in the period incurred.

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Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Consolidated Statements of Operations.

In the event that we acquire a company in which we previously held an equity interest, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the equity investment is recorded as a non-cash gain or loss and recorded within Other income (expense), net on the Consolidated Statements of Operations.

In the event that we acquire a company in which we previously held an equity interest, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the equity investment is recorded as a non-cash gain or loss within Other income (expense), net on the Consolidated Statements of Operations.

Goodwill and Acquisition-Related Intangible Assets

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As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate to determine the present value of lease payments.

We have elected to combine lease and non-lease components for each of our existing underlying asset classes and to not include leases with a term of 12 months or less on our Consolidated Balance Sheets.

We have elected to combine lease and non-lease components for each of our existing underlying asset classes and to exclude leases with a term of 12 months or less from our Consolidated Balance Sheets.

We recognize variable lease costs, including common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor, in the Consolidated Statements of Operations in the period incurred.

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Share-Based Compensation

We measure and recognize compensation expense for share-based awards issued to employees and non-employees, primarily including RSUs and purchases under the Amended and Restated 2012 Employee Stock Purchase Plan (“ESPP”), on the Consolidated Statements of Operations.

We measure and recognize compensation expense for share-based awards issued to employees and non-employees, primarily including restricted stock units (“RSUs”) and purchases under our employee stock purchase plan (“ESPP”), on the Consolidated Statements of Operations.

For RSUs, fair value is based on the closing price of our common stock on the grant date.

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The dividend yield is assumed to be zero as we have not paid and do not expect to pay dividends.

Restructuring

Restructuring costs are associated with a formal restructuring plan and are primarily related to employee severance, the closure of facilities, and cancellation of certain contracts.

For involuntary employee termination benefits not provided under an ongoing benefit arrangement, costs are recognized when the plan is communicated to the employees.

For ongoing employee benefit arrangements, inclusive of statutory requirements, costs are recognized when it becomes probable that an obligation has been incurred and the amount can be reasonably estimated.

Costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates, and losses on owned real estate are recognized when all of the held for sale criteria are met.

The liabilities for restructuring charges are generally included in Accrued expenses and other liabilities or Accrued compensation on the Consolidated Balance Sheets.

We record a provision for (benefit from) income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.

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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 North America and Europe.

We serve our customers and users from data center facilities operated by third parties, located in the United States 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 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, including Amazon Web Services (“AWS”) and Google Cloud, to serve customers globally 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.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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.

Improvements to Reportable Segment Disclosures , which requires enhanced segment disclosures primarily focusing on significant segment expenses.

This ASU also requires public entities with a single reportable segment to provide all the disclosures required by the updated standard and all existing segment disclosures in Topic 280 on an interim and annual basis.

These amendments do not change how a public entity identifies its operating and reportable segments.

We adopted this ASU effective February 1, 2024.

For further information, see Note 1, Overview and Basis of Presentation .

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No.

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

We are currently evaluating the impacts of the new standard.

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

The updated 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 updated standard.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires the disclosure of additional information about specific expense categories in the notes to the financial statements.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The updated standard allows for adoption on a prospective or retrospective basis.

We are currently evaluating the impacts of the updated standard.

Debt Securities

5 unchanged sentences

Commercial paper 294 0 0 294

Asset-backed securities 104 0 0 104

Other debt securities

Total debt securities $ 6,638 $ 17 $ ( 4 ) $ 6,651

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

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

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

January 31, 2025

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Due 1 year through 5 years

Due 5 years through 10 years

Due after 10 years

Total debt securities

As of January 31, 2024, and 2023, the fair value of debt securities in an unrealized loss position was $ 2.4 billion and $ 3.1 billion, respectively, the majority of which had been in a continuous unrealized loss position for less than 12 months.

Actual maturities may differ from contractual maturities because borrowers may have certain prepayment conditions.

Interest receivable of $ 53 million and $ 35 million is included in Prepaid expenses and other current assets on the Consolidated Balance Sheets as of January 31, 2025, and 2024, respectively.

The unrealized losses on our 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 fiscal 2024, 2023, or 2022.

We sold $ 59 million, $ 98 million, and $ 162 million of debt securities during fiscal 2024, 2023, and 2022, respectively.

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

The following tables summarize the aggregate fair value and gross unrealized losses for all debt securities in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):

As of January 31, 2025

Less than 12 Months

12 Months or Greater

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

treasury securities $ 555 $ ( 1 ) $ 0 $ 0 $ 555 $ ( 1 )

Corporate bonds 966 ( 3 ) 74 0 1,040 ( 3 )

$ 1,521 $ ( 4 ) $ 74 $ 0 $ 1,595 $ ( 4 )

As of January 31, 2024

Less than 12 Months

12 Months or Greater

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

treasury securities $ 921 $ ( 2 ) $ 78 $ ( 1 ) $ 999 $ ( 3 )

agency obligations 234 0 100 ( 1 ) 334 ( 1 )

Corporate bonds 921 ( 3 ) 171 ( 1 ) 1,092 ( 4 )

$ 2,076 $ ( 5 ) $ 349 $ ( 3 ) $ 2,425 $ ( 8 )

We sold $ 273 million, $ 59 million, and $ 98 million of debt securities during fiscal 2025, 2024, or 2023, respectively.

The realized gains and losses from the sales were immaterial.

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Non-marketable equity investments measured using the measurement alternative Other assets 244 248

Marketable equity investments Marketable securities — 81

Total equity investments $ 1,232 $ 1,265

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

Year Ended January 31,

As of January 31,

2025 2024 2023

1 unchanged sentence

$ ( 6 ) $ 6 $ ( 1 )

Net unrealized gains (losses) recognized on equity investments held as of the end of the period ( 30 ) ( 26 ) 122

Total net gains (losses) recognized in Other income (expense), net $ ( 24 ) $ ( 27 ) $ 144

Net unrealized losses recognized on equity investments held as of the end of the period ( 12 ) ( 30 ) ( 26 )

Total net losses recognized in Other income (expense), net $ ( 18 ) $ ( 24 ) $ ( 27 )

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

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Carrying value $ 244 $ 248

In fiscal 2025, we recorded losses related to impairments and exits of $ 18 million, upward adjustments of $ 5 million, and downward adjustments of $ 5 million on our non-marketable equity investments.

In fiscal 2024, we recorded impairment losses of $ 30 million.

In fiscal 2023, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 8 million and impairment losses of $ 16 million.

In fiscal 2022, we recorded upward adjustments to the carrying value of non-marketable equity investments of $ 58 million and a non-cash gain of $ 12 million related to our acquisition of Zimit.

In fiscal 2023, we recorded upward adjustments of $ 8 million and impairment losses of $ 16 million.

Marketable Equity Investments

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

As of January 31,

Total initial cost $ — $ 39

Cumulative net unrealized gains (losses) — 42

Carrying value $ — $ 81

During fiscal 2024, we sold all of our marketable equity investments for proceeds of $ 87 million, with corresponding realized gains of $ 6 million.

During fiscal 2023, we sold marketable equity investments for proceeds of $ 6 million, and the realized gains from the sales were not material.

We held no marketable equity investments in fiscal 2025.

During fiscal 2024, we sold marketable equity investments for proceeds of $ 87 million, with corresponding realized gains of $ 6 million.

During fiscal 2023 and 2022, we recorded unrealized net losses of $ 18 million, and gains of $ 67 million, respectively, on marketable equity investments held as of the end of each period.

During fiscal 2023, we sold marketable equity investments for proceeds of $ 6 million, and the realized gains from the sales were not material.

Additionally, we recorded unrealized net losses of $ 18 million on marketable equity investments held as of January 31, 2023.

Fair Value Measurements

6 unchanged sentences

Commercial paper 0 294 0 294

Asset-backed securities 0 104 0 104

Other debt securities

Money market funds 988 0 0 988

10 unchanged sentences

Money market funds 1,017 0 0 1,017

Marketable equity investments 81 — — 81

Foreign currency derivative assets 0 46 0 46

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Fair Value Measurements of Other Financial Instruments

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

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

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

The fair values of 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 11, Debt .

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Depreciation expense totaled $ 243 million, $ 203 million, and $ 275 million for fiscal 2025, 2024, and 2023, respectively.

Related-Party Transactions

There were no material related party transactions related to our property and equipment in fiscal 2024 or 2023.

Aircraft Purchase

During fiscal 2022, we purchased an aircraft from an affiliate of our Co-Founder and CEO Emeritus, David Duffield, for approximately $ 24 million in cash.

The aircraft was purchased primarily for the purpose of business travel by our Co-Founder and Executive Chair, Mr.

Bhusri, and other Workday executives.

In approving the related-party transaction, the Audit Committee of our Board of Directors considered the benefits to Workday of purchasing the aircraft, independent appraisals, the terms of the related purchase agreement, and the extent and nature of Mr.

Duffield’s interest in the transaction.

The aircraft is included in the Furniture, fixtures, and transportation equipment category in the table above.

Leased Property Purchase

During fiscal 2022, we purchased certain leased office space (“Property”) within our corporate headquarters from an affiliate of Mr.

Duffield for $ 173 million in cash.

In deciding to purchase the Property, the independent members of our Board of Directors considered the benefits to Workday, 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 of Directors also considered independent appraisals, comparable transaction data, and the extent and nature of Mr.

Duffield’s interest in the transaction.

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

There were no material business combinations in fiscal 2024 or 2023.

VNDLY Acquisition

On December 21, 2021, we acquired all outstanding stock of VNDLY, a cloud-based external workforce and vendor management technology.

With VNDLY, Workday provides organizations with a unified workforce optimization solution that helps organizations manage all types of workers—salaried, hourly, contingent, and outsourced—and support a holistic talent strategy, including insight into costs, workforce planning needs, and compliance.

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

Evisort Acquisition

On October 8, 2024, we acquired all outstanding stock of Evisort Inc.

(“Evisort”), a provider of an AI-native document intelligence platform.

With Evisort, we intend to add AI-powered document intelligence solutions across our suite of finance and HCM applications.

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

The total acquisition-date fair value of the purchase consideration was $ 311 million, which was paid in cash.

In connection with the acquisition, we issued approximately 152 thousand shares of our Class A common stock to certain key VNDLY employees, with 50 % of such shares issued following the first anniversary of the closing date of the acquisition and the remaining 50 % to be issued following the second anniversary of the closing date, subject to service conditions.

The aggregate fair value of the equity was accounted for as post-acquisition share-based compensation expense.

The purchase consideration was 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 purchase consideration allocation, which includes measurement period adjustments, was as follows (in millions):

We recorded developed technology intangible assets of $ 44 million (to be amortized over an estimated useful life of 6 years), customer relationships intangible assets of $ 28 million (to be amortized over an estimated useful life of 14 years), and goodwill of $ 223 million.

The goodwill recognized was primarily attributable to the expected synergies from integrating Evisort’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 be subject to change over the measurement period as additional information is received and certain tax matters are finalized.

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

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

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 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 assets 3

Deferred tax liability ( 3 )

Other liabilities

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Total acquisition-related intangible assets

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

Zimit Acquisition

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

With Zimit, Workday delivers a comprehensive quote-to-cash process automation offering that provides services organizations increased visibility across the entire revenue cycle.

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

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

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 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.

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 Consolidated Statements 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.

Peakon Acquisition

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

With Peakon, Workday provides 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 consolidated financial statements from the date of acquisition.

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

Cash paid to stockholders, warrant holders, and vested option holders $ 684

Transaction costs paid by Workday on behalf of Peakon 18

Additionally, we granted certain Peakon employees restricted stock awards (“RSAs”) with service conditions, which totaled approximately 82 thousand shares of our Class A common stock.

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

The purchase consideration allocation, which includes measurement period adjustments, was as follows (in millions):

Acquisition-related intangible assets $ 171

Other assets 35

Deferred tax liability ( 20 )

Other liabilities ( 25 )

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)

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 as of January 31, 2025 (in millions):

Gross Carrying Amount Accumulated Amortization Net Book Value

Developed technology $ 473 $ ( 303 ) $ 170

Customer relationships 362 ( 171 ) 191

Backlog 15 ( 15 ) 0

Trade name 14 ( 14 ) 0

Total acquisition-related intangible assets $ 171 8

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

A portion of the goodwill was 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.

Acquisition-Related Intangible Assets, Net

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

As of January 31,

$ 864 $ ( 503 ) $ 361

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

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Trade name 13 ( 13 ) 0

Acquisition-related intangible assets, gross 657 682

Less accumulated amortization ( 424 ) ( 376 )

Acquisition-related intangible assets, net $ 233 $ 306

$ 657 $ ( 424 ) $ 233

Amortization expense related to acquisition-related intangible assets was $ 79 million, $ 74 million, and $ 86 million for fiscal 2025, 2024, and 2023, respectively.

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Non-marketable equity and other investments $ 247 $ 248

Technology patents and other intangible assets, net 26 21

Contract assets 21 —

Derivative assets 52 14

Contract assets 44 21

Technology patents and other intangible assets, net 25 26

Prepayments for goods and services 16 14

Deposits 10 8

Total other assets $ 418 $ 337

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Counterparty E 5 0 5 0 0 5

Counterparty F 9 0 9 ( 1 ) 0 8

Counterparty G 6 0 6 ( 1 ) 0 5

Total $ 112 $ 0 $ 112 $ ( 26 ) $ 0 $ 86

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Counterparty D 9 0 9 ( 9 ) 0 0

Counterparty E 2 — 2 ( 2 ) — —

Counterparty F 1 0 1 ( 1 ) 0 0

Counterparty G

1 0 1 ( 1 ) 0 0

Total $ 26 $ 0 $ 26 $ ( 26 ) $ 0 $ 0

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unamortized debt discount and issuance costs ( 16 ) ( 20 )

Net carrying amount 2,980 2,976

Debt, noncurrent $ 2,984 $ 2,980

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Total principal amount $ 3,000

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, $ 750 million aggregate principal amount of 3.700 % notes due April 1, 2029, and $ 1.25 billion aggregate principal amount of 3.800 % notes due April 1, 2032.

In fiscal 2023, 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.

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Credit Agreement

In April 2022, we entered into the 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 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.

In fiscal 2023, 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 the credit agreement entered into in fiscal 2021 (“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.

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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 SOFR 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.

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”) 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.

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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.

In fiscal 2018, we issued 0.25 % convertible senior notes due October 1, 2022, with a principal amount of $ 1.15 billion.

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.

During 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, respectively, 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.

During 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 Consolidated Balance Sheets.

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In connection with the issuance of the 2022 Notes, we also entered into 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.

During fiscal 2024, the Warrants fully expired without exercise.

Interest Expense on Debt

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Operating lease right-of-use assets were $ 336 million and $ 289 million as of January 31, 2025, and 2024, respectively, and operating lease liabilities were $ 378 million and $ 316 million as of January 31, 2025, and 2024, respectively.

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

As of January 31, 2024, and 2023, finance leases were not material.

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

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As of January 31, 2025, we have additional operating leases for data centers and office space that had not yet commenced with total undiscounted lease payments of $ 52 million.

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

Related-Party Transactions

There were no material related party transactions related to our leases in fiscal 2024 or 2023.

Leased Property Purchase

As discussed in Note 6, Property and Equipment, Net, during fiscal 2022, we purchased certain leased office space within our corporate headquarters from an affiliate of Mr.

Duffield for $ 173 million in cash.

Subsequent to the purchase, the Property was included in Property and equipment, net on the Consolidated Balance Sheets.

Total rent expense under these agreements was $ 2 million for fiscal 2022.

These operating leases will commence in fiscal 2026, with lease terms ranging from approximately five to ten years .

Commitments and Contingencies

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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.

Under the 2022 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.

The 2022 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 fiscal 2024 and 2023, we repurchased approximately 1.8 million and 0.5 million shares of Class A common stock for approximately $ 423 million and $ 75 million, at an average price per share of $ 228.67 and $ 165.75 , respectively.

In August 2024, our Board of Directors authorized the repurchase of up to $ 1.0 billion of our outstanding shares of Class A common stock (“August 2024 Share Repurchase Program”).

Under this program, in accordance with applicable securities laws and other restrictions, we may repurchase shares of our Class A common stock 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.

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

The August 2024 Share Repurchase Program has no expiration date, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of Class A common stock.

Prior to the August 2024 Share Repurchase Program, our Board of Directors authorized a $ 500 million share repurchase program in February 2024, which we completed in the third quarter of fiscal 2025, and a $ 500 million share repurchase program in November 2022, which we completed in the first quarter of fiscal 2025.

The table below sets forth information regarding our share repurchase programs (in millions, except number of shares which are reflected in thousands, and per share data):

Year Ended January 31,

2025 2024 2023

Total number of shares repurchased 2,914 1,849 450

Average price paid per share $ 240.20 $ 228.67 $ 165.75

Amount repurchased

$ 700 $ 423 $ 75

All repurchases were made in open market transactions.

As of January 31, 2024, we were authorized to purchase a remaining $ 2 million of our outstanding shares of Class A common stock under the 2022 Share Repurchase Program.

In February 2024, our Board of Directors authorized the 2024 Share Repurchase Program, under which we may repurchase up to an additional $ 500 million of our outstanding shares of Class A common stock.

For further information, see Note 21, Subsequent Events .

As of January 31, 2025, we were authorized to repurchase a remaining $ 802 million of our outstanding shares of Class A common stock under the August 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.

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 January 31, 2025, we had 17 million shares of Class A common stock available for future grants.

In June 2022, our stockholders approved the ESPP.

In June 2022, our stockholders approved the Amended and Restated 2012 Employee Stock Purchase Plan (“2012 ESPP”).

Under the 2012 ESPP, eligible employees are granted options to purchase shares at the lower of 85 % of the fair market value of the stock at the time of grant or 85 % of the fair market value at the time of exercise.

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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 7,269 252.18

RSUs vested ( 4,296 ) 205.85

RSUs forfeited ( 1,551 ) 196.93

Balance as of January 31, 2024 15,020 203.94

RSUs forfeited and canceled (1)

( 3,632 ) 208.95

Outstanding balance as of January 31, 2025 14,361 226.52

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

The weighted-average grant date fair value of RSUs granted during fiscal 2025, 2024, and 2023 was $ 252.18 , $ 197.22 , and $ 200.98 , respectively.

The total fair value of RSUs vested as of the vesting dates during fiscal 2024, 2023, and 2022 was $ 1.4 billion, $ 977 million, and $ 1.6 billion, respectively.

The total fair value of RSUs vested as of the vesting dates during fiscal 2025, 2024, and 2023 was $ 1.1 billion, $ 1.4 billion, and $ 977 million, respectively.

In the fourth quarter of fiscal 2023, we modified the vesting date of all unvested RSU awards from the 15th to the 5th of each month.

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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 January 31, 2024, there was a total of $ 19 million in unrecognized compensation cost related to the PVU Award, which is expected to be recognized over approximately four years .

Performance-Based Restricted Stock Units

During fiscal 2022, 0.4 million shares of PRSUs were granted to employees below the level of vice president 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 did no t grant any company-wide PRSUs in fiscal 2024 or 2023.

As of January 31, 2025, there was a total of $ 9 million in unrecognized compensation cost related to the PVU Award, which is expected to be recognized over approximately three 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 fiscal 2024 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 ( 27 ) 34.10

Stock options canceled — —

Balance as of January 31, 2024 88 29.20 23

Vested and expected to vest as of January 31, 2024 88 29.20 23

Exercisable as of January 31, 2024 88 29.20 23

As of January 31, 2024, all stock options were fully vested with no remaining unrecognized compensation cost.

As of January 31, 2025, there were 0.1 million options outstanding and exercisable with a weighted-average exercise price of $ 28.97 , and an aggregate intrinsic value of $ 17 million.

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

The total intrinsic value of stock options exercised during fiscal 2025, 2024, and 2023 was $ 4 million, $ 5 million, and $ 41 million, respectively.

The intrinsic value is the difference between the current fair value of the stock and the exercise price of the stock option.

As of January 31, 2024, stock options have a weighted-average remaining contractual life of approximately four years .

Employee Stock Purchase Plan

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Expected volatility 32 %

46.2 % - 48.5 %

30.4 % - 41.5 %

Expected term (in years) 0.5 0.5 0.5

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$ 156.56 - $ 169.48

Tax Benefits on Share-Based Compensation

In fiscal 2025, 2024, and 2023, we recognized tax benefits on share-based compensation expense of $ 277 million, $ 257 million, and $ 17 million, respectively, which are reflected in the Provision for (benefit from) income taxes on the Consolidated Statements of Operations.

Contract Balances and Performance Obligations

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Permanent difference 1.6 % 1.2 % ( 0.9 ) %

Nontaxable gain on investment — % — % ( 15.7 ) %

Other ( 0.1 ) % 1.2 % ( 0.4 ) %

Total 17.5 % ( 287.6 ) % ( 41.1 ) %

The benefit from income taxes increased in fiscal 2024 primarily due to the release of a portion of our valuation allowance related to U.S.

federal and state deferred tax assets.

The income tax provision for fiscal 2025 was primarily attributable to an increase in our U.S.

pretax income and income tax expenses in profitable foreign jurisdictions.

Significant components of our deferred tax assets and liabilities were as follows (in millions):

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Deferred tax assets:

Unearned revenue $ 16 $ 11

Other reserves and accruals 47 61

Tax attributes carryforward $ 1,290 $ 1,431

Capitalized research and development expense 621 367

Property and equipment — 30

Share-based compensation 69 75

Intangibles 429 483

Operating lease liabilities 81 69

Share-based compensation 76 69

Other reserves and accruals 65 47

Total deferred tax assets 2,599 2,498

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Net deferred tax assets $ 1,032 $ 1,063

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

Prior to fiscal 2024, we considered global cumulative losses as a significant piece of negative evidence.

During fiscal 2024, we recognized cumulative earnings on a global basis and were profitable in the U.S.

Our ability to sustain and grow our profitability is supported by the continued positive operating performance in the U.S.

We also considered forecasts of future taxable income and evaluated the utilization of tax attributes before their expiration.

After considering these factors, we determined that the positive evidence outweighed the negative evidence and concluded that it was more likely than not that the majority of U.S.

deferred tax assets were realizable.

As a result, we released the valuation allowance against all U.S.

federal deferred tax assets and state deferred tax assets, excluding certain state tax credits.

The remaining valuation allowance of $ 1.2 billion as of January 31, 2024, was primarily 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.

The valuation allowance on our net deferred tax assets decreased by $ 1.2 billion during fiscal 2024, primarily due to the release of the U.S.

federal and state valuation allowance discussed above.

The valuation allowance increased by $ 116 million during fiscal 2023 primarily due to an increase in deferred tax assets on amortization of intangibles from business combinations and capitalized research and development expenditures and credits, which were partially offset by the utilization of net operating losses.

As of January 31, 2024, we had approximately $ 1.7 billion of federal, $ 1.9 billion of state, and $ 3.5 billion of foreign net operating loss and other tax attributes carryforwards available to offset future taxable income.

We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative, such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies.

The assessment requires significant judgement and is performed in each of the applicable jurisdictions.

The remaining valuation allowance of $ 1.3 billion and $ 1.2 billion as of January 31, 2025, and 2024, respectively, was primarily related to tax credits in certain state jurisdictions and net operating loss in certain foreign jurisdictions.

The valuation allowance increased by $ 77 million during fiscal 2025 primarily due to an increase in deferred tax assets on certain state tax credits and net operating losses in certain foreign jurisdictions.

The valuation allowance decreased by $ 1.2 billion during fiscal 2024 primarily due to the release of the valuation allowance against all U.S.

federal and state deferred tax assets, excluding certain state tax credits.

As of January 31, 2025, we had approximately $ 378 million of federal, $ 1.4 billion of state, and $ 3.9 billion of foreign net operating loss and other tax attributes carryforwards available to offset future taxable income.

If not utilized, the pre-fiscal 2018 federal and the state net operating loss carryforwards expire in varying amounts between fiscal 2029 and 2043.

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The federal credits expire in varying amounts between fiscal 2036 and 2045.

The California research credits do not expire and may be carried forward indefinitely.

The California research and development tax credits do not expire and may be carried forward indefinitely.

Our ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state tax law.

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As of January 31, 2025, we estimate any such hypothetical foreign withholding tax expense to be immaterial to our financial statements.

A reconciliation of the gross unrecognized tax benefit is as follows (in millions):

A reconciliation of the gross unrecognized tax benefits is as follows (in millions):

Year Ended January 31,

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Additions for tax positions taken in prior years 15 30 1

Reductions for tax positions taken in prior years — — ( 1 )

Additions for tax positions related to the current year 41 27 21

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Our policy is to include interest and penalties related to unrecognized tax benefits within our provision for income taxes.

We did no t accrue any material interest expense or penalties during fiscal 2024, 2023, or 2022.

We did no t accrue any material interest expense or penalties during fiscal 2025, 2024, and 2023.

Of the total amount of unrecognized tax benefits of $ 309 million, $ 184 million, if recognized, would impact the effective tax rate as of January 31, 2025.

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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.

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, our convertible senior notes, 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, and the dilutive effect of shares underlying our convertible senior notes using the if-converted method.

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Dilutive effect of share-based awards 3,948 0 3,941 0 0 0

Dilutive effect of warrants related to the issuance of convertible senior notes — — — — 1,234 —

Weighted-average shares outstanding, diluted 269,205 52,452 265,285 54,343 199,805 55,014

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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.

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):

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Total long-lived assets $ 1,575 $ 1,523

We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code covering eligible employees.

We match a certain portion of employee contributions up to a fixed maximum per employee.

Our contributions to the plan were $ 64 million, $ 57 million, and $ 46 million during fiscal 2024, 2023, and 2022, respectively.

Subsequent Events

HiredScore, Inc.

In February 2024, we entered into a definitive agreement to acquire HiredScore, Inc.

a provider of AI powered talent orchestration solutions.

The transaction is expected to close during the first quarter of fiscal 2025, subject to the satisfaction of customary closing conditions, including required regulatory approval.

2024 Share Repurchase Program

In February 2024, our Board of Directors authorized the 2024 Share Repurchase Program, under which we may purchase up to $ 500 million of our outstanding shares of Class A common stock.

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 Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The timing and total amount of stock repurchases will depend on 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.

Tax Withholding Method on Employee Equity Awards

Beginning in April 2024, we intend to fund withholding taxes due on employee equity awards by net share withholding, rather than our current approach of selling shares of our common stock on our employees’ behalf to cover taxes upon vesting of such awards.

We expect this net share withholding approach will increase our financing cash outflows and reduce the number of shares that will be issued from our equity plans.

However, we are unable to estimate the cash outflows and number of shares that will be withheld since they will depend on the market price of our Class A common stock.

Defined Contribution Plans

We provide defined contribution plans for eligible employees, including a 401(k) plan in the United States and similar plans in certain other countries.

Our contributions to these plans were $ 116 million, $ 101 million, and $ 86 million during fiscal 2025, 2024, and 2023, respectively.

Restructuring

In February 2025, we announced a restructuring plan (“Fiscal 2026 Restructuring Plan”) intended to prioritize our investments and continue advancing our ongoing focus on durable growth.

This plan is currently expected to result in the elimination of approximately 8 % of our workforce.

In connection with this plan, we expect to exit certain owned office space.

The activities associated with this plan are expected to be substantially complete by the second quarter of fiscal 2026, subject to local law and consultation requirements.

We estimate that we will incur approximately $ 230 million to $ 250 million in charges in connection with this plan, of which $ 65 million was recognized in the fourth quarter of fiscal 2025, and the remainder is expected to be recognized in the first quarter of fiscal 2026.

The total charges consist of approximately $ 200 million to $ 210 million related to employee transition, severance payments, employee benefits, and share-based compensation, and the balance is related to an impairment of office space.

The following table summarizes the activity under the Fiscal 2026 Restructuring Plan during fiscal 2025 (in millions):

Workforce Reduction

Non-cash items

Restructuring liability as of January 31, 2025

Additionally, during fiscal 2025, we recorded exit charges of $ 19 million associated with office space reductions under a separate restructuring plan.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data