What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-22 compared with 2025-05-23 · 113 added, 80 removed, 235 unchanged (45% of the section changed)

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As a result of our focus on expanding operating margin, we expect our product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as we grow our revenues and invest in a disciplined manner to support our long-term growth objectives.

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

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

The plan resulted in the reduction of approximately 7.5% of our workforce.

In connection with this plan, we have exited certain owned office space.

In connection with this plan, we exited certain owned office space.

Impact of Current Economic Conditions

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The following table provides an overview of our key metrics (in millions, except percentages, basis points, and headcount data):

Three Months Ended April 30,

2025 2024 Change

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 Change 2025 2024 Change

Total revenues $ 2,348 $ 2,085 13 % $ 4,588 $ 4,075 13 %

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$ 680 $ 518 31 % $ 1,358 $ 1,033 31 %

GAAP operating margin 1.8 % 3.2 % (144 bps)

GAAP operating margin 10.6 % 5.3 % 524 bps 6.3 % 4.3 % 198 bps

Non-GAAP operating margin (1)

30.2 % 25.9 % 437 bps

29.0 % 24.9 % 412 bps 29.6 % 25.4 % 424 bps

Operating cash flows $ 1,073 $ 943 14 %

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$ 1,009 $ 807 25 %

As of April 30,

As of July 31,

2025 2024 Change

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Headcount 19,517 19,908 (2) %

20,515 19,415 6 %

(1) See “Non-GAAP Financial Measures” below for further information.

(2) Does not reflect the impact of the Fiscal 2026 Restructuring Plan which reduced our workforce by approximately 7.5%.

Components of Results of Operations

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Professional services revenues include fees for deployment services, optimization services, and training.

Subscription services revenues accounted for approximately 92% of our total revenues for the three months ended April 30, 2025, and represented 96% of our total unearned revenue as of April 30, 2025.

Subscription services revenues accounted for approximately 92% of our total revenues for the three and six months ended July 31, 2025, and represented 97% of our total unearned revenue as of July 31, 2025.

Subscription services revenues are driven primarily by the number of customers, the number of workers at each customer, the specific applications subscribed to by each customer, and the price of our applications.

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Costs of subscription services revenues.

Costs of subscription services revenues consist primarily of expenses associated with hosting our applications, providing standard customer support, and delivering our enhanced customer support service, Workday Success Plans.

Costs of subscription services revenues consist primarily of expenses associated with hosting our applications, providing standard customer support, and delivering enhanced customer support services.

These costs include employee-related expenses, expenses related to data center capacity and third-party hosted infrastructure, and depreciation of our data center equipment.

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Product development expenses .

Product development expenses consist primarily of employee-related expenses associated with our efforts to add new features and applications, increase functionality, and enhance the ease of use of our cloud applications, as well as expenses related to data center capacity.

Sales and marketing expenses.

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General and administrative expenses .

General and administrative expenses consist of employee-related expenses for finance and accounting, legal, human resources, information systems personnel, professional fees, and other corporate expenses.

General and administrative expenses consist primarily of employee-related expenses for our finance and accounting, legal, human resources, and information systems personnel, as well as professional services fees and other corporate expenses.

Restructuring expenses.

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Our total revenues were as follows (in millions, except percentages):

Three Months Ended April 30,

2025 2024 % Change

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 % Change 2025 2024 % Change

Subscription services $ 2,169 $ 1,903 14 % $ 4,228 $ 3,719 14 %

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Total revenues $ 2,348 $ 2,085 13 % $ 4,588 $ 4,075 13 %

Total revenues were $2.2 billion for the three months ended April 30, 2025, compared to $2.0 billion for the prior year period, an increase of $250 million, or 13%.

Subscription services revenues were $2.1 billion for the three months ended April 30, 2025, compared to $1.8 billion for the prior year period, an increase of $244 million, or 13%.

Total revenues were $2.3 billion for the three months ended July 31, 2025, compared to $2.1 billion for the prior year period, an increase of $263 million, or 13%.

Subscription services revenues were $2.2 billion for the three months ended July 31, 2025, compared to $1.9 billion for the prior year period, an increase of $266 million, or 14%.

Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the comparable prior year period, and the remaining 40% was attributable to customers added after the beginning of the comparable prior year period.

Professional services revenues were $181 million for the three months ended April 30, 2025, compared to $175 million for the prior year period, an increase of $6 million, or 4%.

The increase in professional services revenues was driven by higher demand for our deployment and integration services.

Professional services revenues were $179 million for the three months ended July 31, 2025, compared to $182 million for the prior year period, a decrease of $3 million, or 2%.

Professional services revenues remained relatively flat with the change due to variation in project size and mix of deployment and integration services provided as we continue to expand and leverage our service partners.

Total revenues were $4.6 billion for the six months ended July 31, 2025, compared to $4.1 billion for the prior year period, an increase of $513 million, or 13%.

Subscription services revenues were $4.2 billion for the six months ended July 31, 2025, compared to $3.7 billion for the prior year period, an increase of $509 million, or 14%.

Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the prior fiscal year, and the remaining 40% was attributable to customers added after the beginning of the prior fiscal year.

Professional services revenues were $360 million for the six months ended July 31, 2025, compared to $356 million for the prior year period, an increase of $3 million, or 1%.

Gross Revenue Retention Rate

Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 98% as of April 30, 2025.

Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 97% as of July 31, 2025.

Our gross revenue retention rate measures the percentage of recurring revenue retained from existing customers and is calculated by taking total annual recurring revenue (“ARR”) of our customers as of the corresponding prior period-end and comparing that to ARR from that same set of customers as of the current period-end.

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Subscription Revenue Backlog

As of April 30, 2025, our total subscription revenue backlog was $24.6 billion, with $7.6 billion expected to be recognized in revenues over the next 12 months.

As of April 30, 2024, our total subscription revenue backlog was $20.7 billion, with $6.6 billion expected to be recognized in revenues over the next 12 months.

As of July 31, 2025, our total subscription revenue backlog was $25.4 billion, with $7.9 billion expected to be recognized in revenues over the next 12 months.

As of July 31, 2024, our total subscription revenue backlog was $21.6 billion, with $6.8 billion expected to be recognized in revenues over the next 12 months.

The increase in subscription revenue backlog was primarily driven by expansion within our existing customer base, sales to new customers, and timing of renewals for existing customers.

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Our costs and expenses were as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024

Costs of subscription services $ 370 $ 304 $ 720 $ 594

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Total costs and expenses $ 2,100 $ 1,974 $ 4,301 $ 3,900

Total costs and expenses were $2.2 billion for the three months ended April 30, 2025, compared to $1.9 billion for the prior year period, an increase of $274 million, or 14%.

Included in the increase in operating expenses was $158 million in restructuring expenses primarily related to the Fiscal 2026 Restructuring Plan.

Employee-related expenses, including share-based compensation, increased $36 million due to higher average headcount, partially offset by restructuring-related cost savings.

Additional increases included $27 million in data center capacity and third-party hosted infrastructure expenses, $25 million in facilities and IT-related expenses, $11 million in professional services expenses, $9 million in amortization of deferred sales commissions, and $9 million in depreciation.

Total costs and expenses were $2.1 billion for the three months ended July 31, 2025, compared to $2.0 billion for the prior year period, an increase of $126 million, or 6%.

The increase in total costs and expenses included increases of $52 million in employee-related expenses, net of restructuring-related cost savings, $46 million in third-party hosted infrastructure expenses, $27 million in facilities and IT-related expenses, and $10 million in amortization of deferred sales commissions.

Total costs and expenses were $4.3 billion for the six months ended July 31, 2025, compared to $3.9 billion for the prior year period, an increase of $400 million, or 10%.

Included in the increase in total costs and expenses was $159 million in restructuring expenses primarily related to the Fiscal 2026 Restructuring Plan.

Additional increases included $88 million in employee-related expenses, net of restructuring-related cost savings, $72 million in third-party hosted infrastructure expenses, $52 million in facilities and IT-related expenses, and $19 million in amortization of deferred sales commissions.

Costs of Subscription Services

Costs of subscription services were $350 million for the three months ended April 30, 2025, compared to $290 million for the prior year period, an increase of $60 million, or 21%.

Employee-related expenses, including share-based compensation, increased $19 million due to higher average headcount and the growth of our Workday Success Plan service offering, partially offset by restructuring-related cost savings.

Additional increases included $23 million in data center capacity and third-party hosted infrastructure expenses, $10 million in depreciation, and $10 million in facility and IT-related expenses.

We expect costs of subscription services will continue to increase in absolute dollars as we improve and expand our technical operations infrastructure, including third-party hosted infrastructure, and as we grow the Workday Success Plan offering.

Costs of subscription services were $370 million for the three months ended July 31, 2025, compared to $304 million for the prior year period, an increase of $66 million, or 22%.

The increase in costs of subscription services included increases of $43 million in third-party hosted infrastructure expenses, $18 million in employee-related expenses primarily due to delivering our enhanced customer support services, net of restructuring-related cost savings, and $7 million in facilities and IT-related expenses.

Costs of subscription services were $720 million for the six months ended July 31, 2025, compared to $594 million for the prior year period, an increase of $126 million, or 21%.

The increase in costs of subscription services included increases of $64 million in third-party hosted infrastructure expenses, $37 million in employee-related expenses due to delivering our enhanced customer support services, net of restructuring-related cost savings, and $17 million in facilities and IT-related expenses.

Costs of Professional Services

Costs of professional services were $187 million for the three months ended April 30, 2025, compared to $199 million for the prior year period, a decrease of $12 million, or 6%.

The decrease in costs of professional services was primarily a result of restructuring-related cost savings that reduced employee-related costs.

We expect costs of professional services as a percentage of total revenues to continue to decline as we rely on our service partners to deploy our applications and as our subscription services revenues continue to grow as we expand both our customer base and our footprint within our existing customers.

Costs of professional services were $212 million for the three months ended July 31, 2025, compared to $207 million for the prior year period, an increase of $5 million, or 2%.

Costs of professional services remained relatively flat as a result of restructuring-related cost savings that reduced employee-related expenses.

Costs of professional services were $399 million for the six months ended July 31, 2025, compared to $406 million for the prior year period, a decrease of $7 million, or 2%.

Costs of professional services remained relatively flat as a result of restructuring-related cost savings that reduced employee-related expenses.

We expect costs of professional services as a percentage of total revenues to continue to decline as we expand and leverage our service partners to deploy our applications and focus on growing our subscription revenues.

Product Development

Product development expenses were $663 million for the three months ended April 30, 2025, compared to $656 million for the prior year period, an increase of $7 million, or 1%.

Product development expenses remained relatively flat, as increases within employee-related expenses, including share-based compensation, were offset by restructuring-related cost savings.

We expect product development expenses will continue to increase in absolute dollars as we improve and extend our applications and develop new technologies, including costs incurred for hardware maintenance, data center capacity, facility costs, and IT-related expenses.

Product development expenses were $660 million for the three months ended July 31, 2025, compared to $649 million for the prior year period, an increase of $10 million, or 2%.

Product development expenses remained relatively flat as a result of restructuring-related cost savings that reduced employee-related expenses.

Product development expenses were $1.3 billion for the six months ended July 31, 2025, compared to $1.3 billion for the prior year period, an increase of $17 million, or 1%.

Product development expenses remained relatively flat as a result of restructuring-related cost savings that reduced employee-related expenses.

We expect product development expenses will continue to increase in absolute dollars as we improve and extend our applications and develop new technologies, including costs incurred for hardware maintenance, third-party hosted infrastructure, and facilities and IT.

Sales and Marketing

Sales and marketing expenses were $623 million for the three months ended April 30, 2025, compared to $573 million for the prior year period, an increase of $50 million, or 9%.

Employee-related expenses, including share-based compensation, increased $26 million due to higher average headcount, partially offset by restructuring-related cost savings.

Additional increases included $9 million in amortization of deferred sales commissions, $7 million in professional services expenses, and $6 million in facilities and IT-related expenses.

We expect sales and marketing expenses to increase in absolute dollars as we continue to invest in our domestic and international selling and marketing activities to expand awareness of our brand and product offerings to attract new and existing customers.

Sales and marketing expenses were $641 million for the three months ended July 31, 2025, compared to $611 million for the prior year period, an increase of $30 million, or 5%.

The increase in sales and marketing expenses included increases of $12 million in employee-related expenses, net of restructuring-related cost savings, $10 million in amortization of deferred sales commissions, and $7 million in facilities and IT-related expenses.

Sales and marketing expenses were $1.3 billion for the six months ended July 31, 2025, compared to $1.2 billion for the prior year period, an increase of $80 million, or 7%.

The increase in sales and marketing expenses included increases of $37 million in employee-related expenses, net of restructuring-related cost savings, $19 million in amortization of deferred sales commissions, and $13 million in facilities and IT-related expenses.

We expect sales and marketing expenses to increase in absolute dollars as we continue to invest domestically and internationally to expand awareness of our brand and product offerings to attract new and existing customers.

General and Administrative

General and administrative expenses were $212 million for the three months ended April 30, 2025, compared to $200 million for the prior year period, an increase of $11 million, or 6%.

The increase in general and administrative expenses included an increase of $6 million in professional services expenses.

Other general and administrative expenses remained relatively flat, as increases within employee-related expenses were offset by restructuring-related cost savings.

General and administrative expenses were $216 million for the three months ended July 31, 2025, compared to $202 million for the prior year period, an increase of $14 million, or 7%.

The increase in general and administrative expenses was primarily driven by higher employee-related expenses, which were partially offset by restructuring-related cost savings.

General and administrative expenses were $429 million for the six months ended July 31, 2025, compared to $403 million for the prior year period, an increase of $26 million, or 6%.

The increase in general and administrative expenses included increases of $10 million in employee-related expenses, net of restructuring-related cost savings, and $8 million in facilities and IT-related expenses.

We expect general and administrative expenses will continue to increase in absolute dollars as we continue to grow our business and invest in our people, processes, and systems to support our global operations.

Restructuring

Restructuring expenses of $166 million for the three months ended April 30, 2025, were related to the Fiscal 2026 Restructuring Plan, and included $132 million for employee transition, severance payments, employee benefits, and share-based compensation, and $34 million for an impairment of office space.

Restructuring expenses of $8 million for the three months ended April 30, 2024, were related to exit charges associated with office space reductions under a separate restructuring plan.

Restructuring expenses of $167 million for the six months ended July 31, 2025, were related to the Fiscal 2026 Restructuring Plan, and included $133 million for employee transition, severance payments, employee benefits, and share-based compensation, and $34 million for an impairment of office space.

Restructuring expenses of $8 million for the six months ended July 31, 2024, were related to exit charges associated with office space reductions under a separate restructuring plan.

Share-based Compensation

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

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024

Costs of subscription services $ 39 $ 35 $ 81 $ 73

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16.7 % 17.7 % 18.5 % 18.5 %

Share-based compensation expense increased by $74 million for the three months ended April 30, 2025, compared to the prior year period, primarily due to the Fiscal 2026 Restructuring Plan and additional grants to new and existing employees.

Share-based compensation expense increased by $21 million for the three months ended July 31, 2025, compared to the prior year period, primarily due to additional grants to new and existing employees.

Share-based compensation expense increased by $96 million for the six months ended July 31, 2025, compared to the prior year period, primarily due to the Fiscal 2026 Restructuring Plan and additional grants to new and existing employees.

Equity compensation is an important element of our compensation philosophy.

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Operating Income and Operating Margin

GAAP operating income was $39 million, or 1.8% of revenues, for the three months ended April 30, 2025, compared to the prior year GAAP operating income of $64 million, or 3.2% of revenues.

The decline resulted from the Fiscal 2026 Restructuring Plan expenses recognized in the current quarter, offset by improvements due to our revenue growth outpacing headcount growth and moderation of operating expenses, including share-based compensation.

Non-GAAP operating income was $677 million, or 30.2% of revenues, for the three months ended April 30, 2025, compared to the prior year non-GAAP operating income of $515 million, or 25.9% of revenues.

The increase was primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.

GAAP operating income was $248 million, or 10.6% of revenues, for the three months ended July 31, 2025, compared to the prior year GAAP operating income of $111 million, or 5.3% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, moderation of operating expenses, including share-based compensation, and restructuring-related cost savings.

GAAP operating income was $287 million, or 6.3% of revenues, for the six months ended July 31, 2025, compared to the prior year GAAP operating income of $175 million, or 4.3% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, moderation of operating expenses, including share-based compensation, and restructuring-related cost savings, partially offset by the Fiscal 2026 Restructuring Plan expenses recognized in the first quarter.

Non-GAAP operating income was $680 million, or 29.0% of revenues, for the three months ended July 31, 2025, compared to the prior year non-GAAP operating income of $518 million, or 24.9% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, moderation of operating expenses, and restructuring-related cost savings.

Non-GAAP operating income was $1.4 billion, or 29.6% of revenues, for the six months ended July 31, 2025, compared to the prior year non-GAAP operating income of $1.0 billion, or 25.4% of revenues.

The increase is primarily due to our revenue growth outpacing headcount growth, moderation of operating expenses, and restructuring-related cost savings.

Reconciliations of our GAAP to non-GAAP operating income and operating margin were as follows (in millions, except percentages).

See “Non-GAAP Financial Measures” below for further information.

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024

Operating income $ 248 $ 111 $ 287 $ 175

Share-based compensation expense (1)

391 370 809 755

Employer payroll tax-related items on employee stock transactions (1)

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Employer payroll tax-related items on employee stock transactions (1)

0.5 % 0.6 % 0.8 % 1.2 %

Amortization of acquisition-related intangible assets 0.9 % 1.0 % 0.9 % 1.0 %

Acquisition-related costs

0.3 % 0.3 % 0.3 % 0.2 %

Restructuring costs

0.0 % 0.0 % 3.7 % 0.2 %

Non-GAAP operating margin 29.0 % 24.9 % 29.6 % 25.4 %

(1) For the three months ended April 30, 2025, the Share-based compensation expense and Employer payroll tax-related items on employee stock transactions lines in the GAAP to non-GAAP reconciliation tables above exclude $42 million and $2 million, respectively, related to restructuring initiatives.

(1) For the six months ended July 31, 2025, the Share-based compensation expense and Employer payroll tax-related items on employee stock transactions lines in the GAAP to non-GAAP reconciliation tables above exclude $42 million and $2 million, respectively, related to the Fiscal 2026 Restructuring Plan.

These expenses are included in the Restructuring costs lines.

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Other income, net was as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024

Total other income, net

Other income, net increased by $5 million for the three months ended April 30, 2025, primarily due to lower losses recognized in the current quarter on our equity investments as compared to the prior year period.

$ 56 $ 57 $ 120 $ 116

Other income, net decreased by $1 million for the three months ended July 31, 2025, and increased by $4 million for the six months ended July 31, 2025, compared to the prior year periods.

Provision For Income Taxes

The provision for income taxes was as follows (in millions):

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024

Provision for income taxes

The income tax provision for the three months ended April 30, 2025, was primarily attributable to earnings in the U.S.

$ 76 $ 36 $ 111 $ 52

The income tax provision for the six months ended July 31, 2025, was primarily attributable to earnings in the U.S.

and profitable foreign jurisdictions.

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

The income tax provision for the six months ended July 31, 2024, was primarily attributable to earnings in the U.S.

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

On July 4, 2025, the One Big Beautiful Bill Act (“The 2025 Tax Act”) was signed into law.

The 2025 Tax Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and modifications to the international tax framework.

The 2025 Tax Act did not have a material impact on our annual effective tax rate and is expected to reduce our domestic cash tax outflows for the remainder of fiscal 2026.

Due to the complexity and various upcoming effective dates of the 2025 Tax Act, we are still in the process of assessing its impact on our consolidated financial statements.

The final impact may differ from our current estimates based on further analysis, regulatory guidance, and any legislative changes.

The Organization for Economic Cooperation and Development (“OECD”) released Pillar Two model rules defining a 15% global minimum tax for large multinational corporations.

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Liquidity and Capital Resources

As of April 30, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $8.0 billion, which were primarily held for working capital and general corporate purposes.

As of July 31, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $8.2 billion, which were primarily held for working capital and general corporate purposes.

Our cash equivalents and marketable securities are primarily composed of, in order from largest to smallest, corporate bonds, U.S.

treasury securities, U.S.

agency obligations, money market funds, asset-backed securities, and commercial paper.

treasury securities, money market funds, U.S.

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

We have financed our operations primarily through customer payments, issuance of debt, and sales of our common stock.

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Our long-term future capital requirements depend on many factors, including the effects of macroeconomic trends, customer growth rates, subscription renewal activity, headcount growth, the timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings, infrastructure development, and our investment and acquisition activities.

As part of our strategy, we may choose to seek additional debt or equity financing.

As part of our strategy, we may choose to seek additional debt or equity financing, which may not be available on terms favorable to us or at all.

Additionally, our cash provided by operating activities could be affected by various risks and uncertainties, including the “Risk Factors” included in Part II, Item 1A of this report.

Our cash flows were as follows (in millions):

Three Months Ended April 30,

Six Months Ended July 31,

Net cash provided by (used in):

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Operating Activities

Cash provided by operating activities was $457 million and $372 million for the three months ended April 30, 2025, and 2024, respectively.

The improvement in cash provided by operating activities was primarily the result of higher cash collections of $205 million due to increased sales, offset by increased supplier payments of $79 million to support our continued growth and increased employee-related payments of $32 million primarily due to higher average headcount.

Cash provided by operating activities was $1.1 billion and $943 million for the six months ended July 31, 2025, and 2024, respectively.

The improvement in cash provided by operating activities was primarily the result of higher cash collections of $427 million due to increased sales, partially offset by increased employee-related payments of $176 million, which include payments made under the Fiscal 2026 Restructuring Plan, and increased supplier payments of $95 million to support our continued growth.

Investing Activities

Cash used in investing activities for the three months ended April 30, 2025, was $523 million, which primarily resulted from net cash outflow of $483 million related to marketable debt securities activity and capital expenditures of $36 million mainly for office space projects.

Cash used in investing activities for the three months ended April 30, 2024, was $258 million, which was primarily related to cash consideration of $512 million for the acquisition of HiredScore, net of cash acquired, and capital expenditures of $81 million for data center and office space projects, offset by net proceeds of $335 million related to marketable debt securities activity.

Cash used in investing activities was $510 million for the six months ended July 31, 2025, which primarily resulted from net cash outflow of $431 million related to marketable debt securities activity, capital expenditures of $64 million mainly for office space projects, and purchases of $15 million for non-marketable equity investments.

Cash used in investing activities was $603 million for the six months ended July 31, 2024, which primarily related to cash consideration of $522 million for the acquisition of HiredScore, net of cash acquired, and capital expenditures of $136 million for data center and office space projects, offset by proceeds of $57 million related to marketable debt securities activity.

We expect capital expenditures will be approximately $200 million in fiscal 2026.

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Financing Activities

Cash used in financing activities was $501 million for the three months ended April 30, 2025, which primarily resulted from repurchases of common stock of $290 million under our share repurchase programs and taxes paid of $211 million related to net share settlement of equity awards.

Cash used in financing activities was $367 million for the three months ended April 30, 2024, which primarily resulted from taxes paid of $239 million related to net share settlement of equity awards and repurchases of common stock of $128 million under our share repurchase programs.

Cash used in financing activities was $850 million for the six months ended July 31, 2025, which primarily resulted from repurchases of common stock of $589 million under our share repurchase programs and taxes paid of $372 million related to net share settlement of equity awards, offset by proceeds of $111 million from the issuance of common stock from employee equity plans.

Cash used in financing activities was $715 million for the six months ended July 31, 2024, which was primarily due to repurchases of common stock of $440 million under our share repurchase programs and taxes paid of $381 million related to net share settlement of equity awards, offset by proceeds of $106 million from the issuance of common stock from employee equity plans.

Free Cash Flows

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See “Non-GAAP Financial Measures” below for further information.

Free cash flows were $421 million for the three months ended April 30, 2025, compared to $291 million for the prior year period.

The improvement in free cash flows was primarily the result of higher cash collections of $205 million due to increased sales and decreased capital expenditures of $44 million, offset by increased supplier payments of $79 million to support our continued growth and increased employee-related payments of $32 million primarily due to higher average headcount.

Free cash flows were $1.0 billion for the six months ended July 31, 2025, compared to $807 million for the prior year period.

The improvement was primarily the result of higher cash collections of $427 million due to increased sales and decreased capital expenditures of $72 million, partially offset by increased employee-related payments of $176 million, which include payments made under the Fiscal 2026 Restructuring Plan, and increased supplier payments of $95 million to support our continued growth.

Reconciliation of our GAAP net cash provided by operating activities to non-GAAP free cash flows is as follows (in millions):

Three Months Ended April 30,

Six Months Ended July 31,

Net cash provided by operating activities $ 1,073 $ 943

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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”), and in May 2025, our Board of Directors authorized the repurchase of up to an additional $1.0 billion of our outstanding shares of Class A common stock (“May 2025 Share Repurchase Program”).

Prior to the May 2025 and August 2024 Share Repurchase Programs, 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.

For further information, see Note 13, Stockholders’ Equity , and Note 20, Subsequent Event , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Prior to the August 2024 and May 2025 Share Repurchase Programs, 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.

For further information, see Note 13, Stockholders’ Equity , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Contractual Obligations

Our contractual obligations primarily consist of borrowings under our Senior Notes, agreements for third-party hosted infrastructure platforms for business operations, leases for office space and co-location facilities for data center capacity, and other purchase obligations entered into in the ordinary course of business.

Except as discussed in Note 11, Leases , there have been no material changes outside the ordinary course of business to our contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Except as discussed in Note 11, Leases , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report, there have been no material changes outside the ordinary course of business to our contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Non-GAAP Financial Measures

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The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization.

The amount of purchase price allocated to intangible assets and the term of the related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of our ongoing operations.

Although we exclude the amortization of acquisition-related intangible assets from these non-GAAP financial measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

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We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.

See “Results of Operations—Operating Income and Operating Margin” for reconciliations from the most directly comparable GAAP financial measures of GAAP operating income and GAAP operating margin, to the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin, for the three months ended April 30, 2025, and 2024.

See “Liquidity and Capital Resources—Free Cash Flows” for a reconciliation from the most comparable GAAP financial measure, net cash provided by operating activities, to the non-GAAP financial measure, free cash flows, for the three months ended April 30, 2025, and 2024.

Critical Accounting Policies and Estimates

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For a further discussion of our critical accounting policies, refer to our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

During the three months ended April 30, 2025, there were no significant changes to our critical accounting policies and estimates.

During the three and six months ended July 31, 2025, there were no significant changes to our critical accounting policies and estimates.

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 2. Management’s Discussion and Analysis