Workday delivers applications for financial management, spend management, human capital management, planning, and analytics applications designed for the world’s largest companies, educational institutions, and government agencies. We offer innovative and adaptable technology focused on the consumer internet experience and cloud delivery model. Our applications are designed for global enterprises to manage complex and dynamic operating environments. We provideanalytics. With Workday, our customers ~~highly adaptable, accessible,~~have a unified system that can help them plan, execute, analyze, and ~~reliable~~extend to other applications toand environments, thereby helping them continuously adapt how they manage ~~critical~~their business ~~functions that help enable them to optimize their financial~~ and ~~human resources.~~operations. We were originally incorporated in March 2005 in Nevada, and in June 2012, we reincorporated in Delaware. As used in this report, the terms “Workday,” “registrant,” “we,” “us,” and “our” mean Workday, Inc. and its subsidiaries unless the context indicates otherwise.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Workday, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of our management, the information contained herein reflects all adjustments necessary for a fair presentation of Workday’s financial position, results of operations, stockholders’ equity, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the ~~quarter~~three months ended April 30, ~~2021,~~2022, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, ~~2022.~~2023. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2021,~~2022, filed with the SEC on ~~March 2, 2021.~~February 28, 2022.

~~There~~Certain prior period amounts reported in our consolidated financial statements and notes thereto have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, other than the adoption of an accounting pronouncement as described in Note 2, Accounting Standards.reclassified to conform to current period presentation.

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, ~~judgments,~~judgements, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. ~~Significant~~For revenue recognition, examples of significant estimates, ~~judgments,~~judgements, and assumptions include the identification of distinct performance obligations and the assessment of the standalone selling price for each performance obligation identified. Other significant estimates, judgements, and assumptions include, but are not limited to, the determination of the period of benefit for deferred commissions, the fair value and useful lives of assets acquired and liabilities assumed through business combinations, ~~the period of benefit for deferred commissions, the fair value of certain equity awards,~~ and the valuation of non-marketable equity investments. Actual results could differ from those estimates, judgements, and assumptions, and such differences could be material to our condensed consolidated financial statements.

We operate in 1 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 ~~makers~~maker (“~~CODMs”~~CODM”) in deciding how to allocate resources and assessing performance. For the three months ended April 30, ~~2021,~~2022, our ~~CODMs were~~CODM was our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez. Our ~~CODMs allocate~~CODM allocates resources and ~~assess~~assesses performance based upon discrete financial information at the consolidated level.

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

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

No customer individually accounted for more than 10% of trade and other receivables, net as of April 30, 2022, or January 31, 2022. No customer individually accounted for more than 10% of total revenues during the three months ended April 30, 2022, or 2021.

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

In order to reduce the risk of down-time of our cloud applications, we have established data centers in various geographic regions. We serve our customers and users from data center facilities operated by third parties, located in the United States, Canada, and Europe. We have internal procedures to restore services in the event of disaster at one of our data center facilities. Even with these procedures for disaster recovery in place, our cloud applications could be significantly interrupted during the implementation of the procedures to restore services.

In addition, we rely upon third-party hosted infrastructure partners globally, including Amazon Web Services (“AWS”), Google LLC, and Microsoft Corporation, to serve customers and operate certain aspects of our services. Given this, any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.

As of April 30, ~~2021,~~2022, debt securities consisted of the following (in thousands):

As of January 31, ~~2021,~~2022, debt securities consisted of the following (in thousands):

We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. Debt securities included in Marketable securities on the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets consist of securities with original maturities at the time of purchase greater than three months, and the ~~remainder of the~~remaining securities isare included in Cash and cash equivalents.

~~The unrealized losses associated with our~~No debt securities ~~were immaterial~~held as of April 30, ~~2021,~~2022, and January 31, ~~2021,~~2022, were in a continuous unrealized loss position for greater than 12 months, and we did not recognize any credit losses related to our debt securities during the periods presented.

We did not have any sales of debt securities during the three months ended April 30, ~~2021, or 2020.~~

Equity investments consisted of the following (in thousands):

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

Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence. The carrying values for our non-marketable equity investments are summarized below (in thousands):

During the three months ended April 30, 2022, we recorded upward adjustments to the carrying ~~values~~value of non-marketable equity investments of $8$3 million ~~during the three months ended April 30, 2021. NaN material adjustments were made to the carrying values of these investments during the three months ended April 30, 2020. Additionally, we recorded~~and impairment losses ~~on these investments~~ of ~~$2 million and $3 million during~~$14 million. During the three months ended April 30, 2021, we recorded upward adjustments to the carrying value of these investments of $8 million and ~~2020, respectively.~~impairment losses of $2 million.

We hold marketable equity investments with readily determinable fair values over which we do not own a controlling interest or exercise significant influence. The carrying values for our marketable equity investments are summarized below (in thousands):

WeDuring the three months ended April 30, 2022, we sold marketable equity investments for proceeds of $5 million with a corresponding realized gain of $1 million. During the three months ended April 30, 2021, we sold marketable equity investments for proceeds of $2 million ~~during~~with a corresponding realized loss of $2 million.

During the three months ended April 30, ~~2021. The initial cost of the equity investments sold was $1 million. There were 0 sales of~~2022, and 2021, we recorded unrealized gains on marketable equity investments ~~during the three months ended April 30, 2020.~~of $3 million and unrealized losses of $7 million, respectively.

We measure our cash equivalents, marketable securities, and foreign currency derivative contracts at fair value at each reporting period using a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, we measure our non-marketable equity investments for which there has been an observable price change from an orderly transaction for identical or similar investments of the same issuer at fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Other inputs that are directly or indirectly observable in the marketplace.

Level 3 — Unobservable inputs that are supported by little or no market activity.

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of April 30, ~~2021~~2022 (in thousands):

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of January 31, ~~2021~~2022 (in thousands):

Deferred costs, which consist of deferred sales commissions, were ~~$389~~$497 million and ~~$395~~$494 million as of April 30, ~~2021,~~2022, and January 31, ~~2021,~~2022, respectively. Amortization expense for the deferred costs was ~~$32~~$39 million and ~~$26~~$32 million for the three months ended April 30, ~~2021,~~2022, and ~~2020,~~2021, respectively. There was 0no impairment loss in relation to the costs capitalized for the periods presented.

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

Depreciation expense totaled ~~$63~~$67 million and ~~$55~~$63 million for the three months ended April 30, ~~2021,~~2022, and ~~2020,~~2021, respectively.

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

Amortization expense related to acquisition-related intangible assets was ~~$18~~$22 million and ~~$16~~$18 million for the three months ended April 30, 2022, and 2021, ~~and 2020,~~ respectively.

As of April 30, ~~2021,~~2022, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):

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

Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis. As of April 30, ~~2021,~~2022, the future estimated amortization expense was as follows (in thousands):

We conduct business on a global basis in multiple foreign currencies, subjecting Workday to foreign currency exchange risk. To mitigate this risk, we utilize derivative hedging contracts as described below. We do not enter into any derivatives for trading or speculative purposes.

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

We ~~are exposed to foreign currency fluctuations resulting from customer contracts denominated in foreign currencies. We have a hedging program in which we~~ enter into foreign currency forward contracts ~~related~~ to ~~certain customer contracts.~~hedge a portion of our forecasted revenue and expense transactions (“cash flow hedges”). We designate these forward contracts as cash flow hedging instruments since the accounting criteria for such designation have been met.

~~Foreign currency forward contracts designated as cash~~Cash flow hedges are recorded on the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets at fair value. Cash flows from such forward contracts are classified as operating activities. Gains or losses resulting from changes in the fair value of these hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets and ~~will be~~are subsequently reclassified to the ~~related revenue~~same line item as the hedged transaction on the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations in the same period that the ~~underlying revenues are earned.~~hedged transaction affects earnings. As of April 30, ~~2021,~~2022, we estimate that ~~$14~~$5 million of net ~~losses~~gains recorded in AOCI related to our ~~foreign currency forward contracts designated as~~ cash flow hedges will be reclassified into income within the next 12 months.

As of April 30, ~~2021,~~2022, and January 31, ~~2021, we had outstanding foreign currency~~2022, the notional values of the forward contracts designated as cash flow hedges ~~with total notional values of $1.4~~that we held to buy U.S. dollars in exchange for other currencies were $1.5 billion and ~~$1.3~~$1.4 billion, respectively. The notional ~~value represents the amount that will be bought or sold upon maturity~~values of the forward ~~contract.~~contracts designated as cash flow hedges that we held to sell U.S. dollars in exchange for other currencies were $300 million and $355 million as of April 30, 2022, and January 31, 2022, respectively. All contracts ~~have~~had maturities of less than 4847 months.

We also enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets and ~~liabilities.~~liabilities (“non-designated hedges”). These forward contracts are intended to offset ~~the~~ foreign currency gains or losses associated with the underlying monetary assets and liabilities and are recorded on the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets at fair value. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore all changes in the fair value of these forward contracts are recorded in Other income (expense), net on the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~Operations. Cash flows from such forward contracts are classified as operating activities.

As of April 30, ~~2021,~~2022, and January 31, ~~2021, we had outstanding~~2022, the notional values of the forward contracts not designated as hedges ~~with total~~that we held to buy U.S. dollars in exchange for other currencies were $100 million and $217 million, respectively, and the notional values of ~~$100~~the forward contracts not designated as hedges that we held to sell U.S. dollars in exchange for other currencies were $14 million and ~~$175~~$8 million, respectively.

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

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

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

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

We are subject to ~~master~~ netting agreements with all of the counterparties of the foreign exchange contracts, under which we are permitted to net settle transactions of the same currency with a single net amount payable by one party to the other. It is our policy to present the derivatives gross on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. Our foreign currency forward contracts are not subject to any credit contingent features or collateral requirements. We manage our exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

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Outstanding debt consisted of the following (in thousands):

In April 2022, we issued $3.0 billion aggregate principal amount of senior notes, consisting of $1.0 billion aggregate principal amount of 3.500% notes due April 1, 2027 (“2027 Notes”), $750 million aggregate principal amount of 3.700% notes due April 1, 2029 (“2029 Notes”), and $1.25 billion aggregate principal amount of 3.800% notes due April 1, 2032 (“2032 Notes,” and together with the 2027 Notes and the 2029 Notes, “Senior Notes”). Interest is payable semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2022.

The Senior Notes are unsecured obligations and rank equally with all existing and future unsecured and unsubordinated indebtedness of Workday. We may redeem the Senior Notes in whole or in part at any time or from time to time, at specified redemption dates and prices. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms. The indenture governing the Senior Notes also includes covenants (including certain limited covenants restricting our ability to incur certain liens and enter into certain sale and leaseback transactions), events of default, and other customary provisions. As of April 30, 2022, we were in compliance with all covenants associated with the Senior Notes.

We incurred debt discount and issuance costs of approximately $27 million in connection with the Senior Notes offering, which were allocated on a pro rata basis to the 2027 Notes, 2029 Notes, and 2032 Notes. The debt discounts and issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the contractual term of each arrangement. The effective interest rates on the 2027 Notes, 2029 Notes, and 2032 Notes, which are calculated as the contractual interest rates adjusted for the debt discount and issuance costs, are 3.67%, 3.82%, and 3.90%, respectively.

As of April 30, 2022, the total estimated fair value of the Senior Notes was $2.9 billion. The estimated fair values of the Senior Notes, which we have classified as Level 2 financial instruments, were determined based on quoted bid prices in an over-the-counter market on the last trading day of the reporting period.

In April ~~2020,~~2022, we entered into a credit agreement (“2022 Credit Agreement”) which provides for a revolving credit facility in an aggregate principal amount of $1.0 billion. The 2022 Credit Agreement ~~pursuant to~~replaced our prior credit agreement entered into in April 2020 (“2020 Credit Agreement”) which ~~the lenders extended to Workday~~provided for a ~~senior unsecured Term Loan~~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 ~~an unsecured Revolving~~terminated the revolving credit facility under the 2020 Credit ~~Facility in an aggregate principal amount~~Agreement which had no outstanding balance. The modification to our revolving credit facility and extinguishment of ~~$750 million.~~the term loan under the 2020 Credit Agreement did not have a material impact to our Condensed Consolidated Statements of Operations for the three months ended April 30, 2022.

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The 2022 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain merger transactions, and other matters, all subject to certain exceptions. The financial covenant, based on a quarterly financial test, requires ~~Workday~~that we do not to exceed a maximum leverage ratio of 3.50:1.00, subject to a step-up to 4.50:1.00 at ~~the~~our election ~~of Workday~~ for a certain period following an ~~Acquisition (as defined in the Credit Agreement).~~acquisition. As of April 30, ~~2021,~~2022, we were in compliance with all covenants.

In September 2017, we issued 0.25% convertible senior notes due October 1, 2022, with a principal amount of $1.15 billion ~~(together with the 2020 Notes, the “Notes”~~(“2022 Notes”). The 2022 Notes are unsecured, unsubordinated obligations, and interest is payable in cash in arrears at a fixed rate of 0.25% on April 1 and October 1 of each year. The 2022 Notes mature on October 1, 2022, unless repurchased or converted in accordance with their terms prior to such date. We cannot redeem the 2022 Notes prior to maturity.

The terms of the 2022 Notes are governed by an Indenture by and between us and Computershare Trust Company, as Trustee and successor to Wells Fargo Bank, National ~~Association, as Trustee (“Indenture”).~~Association. Upon conversion, holders of the 2022 Notes will receive cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at our election.

The initial conversion rate for the 2022 Notes is 6.7982 shares of Class A common stock per $1,000 principal amount, which is equal to an initial conversion price of approximately $147.10 per share of Class A common stock, subject to adjustment. Prior to the close of business on May 31, 2022, conversion of the 2022 Notes is subject to the satisfaction of certain conditions, as described below.

Holders of the 2022 Notes who convert their 2022 Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the Indenture), holders of the 2022 Notes may require us to repurchase all or a portion of their 2022 Notes at a price equal to 100% of the principal amount of the 2022 Notes, plus any accrued and unpaid interest.

Holders of the 2022 Notes may convert all or a portion of their 2022 Notes prior to the close of business on May 31, 2022, in multiples of $1,000 principal amount, only under the following circumstances:

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

The 2022 Notes were convertible at the option of the holders during the first quarter of fiscal ~~2022~~2023 and continue to be convertible in the second quarter of fiscal ~~2022~~2023 since the trigger for early conversion was met. Specifically, the last reported sale price of our Class A common stock exceeded 130% of the conversion price of the 2022 Notes for more than 20 trading days during the 30 consecutive trading days ended April 30, ~~2021, and January 31, 2021. Accordingly, the 2022 Notes are classified as current on the condensed consolidated balance sheets for the periods presented.~~2022. Through the date of this filing, the amount of the principal balance of the 2022 Notes that has been converted or for which conversion has been requested was not material.

As described in Note 2, Accounting Standards, we adopted ASU 2020-06 effective February 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted. Prior to the adoption of the standard, in accounting for the issuance of theThe 2022 Notes we separated them into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that do not have associated convertible features. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes. This difference represented a debt discount that was amortized to interest expense over the term of the 2022 Notes using the effective interest rate method. The gross carrying amount of the equity component for the 2022 Notes was $223 million and was included in Additional paid-in capitalare classified as current on the condensed consolidated balance sheets upon issuance. The effective interest rate of the liability component of the 2022 Notes was 4.60%. Additionally, we separated the total issuance costs incurred into liability and equity components in proportion to the allocation of the initial proceeds, resulting in liability issuance costs of $14 million and equity issuance costs of $4 million. Issuance costs attributable to the liability component were amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the 2022 Notes. The issuance costs attributable to the equity component were netted against the equity component in Additional paid-in capital.

In connection with the issuance of the 2022 Notes, we entered into convertible note hedge transactions ~~with respect to our Class A common stock~~ (“Purchased Options”). The Purchased Options are intended to offset potential economic dilution to our Class A common stock upon any conversion of the Notes. The Purchased Options are separate transactions and are not part of the terms of the Notes. The amounts paid for the Purchased Options were included in Additional paid-in capital on the condensed consolidated balance sheets.

In connection with the issuance of the 2022 Notes, we also entered into warrant transactions to sell warrants (“Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately ~~3.1 million shares over 60 scheduled trading days beginning in October 2020 and~~ 7.8 million shares over 60 scheduled trading days beginning in January 2023 of our Class A common stock at an exercise price of ~~$107.96 and~~ $213.96 per ~~share, respectively.~~share. If the Warrants are not exercised on their exercise dates, they will expire. The Warrants will be net share settled, and the resulting number of shares of our common stock we will issue depends on the daily volume-weighted average stock prices over the 60 scheduled trading day period beginning on the first expiration date of the Warrants. If the market value per share of our Class A common stock exceeds the applicable exercise price of the Warrants, the Warrants will have a dilutive effect on our earnings per share, assuming that we are profitable. The Warrants are separate transactions and are not part of the terms of the 2022 Notes or the Purchased Options. The proceeds from the sale of the Warrants were recorded in Additional paid-in capital on the ~~condensed consolidated balance sheets.~~

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

We have entered into operating lease agreements for our office space, data centers, and other property and equipment. ~~As of April 30, 2021, and January 31, 2021, operating~~Operating lease right-of-use assets were ~~$281~~$252 million and ~~$414~~$248 million as of April 30, 2022, and January 31, 2022, respectively, and operating lease liabilities were ~~$295~~$263 million as of both April 30, 2022, and ~~$443 million, respectively.~~January 31, 2022. We have also entered into finance lease agreements for other property and equipment. As of April 30, ~~2021,~~2022, and January 31, ~~2021,~~2022, finance leases were not material.

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

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

Other information related to our operating leases was as follows:

As of April 30, ~~2021,~~2022, maturities of operating lease liabilities were as follows (in thousands):

~~We have entered into noncancelable~~Our purchase obligations are primarily related to agreements ~~with~~for third-party hosted infrastructure ~~platform vendors with various expiration dates. As of~~platforms, data center equipment and software, business technology software and support, and sales and marketing activities. During the three months ended April 30, ~~2021, future noncancelable minimum payments under these agreements~~2022, there were ~~approximately $401 million.~~no material changes outside the ordinary course of business to our non-cancelable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

We are a party to various legal proceedings and claims that arise in the ordinary course of business. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. In our opinion, as of April 30, ~~2021,~~2022, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

As of April 30, ~~2021,~~2022, there were ~~188~~199 million shares of Class A common stock, net of treasury stock, and 5855 million shares of Class B common stock outstanding. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to 1 vote per share and each share of Class B common stock is entitled to 10 votes per share. Each share of Class B common stock can be converted into a share of Class A common stock at any time at the option of the holder.

Our 2012 Equity Incentive Plan (“EIP”) serves as the successor to our 2005 Stock Plan (together with the EIP, the “Stock Plans”). As of April 30, ~~2021,~~2022, we had 5952 million shares of Class A common stock available for future grants.

We also have a 2012 Employee Stock Purchase Plan (“ESPP”). Under the 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. Options to purchase shares are granted twice yearly on or about June 1 and December 1, and are exercisable on or about the succeeding November 30 and May 31, ~~respectively,~~respectively. Pursuant to the terms of ~~each year.~~the ESPP, the share reserve increased by 2 million shares on March 31, 2022. As of April 30, ~~2021, 4~~2022, 6 million shares of Class A common stock were available for issuance under the ESPP.

The Stock Plans provide for the issuance of restricted stock units (“RSUs”) to employees and non-employees. RSUs generally vest over four years. A summary of information related to RSU activity during the three months ended April 30, ~~2021,~~2022, is as follows (in thousands, except per share data):

As of April 30, ~~2021,~~2022, there was a total of ~~$2.3~~$2.6 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years.

During fiscal ~~2021, 0.6~~2022, 0.4 million shares of performance-based restricted stock units (“PRSUs”) were granted to ~~all~~ employees ~~other than executive management~~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, ~~2021.~~2022. During the three months ended April 30, ~~2021,~~2022, we recognized ~~$17~~$16 million in compensation cost related to these PRSUs. We will not continue our company-wide PRSU program in fiscal 2023.

The Stock Plans provide for the issuance of incentive and nonstatutory stock options to employees and non-employees. Stock options issued under the Stock Plans generally are exercisable for periods not to exceed ten years and generally vest over five years. A summary of information related to stock option activity during the three months ended April 30, ~~2021,~~2022, is as follows (in millions, except number of shares which are reflected in thousands and per share data):

As of April 30, ~~2021, there was a total of $5 million in~~2022, unrecognized compensation cost ~~adjusted for estimated forfeitures,~~ related to unvested stock options ~~which is expected to be recognized over a weighted-average period of approximately one year.~~

Subscription services revenues of ~~$930 million~~$1.1 billion and ~~$809~~$930 million were recognized during the three months ended April 30, ~~2021,~~2022, and ~~2020,~~2021, respectively, that were included in the unearned revenue balances as of January 31, ~~2021,~~2022, and ~~2020,~~2021, respectively. Professional services revenues recognized in the same periods from unearned revenue balances at the beginning of the respective periods were not material.

As of April 30, ~~2021,~~2022, approximately ~~$10.08~~$12.7 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize revenues on approximately ~~$6.59~~$8.0 billion of these remaining performance obligations over the next 24 months, with the balance recognized thereafter. Revenues from remaining performance obligations for professional services contracts as of April 30, ~~2021, was~~2022, were not material.

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

We ~~compute the year-to-date~~reported an income tax provision ~~by applying the estimated annual effective tax rate to the year-to-date pre-tax income or loss~~of $9 million and ~~adjust for discrete tax items in the period. We reported~~ an income tax benefit of $1 ~~million and an income tax expense of $3~~ million for the three months ended April 30, 2022, and 2021, respectively. The income tax provision for the three months ended April 30, 2022, was primarily attributable to a taxable gain recognized from an intercompany sale of intellectual property, income tax expenses in profitable foreign jurisdictions, and ~~2020, respectively.~~an increase in state taxes due to capitalized research and development expenditures. The income tax benefit for the three months ended April 30, 2021, was primarily attributable to excess tax benefit from stock option deductions in foreign jurisdictions.

The 2017 Tax Cuts and Jobs Act requires research and development expenditures incurred for the tax year beginning after December 31, 2021, to be capitalized and amortized ratably over five years for domestic research and fifteen years for international research. The mandatory capitalization requirement has no material impact to our fiscal 2023 income tax ~~expense for the three months ended April 30, 2020, was primarily attributable~~provision due to ~~state taxes~~our tax attributes carryover and ~~income tax expenses in profitable foreign jurisdictions.~~full valuation allowance position.

We are subject to income tax audits in the U.S. and foreign jurisdictions. We record liabilities related to uncertain tax positions and believe that we have provided adequate reserves for income tax uncertainties in all open tax years. Due to our history of tax losses, all years remain open to tax audit.

We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. As of April 30, ~~2021,~~2022, we continue to maintain a full valuation allowance on our deferred tax assets except in certain jurisdictions.

Basic net loss per share ~~attributable to common stockholders~~ is computed by dividing ~~the~~ net loss ~~attributable to common stockholders~~ by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock. Diluted net loss per share is computed by giving effect to all ~~potential~~potentially dilutive shares of common stock, including our ~~outstanding stock options, unvested RSUs, PRSUs, and RSAs, common stock related to~~ convertible senior notes, outstanding warrants related to the ~~extent dilutive,~~issuance of the convertible senior notes, and outstanding ~~warrants,~~share-based awards consisting primarily of unvested RSUs and common stock issuable pursuant to the ESPP. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive.ESPP obligations.

The net loss per share ~~attributable to common stockholders~~ is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the loss for the period had been distributed. As the liquidation and dividend rights are identical, the net loss ~~attributable to common stockholders~~ is allocated on a proportionate basis.

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

~~Potentially dilutive securities that are~~The computation of diluted net loss per share does not include the effect of the following potentially outstanding weighted-average shares of common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted net loss per share because ~~doing so~~the effect would ~~be antidilutive are as follows~~have been anti-dilutive (in thousands):

We sell our subscription contracts and related services in 2 primary geographical markets: to customers located in the United States and to customers located outside of the United States. Revenues by geography are generally based on the address of the customer as specified in our ~~master~~customer subscription agreement. The following table sets forth revenues by geographic area (in thousands):

Our long-lived assets, which primarily consist of property and equipment and operating lease right-of-use assets, are attributed to a country based on the physical location of the assets. Aggregate Property and equipment, net and Operating lease right-of-use assets by geographic area was as follows (in thousands):

Workday delivers applications for financial management, spend management, human capital management, planning, and ~~analytics and benchmarking applications designed for the world’s largest companies, educational institutions, and government agencies.~~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 ~~businesses~~business and operations. Our diverse customer base includes medium-sized and large, global ~~companies~~organizations within numerous industry categories, including ~~technology,~~professional and business services, financial services, ~~business and professional services,~~ healthcare, ~~and life sciences, manufacturing,~~education, government, technology, media, retail, and ~~hospitality, as well as educational institutions, government agencies, and nonprofit organizations.~~hospitality.

We have achieved significant growth since our inception in ~~a relatively short period of time,~~2005, with a substantial amount of our growth coming from new customers. Our current financial focus is on growing our revenues and expanding both our customer ~~base.~~base and our footprint within our existing customers. While we have ~~incurred net~~a history of GAAP operating losses, ~~on a GAAP basis in each period since our inception in 2005,~~ we strive to invest in a disciplined manner across all of our functional areas to sustain continued near-term revenue growth and support our long-term initiatives. 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 we anticipate that we will gain economies of scale by increasing our customer base without direct incremental development costs.

We plan to reinvest a significant portion of our incremental revenues in future periods to grow our business. We have invested and expect to continue to invest heavily in our product development efforts to deliver additional compelling applications, enhance existing applications, and to address customers’ evolving needs. In addition, we plan to continue to expand our ability to sell our applications globally, particularly in Europe and ~~Asia,~~Asia-Pacific, by investing in product development and customer support to address the business needs of local markets, increasing our sales and marketing organizations, acquiring and leasing additional office space, and expanding our ecosystem of service partners to support local deployments. We expect to make further significant investments in our data center capacity and equipment and third-party hosted infrastructure platforms as we plan for future growth. We are also investing in personnel to support our growing customer base.

We regularly evaluate acquisition and investment opportunities in complementary businesses, employee teams, services, technologies, and intellectual property rights in an effort to expand our product and service offerings. For example, in fiscal 2022, we acquired ~~Adaptive Insights in fiscal 2019, Scout in fiscal 2020,~~Peakon ApS, a continuous listening platform that captures real-time employee sentiment, Zimit, a configure, price, quote solution built for services industries, and ~~Peakon in fiscal 2022.~~VNDLY, a cloud-based external workforce and vendor management technology. We expect to continue making such acquisitions and investments in the future. While we remain focused on improving operating ~~margins,~~margin, these acquisitions and investments will increase our costs on an absolute basis in the near term. Many of these investments will occur in advance of experiencing any direct benefit from them and could make it difficult to determine if we are allocating our resources efficiently.

Since inception, we have also invested heavily in our professional services organization to help ensure that customers successfully deploy and adopt our applications. Additionally, we continue to expand our professional ~~service~~services partner ecosystem to further support our customers. We believe our investment in professional services, as well as partners building consulting practices around Workday, will drive additional customer subscriptions and continued growth in revenues. Due to our ability to leverage the expanding partner ecosystem, we expect the rate of professional services revenue growth to decline over time and continue to be lower than subscription revenue growth.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets. In addition, the Russian invasion of Ukraine in early fiscal 2023 has led to further economic disruption. While we do not operate in Russia and while our extended workforce in Ukraine is ~~having widespread, rapidly evolving,~~not a material part of our workforce, the conflict has increased inflationary cost pressures and ~~unpredictable impacts on~~supply chain constraints which have negatively impacted the global ~~societies, economies, financial markets, and business practices.~~economy. In response to the concerns over inflation risk, the U.S. Federal Reserve began to raise interest rates in March 2022 for the first time in over three years, and signaled they expect additional rate increases throughout the year.

Despite the continuing uncertainty associated with the COVID-19 pandemic, Russia-Ukraine conflict, and other macroeconomic events, we are confident in the long-term overall health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers continue to embark on their human resources and finance digital transformation journeys. Demand for our products remains strong, and we continue to achieve solid new subscription bookings.

At the beginning of the COVID-19 pandemic, we temporarily closed the majority of our offices; required most of our employees to work remotely; implemented travel restrictions; and postponed certain of our customer, industry, implementation partner, analyst, investor, and employee events and converted others to virtual-only experiences. ~~These operational changes remain in effect as~~As of ~~the date of this filing and could extend into future quarters. Despite the economic challenges brought on by the COVID-19 pandemic, we are confident in the long-term overall health~~April 30, 2022, most of our ~~business, the strength of our product offerings,~~offices have reopened and ~~our ability to~~we have begun permitting travel and in-person events in accordance with applicable regional guidance. We continue to ~~execute on our strategy.~~

Our near-term revenues are relatively predictable as a result of our subscription-based business model. However, if the economic uncertainty ~~persists,~~increases, we may ~~continue to~~ experience a negative impact on new business, customer renewals, sales and marketing efforts, revenue growth rates, customer deployments, customer ~~solvency,~~collections, product development, or other financial metrics, ~~any~~similar to what we experienced at the onset of ~~which~~the pandemic. Any of these factors could harm our business, financial condition, and operating results.

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

We derive our revenues from subscription services and professional services. Subscription services revenues primarily consist of fees that give our customers access to our cloud applications, which include related customer support. Professional services revenues include fees for deployment services, optimization services, and training.

The mix of applications to which a customer subscribes can affect our financial performance due to price differentials in our applications. Pricing for our applications varies based on many factors, including the complexity and maturity of the application and its acceptance in the marketplace. New products or services offerings by competitors in the future could also impact the mix and pricing of our offerings.

Subscription services revenues are recognized over time as services are delivered and consumed concurrently over the contractual term, beginning on the date our service is made available to the customer. Our subscription contracts typically have a term of three years or longer and are generally noncancelable. We generally invoice our customers annually in advance. Amounts that have been invoiced are initially recorded as unearned revenue.

Our consulting engagements are ~~generally~~ billed on a time and materials basis or a fixed price basis. For contracts billed on a time and materials basis, revenues are recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenues are recognized over time based on the proportion of the professional services performed. In some cases, we supplement our consulting teams by subcontracting resources from our service partners and deploying them on customer engagements. As the Workday-related consulting practices of our partner firms continues to develop, we expect these partners to increasingly contract directly with our subscription customers. As a result of this trend, and the increase of our subscription services revenues, we expect our professional services revenues as a percentage of total revenues to continue to decline over time.

Our subscription revenue backlog, which is also referred to as remaining performance obligations for subscription contracts, represents contracted subscription services revenues that have not yet been recognized and includes billed and unbilled amounts. Subscription revenue backlog may fluctuate from period to period due to a number of factors, including the timing of renewals and overall renewal rates, new business growth, average contract duration, and seasonality.

Our total revenues for the three months ended April 30, ~~2021,~~2022, and ~~2020,~~2021, were as follows (in thousands, except percentages):

Reconciliations of our GAAP to non-GAAP operating expenses were as follows (in thousands):

Non-GAAP operating expenses in costs of subscription services were ~~$147~~$190 million for the three months ended April 30, ~~2021,~~2022, compared to ~~$122~~$147 million for the prior year period, an increase of ~~$26~~$43 million, or ~~21%~~29%. The increase in costs of subscription services included increases of ~~$13~~$21 million in employee-related expenses ~~driven by~~due to higher ~~average~~ headcount, $12 million in third-party expenses for hardware maintenance and ~~$10~~data center capacity, and $4 million in depreciation expense related to equipment in our data ~~centers, offset by a decrease of $5 million related to the COVID-19 one-time employee bonus.~~centers.

We expect GAAP and non-GAAP operating expenses in costs of subscription services will continue to increase in absolute dollars as we improve and expand our technical operations infrastructure, including our data centers and computing infrastructure operated by third parties.

~~See the table above for a reconciliation of GAAP to non-GAAP operating expenses.~~

Non-GAAP operating expenses in costs of professional services were ~~$116~~$138 million for the three months ended April 30, ~~2021,~~2022, compared to ~~$135~~$116 million for the prior year period, ~~a decrease~~an increase of ~~$19~~$22 million, or ~~14%~~19%. The ~~decrease~~increase in costs of professional services included ~~decreases~~increases of ~~$12 million related to the COVID-19 one-time employee bonus and $5~~$15 million in ~~reduced~~employee-related expenses due to higher headcount and $4 million in professional services and subcontractor expenses.

We expect GAAP and non-GAAP costs of professional services as a percentage of total revenues to continue to decline as we continue to rely on our service partners to deploy our applications and as the number of our customers continues to grow.

We expect GAAP and non-GAAP product development expenses will continue to increase in absolute dollars as we improve and extend our applications and develop new technologies.

We expect GAAP and non-GAAP 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 brand awareness and attract new customers.

We expect GAAP and non-GAAP general and administrative expenses will continue to increase in absolute dollars as we further invest in our infrastructure and support our global expansion.

Reconciliations of our GAAP to non-GAAP operating ~~margins~~income (loss) and operating margin were as ~~follows:~~follows (in thousands, except percentages):

We had other expense, net of $20 million for the three months ended April 30, 2022, as compared to other expense, net of $9 million for the three months ended April 30, ~~2021, as compared to~~2021. The increase in other expense, net ~~of $11 million for the prior year period. This decrease~~ was ~~comprised of a decrease in~~primarily related to additional contractual interest expense of ~~$15~~$9 million ~~due to the adoption of ASU No. 2020-06 and the conversion of the 2020~~for our Senior Notes issued in the second quarter of fiscal 2021, offset by net losses recorded on our equity securities of $6 million and reduced interest income on marketable securities of $6 million due to lower prevailing interest rates.current quarter.

Regulation S-K Item 10(e), “Use of non-GAAP financial measures in Commission filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating ~~margins~~margin meet the definition of a non-GAAP financial ~~measure.~~measures.

Our non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating ~~margins~~margin exclude the components listed below. For the reasons set forth below, management believes that excluding ~~the component~~these components provides useful information to investors and others in understanding and evaluating our operating results and prospects in the same manner as management, in comparing financial results across accounting periods and to those of peer companies, and to better understand the long-term performance of our core business.

A limitation of our non-GAAP financial measures of non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating ~~margins~~margin is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Further, the non-GAAP financial measure of non-GAAP operating expenses has certain limitations because it does not reflect all items of expense that affect our operations and are reflected in the GAAP financial measure of total operating expenses. In the case of share-based compensation, if we did not pay out a portion of compensation in the form of share-based compensation and related employer payroll tax-related items, the cash salary expense included in ~~costs of revenues and~~ operating expenses would be higher, which would affect our cash position.

We compensate for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. 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 Expenses” and “Results of Operations—Operating ~~Margins”~~Margin” for reconciliations from the most directly comparable GAAP financial measures, GAAP operating expenses, GAAP operating income (loss), and GAAP operating ~~margins,~~margin, to the non-GAAP financial measures, non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating ~~margins,~~margin, for the three months ended April 30, ~~2021,~~2022, and ~~2020.~~2021.

As of April 30, ~~2021,~~2022, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling ~~$3.0~~$6.3 billion, which were primarily held for working capital purposes. Our cash equivalents and marketable securities are composed primarily of, in order from largest to smallest, U.S. treasury securities, commercial paper, U.S. agency obligations, money market funds, corporate bonds, and ~~money market funds.~~marketable equity investments. We have financed our operations primarily through customer payments, issuance of debt, and sales of our common stock.

We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to the remaining term of contracted noncancelable subscription agreements, which are not reflected on the ~~balance sheet,~~Condensed Consolidated Balance Sheets, and, if necessary, our borrowing capacity under our ~~Revolving~~2022 Credit ~~Facility~~Agreement that provides for ~~$750 million~~$1.0 billion of unsecured financing, ~~will be~~are sufficient to meet our working capital, capital expenditure, and debt repayment needs over the next 12 months. As part of our strategy, we may enter into arrangements to acquire or invest in complementary businesses, services, technologies, or intellectual property rights in the future. We may also choose to seek additional debt or equity financing.

Our long-term future capital requirements depend on many factors, including the effects of ~~the COVID-19 pandemic,~~macroeconomic trends, customer growth rates, subscription renewal activity, headcount growth, timing and extent of development efforts, expansion of sales and marketing activities, introduction of new and enhanced services offerings, timing of construction or acquisition of additional facilities, investments, and acquisition activities. We may enter into arrangements to acquire or invest in complementary businesses, services, technologies, or intellectual property rights in the future. We may also choose to seek additional debt or equity financing.

Our cash flows for the three months ended April 30, ~~2021,~~2022, and ~~2020,~~2021, were as follows (in thousands):

We expect our business to continue to generate sufficient operating cash flows; however, if the economic uncertainty caused by the COVID-19 pandemic and Russia-Ukraine conflict worsens or is prolonged, our customers may ~~continue to~~ request payment timing concessions, which could materially impact the timing and predictability of our operating cash flows in any given period.

Cash used in investing activities for the three months ended April 30, 2021, was $862 million, which was primarily related to cash consideration for the acquisition of Peakon, net of cash acquired, of $679 million, the purchase of leased office space within our corporate headquarters from an affiliate of our Co-Founder and CEO Emeritus, David Duffield, of $171 million, capital expenditures primarily for data center projects of $70 million, purchases of non-marketable equity and other investments of $46 million, and the timing of purchases and maturities of marketable securities. These payments were partially offset by proceeds of $12 million from sales of marketable securities.

We expect capital expenditures will be approximately $475 million in fiscal 2023. This includes investments in our office facilities, corporate IT infrastructure, and customer data centers to support our continued growth.

Cash used in financing activities was $11 million for the three months ended April 30, 2021, which was primarily due to a payment on the ~~Term Loan~~term loan under the 2020 Credit Agreement of $9 million.

Our condensed consolidated financial statements are prepared in accordance with ~~accounting principles generally accepted in the United States.~~GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates, judgements, and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgements, and assumptions. Our actual results may differ ~~from these estimates under different assumptions or conditions.~~

We believe that the following critical accounting policies involve a high degree of ~~judgment~~judgement and complexity, and are the most critical to aid in fully understanding and evaluating our financial condition and operating results:

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, 2021, filed with the SEC on March 2, 2021. We no longer consider estimates related to our convertible senior notes to be a critical accounting policy due to the adoption of ASU No. 2020-06 effective February 1, 2021, which simplified the accounting for convertible instruments.2022. There were no ~~other~~ significant changes to our critical accounting policies and estimates during the three months ended April 30, ~~2021.~~2022.

The ~~ongoing~~ COVID-19 pandemic ~~has~~and Russia-Ukraine conflict have resulted in negative impacts on global economies and financial markets, which may increase our foreign currency exchange risk and interest rate risk. For further discussion of the potential impacts of ~~the COVID-19 pandemic~~these events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this ~~Quarterly Report on Form 10-Q.~~report.

We transact business globally in multiple currencies. As a result, our operating results and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. As of April 30, ~~2021,~~2022, our most significant currency exposures were the euro, British pound, Canadian dollar, ~~British pound,~~ and Australian dollar.

We had cash, cash equivalents, and marketable securities totaling ~~$3.0~~$6.3 billion and ~~$3.5~~$3.6 billion as of April 30, ~~2021,~~2022, and January 31, ~~2021,~~2022, respectively. Cash equivalents and marketable securities were invested primarily in U.S. treasury securities, U.S. agency obligations, corporate bonds, commercial paper, ~~and~~ money market ~~funds.~~funds, and marketable equity investments. The cash, cash equivalents, and marketable securities are held primarily for working capital purposes. Our investment portfolios are managed to preserve capital and meet liquidity needs. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our portfolio of debt securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. Our debt securities are classified as “available-for-sale.” When the fair value of the security declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the impaired security, is recognized on the ~~condensed consolidated statement~~Condensed Consolidated Statements of ~~operations.~~Operations.

An immediate increase of 100 basis points in interest rates would have resulted in ~~an $11~~a $17 million and ~~$10~~$11 million market value reduction in our investment portfolio as of April 30, ~~2021,~~2022, and January 31, ~~2021,~~2022, respectively. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.

~~In April 2020, we entered into a Credit Agreement pursuant to which the lenders extended to Workday a senior unsecured Term Loan in an aggregate principal amount of $750 million~~The Senior Notes and an unsecured Revolving Credit Facility in an aggregate principal amount of $750 million. The Term Loan and Revolving Credit Facility bear interest, at our option, at either (i) a floating rate per annum equal to the base rate plus a margin that ranges from 0.000% to 0.625%, or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market plus a margin that ranges from 1.000% to 1.625%. The base rate is defined as the greatest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50%, or (iii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market for a period of one month (but not less than zero) plus 1.00%. Actual margins under either election will be based on our consolidated leverage ratio.

Borrowings under our 2022 Credit Agreement bear interest, at our option, at a base rate plus a margin of ~~the 2022 Notes was $1.1 billion as~~0.000% to 0.500% or a SOFR rate plus 10 basis points, plus a margin of ~~April 30, 2021. The estimated fair value of the 2022 Notes was $2.0 billion as of April 30, 2021. The estimated fair value was~~0.750% to 1.500%, in each case with such margin being determined based on our consolidated leverage ratio or credit rating. Because the ~~quoted bid price of~~interest rates applicable to borrowings under the 2022 ~~Notes~~Credit Agreement are variable, we are exposed to market risk from changes in ~~an over-the-counter market as~~the underlying index rates, which affect our cost of ~~the last trading day of the current fiscal quarter, which was $176.50.~~borrowing.

Under the supervision and with the participation of our management, including our principal executive officers and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its ~~judgment~~judgement in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in ~~Securities and Exchange Commission~~SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our principal executive officers and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officers and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, despite the fact that the majority of our employees are continuing to work remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the potential impact of the COVID-19 pandemic on the design and operating effectiveness of our internal controls.reporting.

We are regularly involved with claims, suits, purported class or representative actions, and may be involved in regulatory and government investigations and other proceedings, involving competition, intellectual property, data security and privacy, bankruptcy, tax and related compliance, labor and employment, commercial disputes, and other matters. Such claims, suits, actions, regulatory and government investigations, and other proceedings can impose a significant burden on management and employees, could prevent us from offering one or more of our applications, services, or features to others, could require us to change our technology or business practices, or could result in monetary damages, fines, civil or criminal penalties, reputational harm, or other adverse consequences.

These claims, suits, actions, regulatory and government investigations, and other proceedings may include speculative, substantial, or indeterminate monetary amounts. We record a liability when we believe that it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant ~~judgment~~judgement is required to determine both the likelihood of there being a liability and the estimated amount of a liability related to such matters. With respect to our outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible liability will not, either individually or in aggregate, have a material adverse effect on our business, financial condition, operating results, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

The below summary risks provide an overview of the material risks we are exposed to in the normal course of our business activities. The below summary risks do not contain all of the information that may be important to you, and you should read these together with the more detailed discussion of risks set forth following this section, as well as elsewhere in this ~~Quarterly Report on Form 10-Q~~report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional risks beyond those summarized below, or discussed elsewhere in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may apply to our activities or operations as currently conducted or as we may conduct them in the future, or to the markets in which we currently operate or may in the future operate. Consistent with the foregoing, we are exposed to a variety of risks, including those associated with the following:

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets. In addition, the Russian invasion of Ukraine in early fiscal 2023 has led to further economic disruption. While we do not operate in Russia and while our extended workforce in Ukraine is not a material part of our workforce, the conflict has increased inflationary cost pressures and supply chain constraints which have negatively impacted the global economy. In response to the concerns over inflation risk, the U.S. Federal Reserve began to raise interest rates in March 2022 for the first time in over three years, and ~~global economies and put unprecedented strain on governments, healthcare systems, educational institutions, businesses, and individuals around~~signaled they expect additional rate increases throughout the ~~world, the impact and duration of which is difficult to assess or predict.~~year. It is especially difficult to predict the impact of such events on the global economic markets, which have been and will continue to be highly dependent upon the actions of governments, businesses, and other enterprises in response to the pandemic and macroeconomic events, and the effectiveness of those ~~actions, and vaccine availability, distribution, and adoption.~~actions. As a result of the COVID-19 pandemic and recent macroeconomic events, we have experienced volatility in the trading prices for our Class A common stock, and ~~the stock of other technology companies have been highly volatile, and~~ such volatility may continue ~~for~~in the ~~duration of and possibly beyond the COVID-19 pandemic.~~long term. Any sustained adverse impacts from the continued spread or resurgence of COVID-19 or due to recent macroeconomic events could materially and adversely affect our business, financial condition, operating results, and earnings guidance that we may issue from time to time, which could have a material effect on the value of our Class A common stock.

~~In response to~~At the beginning of the COVID-19 ~~as many other companies have done,~~pandemic, we ~~have~~ temporarily closed the majority of our global offices; required most of our employees ~~to continue~~ to work remotely; implemented travel restrictions; and postponed or canceled certain of our customer, industry, implementation partner, analyst, investor, and employee events, and converted other events to virtual-only experiences. ~~These precautionary~~If we reinstate these measures due to a resurgence of COVID-19 or otherwise, these measures could have increasingly negative effects on our employee productivity and morale, sales and marketing efforts, customer success efforts, and revenue growth rates or other financial metrics, or create operational or other challenges, any of which could adversely impact our business, financial condition, and operating results in any given period. We

As of April 30, 2022, most of our offices have reopened and we have begun permitting travel and in-person events, taking into consideration government restrictions, employee safety, and health risks. Our approach may ~~also~~vary among geographies depending on appropriate health protocols, and may change at any time. Additionally, our efforts to reopen our offices safely may not be successful, could expose our employees to health risks, and could involve additional costs or liability. While vaccines have become widely available in certain countries, and businesses and economies have reopened, the status of global economic recovery remains uncertain and unpredictable, and will continue to ~~experience impacts to productivity and~~be impacted by developments in the pandemic including any subsequent waves of outbreak or new variant strains of the COVID-19 virus which may require re-closures or other ~~operational and business impacts if our employees, executives, or their family members experience health issues, or if there are continued delays in our hiring and onboarding of new employees.~~preventative measures. The COVID-19 pandemic may also have long-term effects on the nature of the office environment and remote working, which may present risks for our real estate portfolio, as well as strategy, operational, talent recruiting and retention, and workplace culture challenges that may adversely affect our business. The COVID-19 pandemic and recent macroeconomic events could also impact our data center and computing infrastructure operations, including potential disruptions to, among other things, the supply chain required to maintain these systems, construction projects designed to expand our data center capacity, and primary vendors who provide critical products and services.

Our future revenues rely on continued demand by existing customers and the acquisition of new ~~customers. We have~~customers who may be subject to labor shortages and global supply chain disruptions due to the COVID-19 pandemic and recent macroeconomic events. During the COVID-19 pandemic, we experienced ~~and may continue to experience~~ delays in purchasing decisions from prospective customers and a reduction in customer demand, particularly in the industries most impacted by the COVID-19 pandemic, such as travel and ~~hospitality and healthcare. We may also continue to experience~~hospitality. Similarly, we experienced a reduction in renewal rates, particularly within our subset of small and medium-sized planning customers, as well as reduced customer spend and delayed ~~payments, which could materially impact our~~payments. Our business, financial condition, and operating results may be negatively impacted in future ~~periods. In addition, some~~periods due to a resurgence of ~~our competitors may offer their products and services at a lower price,~~COVID-19 or ~~may offer delayed payment terms, financing terms, or other terms and conditions that are more enticing to potential customers.~~on account of recent macroeconomic events. While our subscription services revenues are relatively predictable in the near term as a result of our subscription-based business model, the effect of the COVID-19 pandemic and recent macroeconomic events may not be fully reflected in our operating results and overall financial performance until future periods.

It is not possible for us to estimate the duration or magnitude of the adverse results of the COVID-19 pandemic and ~~its effects~~recent macroeconomic events and their effect on our business, financial condition, or operating results at this time, as the impact will depend on future developments, which are highly uncertain and difficult to predict. To the extent the COVID-19 pandemic and recent macroeconomic events adversely ~~affects~~affect our business, financial condition, and operating results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

We have experienced significant growth in the number of users, transactions, and data that our operations infrastructure supports. We seek to maintain sufficient excess capacity in our operations infrastructure to meet the needs of all of our customers and users, as well as our own needs, and to ensure that our services and solutions are accessible within an acceptable load time. We also seek to maintain excess capacity to facilitate the rapid provision of new customer deployments and the expansion of existing customer deployments. In addition, we need to properly manage our technological operations infrastructure in order to support version control, changes in hardware and software parameters, updates, and the evolution of our applications, and to reduce infrastructure latency associated with dispersed geographic locations. However, the provision of new hosting infrastructure requires significant lead time. If we do not accurately predict our infrastructure requirements, we may experience service outages. Furthermore, if our operations infrastructure fails to scale, we may experience delays in providing service as we seek to obtain additional capacity, and no assurance can be made that we will be able to secure such additional capacity on the same or similar terms as we currently have, which could result in a significant increase in our operating costs. Moreover, any failure to scale and secure additional capacity could result in delays in new feature rollouts, reduce the demand for our applications, result in customer and end user dissatisfaction, and adversely affect our business and operating results.

We have experienced, and may in the future experience, defects, system disruptions, outages, and other performance problems, including the failure of our applications to perform properly. These problems may be caused by a variety of factors, including infrastructure changes, vendor issues, software and system defects, human error, viruses, worms, security attacks (internal and external), fraud, spikes in customer usage, and denial of service issues. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. Because of the large amount of data that we collect and process in our systems, even if we do not experience a customer outage as a result of these issues, it is possible that these issues could result in significant disruption, data loss or corruption, or cause the data to be incomplete or contain inaccuracies that our customers and other users regard as significant. Additionally, such issues may also result in vulnerabilities that could inadvertently result in unauthorized access to data. Furthermore, the availability or performance of our applications could also be adversely affected by our customers’ and other users’ inability to access the internet. For example, our customers and other users access our applications through their internet service providers. If a service provider fails to provide sufficient capacity to support our applications or otherwise experiences service outages, such failure could interrupt our customers’ and other users’ access to our applications, which could adversely affect their perception of our applications’ reliability and our revenues. In addition, certain countries have implemented or may implement legislative and technological actions that either do or can effectively regulate access to the internet, including the ability of internet service providers to limit access to specific websites or content. Other countries have attempted or are attempting to change or limit the legal protections available to businesses that depend on the internet for the delivery of their services.

Our customer agreements typically provide for monthly service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our applications as a result of the foregoing or otherwise, we may be contractually obligated to issue service credits or refunds to customers for prepaid and unused subscription services, our customers may make warranty or other claims against us, or we could face contract terminations, which would adversely affect our attrition rates. Any extended service outages could result in customer losses and adversely affect our reputation, business, and operating results.

Furthermore, our financial management application is essential to our and our customers’ financial planning, reporting, and compliance programs. Any interruption in our service may affect the availability, accuracy, or timeliness of such programs and as a result could damage our reputation, cause our customers to terminate their use of our applications, require us to issue refunds for prepaid and unused subscription services, require us to compensate our customers for certain losses, and prevent us from gaining additional business from current or future customers. In addition, because we use Workday’s financial management application, any problems that we experience with financial reporting and compliance could be negatively perceived by prospective or current customers and negatively impact demand for our applications.

Our errors and omissions insurance may be inadequate or may not be available in the future on acceptable terms, or at all, to protect against claims and other legal actions. In addition, our policy may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.

We host our applications and serve our customers from data centers located in the United States, Canada, and Europe. While we control and have access to our servers and all of the components of our network that are located in these data centers, we do not control certain aspects of these facilities, including their operation and security. The owners of these data center facilities have limited or no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, or if any of these data center operators are acquired, or cease to do business, or stop providing contracted services, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and experience possible service interruptions in connection with doing so.

In addition, we ~~also~~ rely upon third-party hosted infrastructure partners globally, including ~~Amazon Web Services, NTT America,~~AWS, Google LLC, and Microsoft Corporation, ~~and Google LLC,~~ to serve customers and operate certain aspects of our ~~services, such as environments for development and testing, training, sales demonstrations, and production usage.~~services. Any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.

Problems faced by these data center operators or hosted infrastructure partners, with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their customers, including us, could adversely affect the experience of our customers or other users. ~~Furthermore, these data center operators or hosted infrastructure partners could decide to close their facilities, cease operations without adequate notice, or stop providing contracted services.~~ In addition, any financial difficulties, such as bankruptcy, faced by these data center operators, our hosted infrastructure partners, or any of the other service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. These facilities may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, natural catastrophic events, as well as local administrative actions, ~~(including shelter-in-place or similar orders),~~ changes to legal or permitting requirements, and litigation to stop, limit or delay operation.

Additionally, if these data center operators or hosted infrastructure partners are unable to keep up with our needs for capacity, this could have an adverse effect on our business. Any changes in third-party service levels at these data centers or at our hosted infrastructure partners, or any errors, defects, disruptions, or other performance problems with our applications or the infrastructure on which they run, including those related to cybersecurity threats or attacks, could adversely affect our reputation and may damage our customers’ or other users’ stored files or result in lengthy interruptions in our services. Interruptions in our services might adversely affect our reputation and operating results, cause us to issue refunds or service credits to customers for prepaid and unused subscription services, subject us to potential liabilities, result in contract terminations, or adversely affect our renewal rates.

Our success and future growth depend largely upon the continued services of our executive officers, other members of senior management, and other key employees. We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period, and they could terminate their employment with us at any time. From time to time, there may be changes in our executive management team and to other key employee roles resulting from organizational changes or the hiring or departure of executives or other employees, which could have a serious adverse effect on our business and operating results. ~~Moreover, if key personnel become ill due to the ongoing COVID-19 pandemic, we may not be able to manage our business effectively and, as a result, our business and operating results could be harmed.~~

To execute our growth plan, we must attract, train, and retain highly qualified personnel. ~~In the technology industry,~~Our ability to compete and ~~particularly~~succeed in ~~the San Francisco Bay Area, the competition~~a highly competitive environment is ~~intense for~~directly correlated to our ability to recruit and retain highly skilled employees, especially ~~for~~in the areas of product development, engineers with significant experience in designing and developing software and internet-related services, including in the areas of machine learning and artificial intelligence; for cybersecurity professionals; and for senior sales executives. The market for skilled personnel in the software industry is very competitive, and we have seen these pressures increase significantly through the COVID-19 pandemic. As we are headquartered in the San Francisco Bay Area, we face intense competition among large and small firms in the Silicon Valley market. In addition, the expansion of our sales infrastructure, both domestically and internationally, is necessary to grow our customer base and business. Identifying and recruiting qualified personnel and training them in our sales methodology, our sales systems, and the use of our software requires significant time, expense, and attention. Our business may be adversely affected if our efforts to attract and train new members of our direct sales force do not generate a corresponding increase in revenues. ~~From time to time, we~~We have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and we may not be able to fill positions in desired geographic areas or at all and may not be successful in achieving the workforce growth goals on the timeline we have publicly announced or at all.

Many of the companies with which we compete for experienced personnel have greater resources than we have and may offer more lucrative compensation packages than we offer. Our business may be adversely affected if we are unable to retain our highly skilled employees, especially our senior sales executives. Job candidates and existing employees carefully consider the value of the equity awards they receive in connection with their employment. If the perceived or actual value of our equity awards declines, or if the mix of equity and cash compensation that we offer is not sufficiently attractive, it may adversely affect our ability to recruit and retain highly skilled employees. ~~Our~~The challenges we face in recruiting ~~efforts~~and hiring qualified personnel may ~~also~~ be ~~limited~~compounded by ~~laws~~a decreased willingness of candidates to leave their current employment due to various factors including economic uncertainty caused by the COVID-19 pandemic and ~~regulations, such~~other macroeconomic factors. As the economic uncertainty related to the COVID-19 pandemic eases, we may face additional challenges in recruiting and retaining qualified personnel as ~~restrictive immigration laws, and restrictions on travel or availability~~other companies increase the pace of ~~visas (including during the ongoing COVID-19 pandemic).~~hiring. Additionally, job candidates may be threatened with legal action under agreements with their existing employers if we attempt to hire them, which could have a chilling effect on hiring and result in a diversion of our time and resources. We must also continue to retain and motivate existing employees through our compensation practices, company culture, and career development opportunities. Further, our current and future office environments or flexible work policies may not meet the expectations of our employees or prospective employees. If we fail to attract new personnel or to retain our current personnel, our business and future growth prospects could be adversely affected.

We believe that a critical component of our success has been our corporate culture, as reflected in our core values: employees, customer service, innovation, integrity, ~~inclusion,~~ fun, and profitability. We also believe that our commitment to our corporate culture, as well as our commitment to building products and services that help provide our customers with information regarding their own workforce and corporate culture, is part of the reason why our customers choose us. As we continue to grow, both organically and through acquisitions of employee teams, and develop the infrastructure associated with being a more mature public company, we will need to maintain our corporate culture among a larger number of employees who are dispersed throughout various geographic regions. Additionally, we and our stakeholders increasingly expect to have a corporate culture that embraces diversity and inclusion, and any inability to attract and retain diverse and qualified personnel may harm our corporate culture and our business. Moreover, ~~the COVID-19 pandemic requires~~our flexible work policies require significant action to preserve culture with ansome of the employee base ~~temporarily~~ working ~~remotely~~remotely. Furthermore, we substantially grew our employee base in fiscal 2022, and ~~facing unique personal~~we must be able to effectively integrate, develop, and ~~professional challenges.~~motivate a large number of new employees, while maintaining the effectiveness of our business execution and the beneficial aspects of our corporate culture. Any failure to ~~preserve~~maintain or adapt our culture could negatively affect our future success, including our ability to retain and recruit personnel and to achieve our corporate objectives, including our ability to quickly develop and deliver new and innovative products.

Our business depends on our ability to satisfy our customers and end users, both with respect to our application offerings and the professional services that are performed to help them use features and functions that address their business needs. High customer satisfaction requires that our customers undergo a successful implementation and be properly trained on our applications to effectively implement and increase their level of adoption of such applications. Implementation of our applications may be technically complicated because they are designed to enable complex and varied business processes across large organizations, integrate data from a broad and complex range of workflows and systems, and may involve deployment in a variety of environments. Incorrect or improper implementation or use of our applications could result in customer and user dissatisfaction and harm our business and operating results.

In order for our customers to successfully implement our applications, they need access to highly skilled and trained service professionals. Professional services may be performed by our own staff, by a third party, or by a combination of the two. Our strategy is to work with third parties to increase the breadth of capability and depth of capacity for delivery of these services to our customers, and third parties provide a majority of deployment services for our customers. The work performed by us or these third parties that we rely on, including any work related to the on-site components of deployment services requested by a customer, might be adversely impacted directly or indirectly by the ongoing COVID-19 pandemic, including as a result of restrictions in accessing customer ~~sites.~~sites, and by increased attrition. Additionally, if our customers’ personnel are unable to participate in deployment activities as a direct or indirect result of the ongoing COVID-19 pandemic, this could result in delays in customer go-live dates for our applications. If customers are not satisfied with the quality and timing of work performed by us or a third party or with the type of professional services or applications delivered, or if we or a third party have not fully delivered on certain commitments made to our customers, then we could incur additional costs to address the situation, the revenue recognition of the contract could be impacted, and the dissatisfaction with our services could damage our ability to expand the applications subscribed to by our customers. We must also align our product development and professional services operations in order to ensure that customers’ evolving needs are met. Negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers both domestic and abroad.

Additionally, in order to maximize the value of our applications, we must continue to educate and train our customers and end users to develop the skills necessary to harness the power of our applications. If we are not able to effectively educate and train our users, they may choose not to renew their subscriptions, market perceptions of our company and our applications may be impaired, and our reputation and brand may suffer. Customers and other users also depend on our support organization to provision the environments used by our customers and to resolve technical issues relating to our applications. We may be unable to respond quickly enough to accommodate short-term increases in demand for support services. We may also be unable to modify the format of our support services to compete with changes in support services provided by our competitors. Increased demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. Failure to maintain high-quality technical support and training, or a market perception that we do not maintain high-quality support or training, could adversely affect our reputation, our ability to offer and sell our applications, our renewal rates, and our business and operating results.

As the markets for our applications mature, or as new competitors introduce new products or services that compete with ours, we may be unable to attract new customers at the same pace or based on the same pricing model as we have used historically. From time to time, we may also change our pricing structure, which could adversely impact demand for our products. Moreover, large customers, which are a primary focus of our sales efforts, have and may continue to request greater price concessions and delayed payment terms. As a result of the COVID-19 pandemic, some of our existing and potential customers ~~have~~ deferred ~~and may continue to defer,~~ purchasing decisions, ~~request~~requested price concessions and delayed payment terms, and ~~request~~requested other terms and conditions. AsIf these conditions were to return, whether as a result ~~in the future~~of a resurgence of COVID-19 or otherwise, we may be required to reduce our prices or accept onerous terms and conditions, including delayed payment terms, which could adversely affect our revenues, profitability, financial position, and cash flows in any given period. Restrictions on travel and in-person meetings have interrupted, and could continue to interrupt, our sales activity, and we cannot predict whether, for how long, or the extent to which the COVID-19 pandemic may continue to have an impact. Our sales force has historically met with our customers and potential customers face-to-face when selling our solutions, and while the majority of our deployment activities are completed remotely, many of our customers may prefer to have certain deployment activities such as project initiation and go-live activities completed on-site. Attrition of key personnel at our customers has impacted and may continue to impact our direct sales efforts. Furthermore, because our future revenue growth relies, in large part, on new customer acquisition, any inability of our sales force to establish relationships with potential customers during the current environment or prospects deferring buying decisions due to the economic uncertainty, is likely to have a negative impact on our future revenue growth and other financial measures.

In addition, our customers have no obligation to renew their subscriptions for our applications after the expiration of either the initial or renewed subscription period. If we are unable to successfully educate our customers on the benefits and features of our applications, or if our customers are aware of those benefits and features but do not use them, our customers may renew for fewer elements of our applications or on different pricing terms. Our customers’ renewal rates may also decline or fluctuate as a result of a number of other factors, including their level of satisfaction with our applications and pricing, their ability to continue their operations and spending levels, and the evolution of their business. If our customers do not renew their subscriptions for our applications on similar pricing terms, our revenues may decline, and we may not be able to meet our revenue projections, which could negatively impact our business and the market price of our Class A common stock. In addition, over time the average term of our contracts could change based on renewal rates or for other reasons.

Our future success also depends, in part, on our ability to sell additional products to our current customers, and the success rate of such endeavors is difficult to predict, especially with regard to any new lines of business that we may introduce from time to time. This may require increasingly costly marketing and sales efforts that are targeted at senior management, and if these efforts are not successful, our business and operating results may suffer. Additionally, acquisitions of our customers by other companies have led, and could continue to lead, to cancellation of our contracts with those customers, thereby reducing the number of our existing and potential customers.

Our quarterly operating results, including our revenues, subscription revenue backlog, operating margin, profitability, and cash flow, ~~unearned revenue, and remaining performance obligations for subscription contracts, or backlog,~~ may vary significantly in the future and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business. As discussed above, the extent to which the ongoing COVID-19 pandemic, the resulting global economic uncertainty, and measures taken in response to the pandemic, as well as the Russia-Ukraine conflict, could continue to impact our operating results will depend on future developments, which are highly uncertain and difficult to predict. For example, beginning in March 2020, we began experiencing and continue to experience unfavorable impacts to our new subscription bookings, causing us to reduce our fiscal 2022 subscription revenue outlook. Fluctuations in our quarterly results and related impacts to any earnings guidance we may issue from time to time, including any modification or withdrawal thereof, may negatively impact the value of our securities. Additionally, as we typically sign a significantly higher percentage of agreements with new customers as well as renewal agreements with existing customers in the fourth quarter of each year, we may experience a greater impact on our business and quarterly results due to the prolonged uncertainty.

Additional factors that may cause fluctuations in our quarterly financial results include, without limitation, those listed below:

We have experienced rapid growth in our customers, headcount, and operations and anticipate that we will continue to expand our customer base, headcount, and operations. This growth has placed, and future growth will place, a significant strain on our management, administrative, operational, and financial infrastructure. Our success will depend in part on our ability to manage this growth effectively and to scale our operations appropriately. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial, and management controls as well as our reporting systems and procedures. Failure to effectively manage growth could result in difficulty or delays in deploying products and services to customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties, and any of these difficulties could adversely impact our business performance and operating results.

We believe that developing and maintaining widespread positive awareness of our brand is critical to achieving widespread acceptance of our applications, retaining and attracting customers, and hiring and retaining employees. However, brand promotion activities may not generate the customer awareness or increased revenues we anticipate, and even if they do, any increase in revenues may not offset the significant expenses we incur in building our brand. Moreover, the ongoing COVID-19 pandemic has made it more difficult to develop and maintain positive awareness of our brand. For example, we ~~did not hold our two largest annual customer conferences for fiscal year 2021, Workday Rising and Workday Rising Europe, and we plan to again hold~~held a ~~primarily~~ virtual event, Conversations for a Changing World, in both fiscal 2021 and 2022, in place of our two largest annual customer conferences, Workday Rising ~~during fiscal year 2022.~~and Workday Rising Europe. We have ~~also transitioned Adaptive Live,~~returned to in-person events, but if due to a resurgence of COVID-19 or otherwise, we reinstate our ~~customer experience for Workday Adaptive Planning customers as well as our global event series, Workday Elevate, from in-person to digital event experiences. Our~~ shift to virtual customer, industry, partner, analyst, investor and employee events, these measures may not be as successful or showcase our products as well, and ultimately generate lower levels of customer interest, opportunities, and leads. In addition, we have and may continue to delay certain corporate advertising programs. These precautionary measures that have been adopted, particularly if extended for prolonged periods, could have increasingly negative effects on our ability to develop and maintain widespread positive awareness of our brand, which could harm our business, financial condition, and operating results. ~~In addition, positions we take on environmental, social, governance, and ethical issues from time to time may impact our brand, reputation, or ability to attract or retain customers.~~

If we fail to successfully promote and maintain our brand, or we fail to expand awareness of our newer solutions or products, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our applications. Additionally, the loss of one or more of our key customers, or a failure to renew our subscription agreements with one or more of our key customers, could significantly impair our ability to market our applications which, in turn, could have a negative impact on our revenues, reputation, and our ability to obtain new customers. In addition, if our brand is negatively impacted, it may be more difficult to hire and retain employees.

We have acquired, and may in the future acquire, other companies, employee teams, or technologies to complement or expand our applications, enhance our technical capabilities, obtain personnel, or otherwise offer growth opportunities. For example, we acquired ~~Adaptive Insights in fiscal 2019,~~ Scout in fiscal 2020 and Peakon, Zimit, and VNDLY in fiscal 2022. The pursuit of acquisitions may divert the attention of management, disrupt ongoing business, and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated.

These impacts may continue through integration activities. Moreover, we may be unable to complete proposed transactions timely or at all due to the failure to obtain regulatory or other approvals, litigation, or other disputes, which may obligate us to pay a termination fee. We also may not achieve the anticipated benefits from an acquisition due to a number of factors, including:

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our operating results.

Acquisitions could also result in dilutive issuances of equity securities or the issuance of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our business, operating results, and financial position may suffer.

A key element of our growth strategy is to further develop our worldwide customer base. Operating globally requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States. Our efforts to further expand internationally may not be successful in creating additional demand for our applications outside of the United States or in effectively selling subscriptions to our applications in all of the markets we enter. Foreign regulations, including privacy, data localization, and import/export regulations, are subject to change and uncertainty, including as a result of geopolitical developments, which may be amplified by the COVID-19 ~~pandemic.~~pandemic or events such as the Russia-Ukraine conflict. In addition to navigating the challenges related to the ongoing COVID-19 pandemic in foreign jurisdictions, we face other risks in doing business on a global scale that could adversely affect our business, including:

Any of the above factors may negatively impact our ability to sell our applications and offer services globally, reduce our competitive position in foreign markets, increase our costs of global operations, and reduce demand for our applications and services from global customers. Additionally, the majority of our international costs are denominated in local currencies and we anticipate that over time an increasing portion of our sales contracts may be outside the U.S. ~~may~~and will therefore be denominated in local currencies. Additionally, global events, as well as geopolitical developments such as the Russia-Ukraine conflict, fluctuating commodity prices, trade tariff developments, and inflation have caused, and may in the future cause, global economic uncertainty, and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations. Therefore, fluctuations in the value of ~~the U.S. dollar and~~ foreign currencies may impact our operating results when translated into U.S. dollars. Such fluctuations may also impact our ability to predict our future results accurately. Although we have a hedging program to help mitigate some of this volatility and related risks, there can be no assurance that the hedging program will be effective in offsetting the adverse financial impacts that may result from unfavorable movements in foreign currency exchange rates, including any such movements caused by the COVID-19 pandemic.

The markets for enterprise cloud applications are highly competitive, with relatively low barriers to entry for some applications or services. Some of our competitors are larger and have greater name recognition, significantly longer operating histories, access to larger customer bases, larger marketing budgets, and significantly greater resources to devote to the development, promotion, and sale of their products and services than we do. This may allow our competitors to respond more effectively than us to new or emerging technologies and changes in market conditions.

Our primary competitors are Oracle and SAP, well-established providers of financial management and HCM applications, which have long-standing relationships with many customers. Some customers may be hesitant to switch vendors or to adopt cloud applications such as ours and may prefer to maintain their existing relationships with competitors. We also face competition from other enterprise software vendors, from regional competitors that only operate in certain geographic markets, and from vendors of specific applications that address only one or a portion of our applications, some of which offer cloud-based solutions. These vendors include, without limitation: UKG Inc. (formerly The Ultimate Software Group, Inc.), Automatic Data Processing, Inc., Infor, Inc., Ceridian HCM Holding Inc., Microsoft Corporation, Anaplan, Inc., and Coupa Software Inc. In order to take advantage of customer demand for cloud applications, legacy vendors are expanding their cloud applications through acquisitions, strategic alliances, and organic development. In addition, other cloud companies that provide services in different target markets may develop applications or acquire companies that operate in our target markets, and some potential customers may elect to develop their own internal applications. As the market matures and as existing and new market participants introduce new types of technologies and different approaches that enable organizations to address their HCM and financial needs, we expect this competition to intensify in the future.

Furthermore, our current or potential competitors may be acquired by, or merge with, third parties with greater available resources and the ability to initiate or withstand substantial price competition, such as the merger between Kronos Incorporated and The Ultimate Software Group, Inc. Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their offerings or resources. Many of our competitors also have major distribution agreements with consultants, system integrators, and resellers. If our competitors’ products, services, or technologies become more accepted than our products, if they are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capable than ours, then our revenues could be adversely affected. In addition, our competitors may offer their products and services at a lower price, or, particularly during the ongoing COVID-19 pandemic, may offer price concessions, delayed payment terms, financing terms, or other terms and conditions that are more enticing to potential customers. Pricing pressures and increased competition could result in reduced sales, reduced margins, losses, or a failure to maintain or improve our competitive market position, any of which could adversely affect our business and operating results.

Developing software applications and related enhancements, features, and modifications is expensive, and the investment in product development often involves a long return on investment cycle. Accelerated application introductions and short application life cycles require high levels of expenditures that could adversely affect our operating results if not offset by revenue increases, and we believe that we must continue to dedicate a significant amount of resources to our development efforts to maintain our competitive position. However, we may not receive significant revenues from these investments for several years, if at all. Furthermore, the COVID-19 pandemic could have a continuing impact on our plans to offer certain new features, enhancements, and modifications of our applications in a timely manner, particularly if we experience impacts to productivity due to our employees or their family members experiencing health issues, or as our employees continue to work remotely, or if there are continuing delays in our hiring and onboarding of new employees. If we are unable to provide new features, enhancements, and modifications in a timely and cost-effective manner that achieve market acceptance or that keep pace with rapid technological developments and changing regulatory landscapes, our business and operating results could be adversely affected. For example, we are focused on enhancing the features and functionality of our applications to improve their utility to larger customers with complex, dynamic, and global operations, or we may be required to develop new features, enhancements, or modifications to our products to support our customers’ evolving compliance obligations. Some of our larger customers may also require features and functions unique to their business processes that we do not currently offer. In order to help ensure we meet these requirements, we may devote a significant amount of technology support and professional service resources to such customers. The success of enhancements, new features, and applications depends on several factors, including their timely completion, introduction, and market acceptance as well as access to development resources and the technologies required to build and improve our applications, such as the datasets required to train our machine learning models. If we are not successful in developing these new features, enhancements, modifications, and applications, and bringing them to market timely, it may negatively impact our customer renewal rates, limit the market for our solutions, or impair our ability to attract new customers.

We depend on relationships with third parties such as deployment partners, technology and content providers, and other key suppliers, and are also dependent on third parties for the license of certain software and development tools that are incorporated into or used with our applications. If the operations of these third parties are disrupted, including as a direct or indirect result of the ongoing COVID-19 pandemic, our own operations may suffer, which could adversely impact our operating results. In addition, we rely upon licensed third-party software to help improve our internal systems, processes, and controls. Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources. We may be at a disadvantage if our competitors are effective in providing incentives to third parties to favor their products or services or to prevent or reduce subscriptions to our services, or in negotiating better rates or terms with such third parties. In addition, acquisitions of our partners by our competitors could end our strategic relationship with the acquired partner and result in a decrease in the number of our current and potential customers, or the support services available for third-party technology may be negatively affected by mergers and consolidation in the software industry. If we are unsuccessful in establishing or maintaining our relationships with these third parties, or in monitoring the quality of their products or performance, our ability to compete in the marketplace or to grow our revenues could be impaired and our operating results may suffer.

To the extent that our applications depend upon the successful integration and operation of third-party software in conjunction with our software, any undetected errors or defects in this third-party software, as well as cybersecurity threats or attacks related to such software, such as the Log4j vulnerability (as defined below), could prevent the deployment or impair the functionality of our applications, delay new application introductions, result in a failure of our applications, result in increased costs, including warranty and other related claims from customers, and injure our reputation. Furthermore, software may not continue to be available to us on commercially reasonable terms. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace. Integration of new software into our applications may require significant work and require substantial investment of our time and resources.

We also need to continuously modify and enhance our applications to keep pace with changes in third-party internet-related hardware, iOS, Android, other mobile-related technologies, and other third-party software, communication, browser, and database technologies. We must also appropriately balance the application capability demands of our current customers with the capabilities required to address the broader market. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase our product development expenses. Any failure of our applications to operate effectively with future network platforms and other third-party technologies could reduce the demand for our applications, result in customer and end user dissatisfaction, and adversely affect our business and operating results. We may experience difficulties in managing improvements to our systems, processes, and controls or in connection with third-party software, which could materially impair our ability to provide solutions or professional services to our customers in a timely manner, cause us to lose customers, limit us to smaller deployments of our solutions, or increase our technical support costs.

We continue to seek opportunities to enter into new markets and/or new lines of business, some of which we may have very limited or no experience in. As an entrant to new markets and new lines of business, we may not be effective in convincing prospective customers that our solutions will address their needs, and we may not accurately estimate our infrastructure needs, human resource requirements, or operating expenses with regard to these new markets and new lines of business. We may also fail to accurately anticipate adoption rates of these new lines of business or their underlying technology. For example, machine learning and artificial intelligence ~~and blockchain~~(“AI”) are propelling advancements in technology, but if they are not widely adopted and accepted or fail to operate as expected, our business and reputation may be harmed. Also, we may not be able to properly price our solutions in these new markets, which could negatively affect our ability to sell to customers. Furthermore, customers in these new markets or of the new lines of business may demand more features and professional services, which may require us to devote even greater research and development, sales, support, and professional services resources to such customers. If we fail to generate adequate revenues from these new markets and lines of business, or if we fail to do so within the envisioned timeframe, it could have an adverse effect on our business, financial condition, and operating results.

Social and ethical issues relating to the use of new and evolving technologies, such as machine learning and AI, in our offerings may result in reputational harm and liability, and may cause us to incur additional research and development costs to resolve such issues. We are increasingly building AI into many of our offerings. As with many innovations, machine learning and AI present additional risks and challenges that could affect their adoption and therefore our business, operations, and results. For example, the development of machine learning and AI present emerging ethical issues, and if we enable or offer solutions on this front that are controversial, due to their impact, or perceived impact, on human rights, privacy, employment, or in other social contexts, we may experience brand or reputational harm, competitive harm, or legal liability. Potential government regulation related to AI ethics may also increase the burden and cost of research and development in this area. Failure to address AI ethics issues by us or others in our industry could undermine public confidence in AI, which could slow adoption of AI in our products and services.

The positions we take on ESG and ethical issues from time to time may impact our brand, reputation, or ability to attract or retain customers. In particular, our brand and reputation are associated with our public commitments to environmental sustainability (including our science-based targets), equality, inclusivity, and ethical use, and any perceived changes in our dedication to these commitments could impact our relationships with potential and current customers, employees, stockholders, and other stakeholders. These commitments reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial ~~condition.~~performance, and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.

Our ability to achieve any ESG objective is subject to numerous risks, many of which are outside of our control. Examples of such risks include:

Standards for tracking and reporting ESG matters continue to evolve. In addition, our processes and controls may not always comply with evolving standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. Further, we may rely on data provided by third parties to measure and report our ESG metrics and if the data input is incorrect or incomplete, our brand, reputation, and financial performance may be adversely affected.

If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, acquirer, or service provider could be negatively impacted. Further, our failure or perceived failure to pursue or fulfill our goals and objectives or to satisfy various reporting standards on a timely basis, or at all, could have similar negative impacts or expose us to government enforcement actions and private litigation.

Our applications involve the storage and transmission of our customers’ sensitive and proprietary information, including personal or identifying information regarding our customers, their employees, customers, and suppliers, as well as financial, accounting, health, and payroll ~~data~~data. Additionally, our operations and ~~other sensitive information.~~the availability of the services we provide customers also depend on our information technology systems. As a result, a compromise of our applications or systems, or unauthorized access to, acquisition, use, tampering, release, alteration, theft, loss, or destruction of ~~this~~sensitive data, or unavailability of data, could disrupt our operations or impact the availability or performance of our applications; expose us and our customers to regulatory obligations and actions, litigation, investigations, remediation and indemnity obligations, or supplemental disclosure obligations; damage to our reputation and ~~brand, supplemental disclosure obligations,~~brand; or result in loss of customer, consumer, and partner confidence in the security of our applications, ~~destruction of information,~~ an increase in our insurance premiums, loss of authorization under the Federal Risk and Authorization Management Program (“FedRAMP”) or other authorizations, impairment to our business, and ~~resulting~~other potential liabilities or related fees, expenses, loss of ~~revenues, and other potential liabilities. We devote significant~~revenues.

The financial and personnel resources we employ to implement and maintain security ~~measures. While~~measures, including our information security risk insurance policy, may not be sufficient to address our security needs. The security measures we have ~~security measures~~ in place that are designed to protect against ~~these~~security risks, preserve our operations and services and the integrity of customer and personal information, and prevent data loss, misappropriation, and other security breaches, ~~our security measures~~ may be compromised ~~as a result of intentional misconduct, including~~ by computer hackers, employees, contractors, or vendors, as well as software bugs, human error, technical malfunctions, or other malfeasance.

Cybersecurity threats and attacks are often targeted at companies such as ours and may take a variety of forms ranging from individuals or groups of security researchers and hackers, including those who appear to offer a solution to a vulnerability, to sophisticated organizations, including state-sponsored ~~actors.~~actors who may launch coordinated attacks, such as retaliatory cyber attacks stemming from the Russia-Ukraine conflict. In the normal course of business, we are and have been the target of malicious cyber-attack attempts and have experienced other security events. As our market presence grows, we may face increased risks of cybersecurity attack or other security threats. Key cybersecurity risks range from viruses, worms, ransomware, and other malicious software programs, ~~including~~to phishing attacks, ~~or ransomware,~~ to exploitation of software bugs or other defects, to ~~“mega breaches”~~ targeted attacks against cloud services and other hosted software, any of which can result in a compromise of our applications or systems and the data we store or process, disclosure of Workday confidential information and intellectual property, ~~defective products,~~ production downtimes, reputational harm, ~~compromised data,~~ and an increase in costs to the business. As the techniques used to obtain unauthorized access or sabotage systems change frequently, are becoming increasingly sophisticated and complex, and generally are not identified until they are launched against a target, we may be unable to anticipate these attacks or to implement adequate preventative measures. Future cyber-attacks and other security events may have a significant or material impact on our business and operating results.

In December 2021, a critical remote code execution (“RCE”) vulnerability was identified in the ~~future.~~Apache Software Foundation’s Log4j software library (“Log4j”). Log4j is an open source software broadly used in Java-based applications to log security and performance information. According to public information, a bad actor can exploit the Log4j vulnerability to remotely access a vulnerable system, allowing the bad actor to then steal information, launch ransomware, or conduct other malicious activity. We use Log4j in a number of our environments although to date we have found no indication that customer data or environments containing customer data have been affected. This required us to identify, test, and deploy mitigation techniques and currently available remediation patches against this vulnerability in our environments, as well as to upgrade our firewalls and the Log4j library directly used by Workday, which caused expense and business disruption. We expect the risk of additional vulnerabilities and potential attacks to continue for several months given the complexity of the situation and the widespread nature of the Log4j vulnerability.

Additionally, during the ongoing COVID-19 pandemic, and potentially beyond as remote work and resource access expand, there is an increased risk of cybersecurity-related events such as COVID-19 themed phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number cybersecurity threats or attacks, and other security challenges as a result of most of our employees and our service providers continuing to work remotely from non-corporate managed networks.

Furthermore, we have acquired or partnered with a number of companies, products, services, and technologies over the years, ~~as well as~~and incorporated third-party products, services, and technologies into our own products and services. ~~Although we devote~~Addressing security issues associated with acquisitions, partnerships, incorporated technologies, and our supply chain requires significant resources, ~~to address any known security issues with respect to such acquisitions, partnerships,~~ and ~~incorporated technologies,~~ we may still inherit additional risks ~~when they are integrated within~~upon integration with or use by Workday. In addition, if a high-profile security breach occurs with respect to an industry peer, our customers and potential customers may generally lose trust in the security of financial management, spend management, human capital management, planning, or analytics applications, or in cloud applications for enterprises in general. Any or all of these issues could negatively affect our ability to attract new customers, cause existing customers to elect to terminate or not renew their subscriptions, result in reputational damage, cause us to pay remediation and indemnity costs and/or issue service credits or refunds to customers for prepaid and unused subscription services, or result in lawsuits, regulatory fines, or other action or liabilities, any of which could adversely affect our business and operating results.

We rely on sophisticated information systems and technology, including those provided by third parties, for the secure collection, processing, transmission, storage of confidential, proprietary, and personal information, and to support our business operations and the availability of our applications. In the past several years, supply chain attacks have increased in frequency and severity. As we are both a provider and consumer of information systems and technology, we are at higher risk of being impacted either directly or indirectly by these attacks. While we have implemented what we believe is an appropriate information security program with cybersecurity procedures, policies, practices, and controls, the control systems, cybersecurity program, infrastructure, physical facilities of, and personnel associated with third parties that we rely on are beyond our control. Although we periodically conduct audits of some of our third parties vendors, we cannot guarantee the security of and may be unable to prevent security events impacting the information technology systems of third parties that are part of our supply chain or that provide valuable services to us, which could result in the unauthorized access to, acquisition, destruction, alteration, use, tampering, release, unavailability, theft or loss of confidential, proprietary, or personal data of Workday, our employees, our customers, or our third party partners, which could in turn disrupt our operations and ability to conduct our business or the availability of our applications, or otherwise adversely affect our business, operating results, reputation, or financial condition.

~~Our customers can use~~Legal requirements related to collecting, storing, handling, and transferring personal data are rapidly evolving at both the national and international level in ways that require our ~~applications~~business to ~~collect, use,~~adapt to support customer compliance. As the regulatory focus on privacy intensifies worldwide, and ~~store~~jurisdictions increasingly consider and adopt privacy laws, the potential risks related to managing personal ~~or identifying information regarding a variety~~data by our business may grow. In addition, possible adverse interpretations of ~~individuals~~existing privacy-related laws and regulations by governments in ~~connection with their operations, including but not limited to their employees, contractors, students, job applicants, customers, and suppliers. Additionally, individuals using our WayTo~~TM by Workday application may store, manage, and share with certain organizations credentials such as employment history, education, skills, and compensation information. National, state and local governments and agencies in the countries ~~in which~~where our customers operate, as well as the potential implementation of new legislation, could impose significant obligations in areas affecting our business or prevent us from offering certain services in jurisdictions where we operate.

Following the European Union’s (“EU”) passage of the General Data Protection Regulation (“GDPR”), which became effective in May 2018, the global data privacy compliance landscape outside of the EU has grown increasingly complex, fragmented, and financially relevant to business operations. As a result, our business faces current and prospective risks related to increased regulatory compliance costs, government enforcement actions and/or financial penalties for non-compliance, and reputational harm. For example, in July 2020, the Court of Justice of the EU invalidated a framework called Privacy Shield for companies to transfer data from the European Economic Area to the United States. This decision led to uncertainty about the legal requirements for transferring customer personal data to and from Europe, an integral process of our business that remains governed by, and subject to, GDPR requirements. Failure to comply with the GDPR data processing requirements by either ourselves or our subcontractors could lead to regulatory enforcement actions, which can result in monetary penalties of up to 4% of worldwide revenue, private lawsuits, reputational damage, and loss of customers. The UK government is considering amending its data protection legislation. If UK data protection changes significantly from EU norms, new data flow barriers could emerge, creating costs and complexity for companies. Other countries such as Russia, China, and India have ~~adopted,~~also passed or are considering ~~adopting,~~passing laws imposing varying degrees of restrictive data residency requirements. Regulatory developments in the United States present additional risks. For example, the California Consumer Privacy Act (“CCPA”) took effect on January 1, 2020, and the California Privacy Rights Act (“CPRA”), which expands upon the CCPA, was passed in November 2020 and comes into effect on January 1, 2023, with a “lookback” period to January 1, 2022. The CCPA and CPRA give California consumers certain rights similar to those provided by the GDPR, and also provide for statutory damages or fines on a per violation basis that could be very large depending on the severity of the violation. Other states have enacted, or are considering, privacy laws as well. Furthermore, the U.S. Congress is considering numerous privacy bills, and the U.S. Federal Trade Commission continues to fine companies for unfair or deceptive data protection practices and may undertake its own privacy rulemaking exercise. In addition to government activity, privacy advocacy and other industry groups have established or may adopt laws and regulations regarding the collection, use, storage, transfer, processing, protection, and disclosure of personal information obtained from consumers and individuals, which could impact our ability to offer our services in certain jurisdictionsestablish various new, additional, or our customers’ ability to deploy our solutions globally. We have been requested to, and may continue to need to develop features, enhancements, or modifications to our products to support our customers’ evolving compliance obligations. Thisdifferent self-regulatory standards that customers may require us to ~~divert development~~adhere to and ~~other resources from other areas, incur significant expenditures,~~which may place additional burdens on us. Increasing sensitivity of individuals to unauthorized processing of personal data, whether real or ~~if we are unsuccessful in delivering these features, enhancements, or modifications, result in monetary damages, loss of revenues or customers, reputational harm, or other adverse impacts~~perceived, and an increasingly uncertain trust climate may create a negative public reaction to ~~our business.~~technologies, products and services such as ours.

~~Privacy and data protection laws are particularly stringent, and~~Taken together, the costs of compliance with and other ~~burdens~~obligations imposed by ~~such~~data protection laws and regulations ~~and standards~~ may require modification of our services, limit ~~the~~ use and adoption of our services, reduce overall demand for our services, lead to significant fines, penalties, or liabilities for noncompliance, or slow the pace at which we close sales transactions, any of which could harm our business. ~~Even the~~The perception of privacy concerns, whether or not valid, may inhibit the adoption, effectiveness, or use of our applications. ~~Moreover, if we or our subprocessors fail to adhere to adequate data protection practices around the usage of~~Compliance with applicable laws and ~~access to our customers’ and other users’~~regulations regarding personal data ~~or fail to report a data breach or other loss of data within timeframes mandated by law or our customer contracts, we~~ may ~~be liable for certain losses, and it may damage our reputation and brand.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware						20-2480422
(State or other jurisdiction of incorporation or organization)						(I.R.S Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001	WDAY	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets as of April 30, ~~2021,~~2022, and January 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Operations for the Three Months Ended April 30, ~~2021,~~2022, and ~~2020~~2021	4

	Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the Three Months Ended April 30, ~~2021,~~2022, and ~~2020~~2021	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended April 30, ~~2021,~~2022, and ~~2020~~2021	6

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, ~~2021,~~2022, and ~~2020~~2021	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2725

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3735

Item 4.	Controls and Procedures	3835

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3937

Item 1A.	Risk Factors	4038

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 3.	Defaults Upon Senior Securities	64

Item 4.	Mine Safety Disclosures	64

Item 5.	Other Information	64

Item 6.	Exhibits	65

	Signatures	6667


		April 30, 2021		January 31, 2021			April 30, 2022		January 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	959,358	$	1,384,181	Cash and cash equivalents	$	2,776,336	$	1,534,273
Marketable securities	Marketable securities	2,035,171		2,151,472		Marketable securities	3,479,019		2,109,888
Trade and other receivables, net	Trade and other receivables, net	647,163		1,032,484		Trade and other receivables, net	778,076		1,242,545
Deferred costs	Deferred costs	123,828		122,764		Deferred costs	156,806		152,957
Prepaid expenses and other current assets	Prepaid expenses and other current assets	140,277		111,160		Prepaid expenses and other current assets	252,989		174,402
Total current assets	Total current assets	3,905,797		4,802,061		Total current assets	7,443,226		5,214,065
Property and equipment, net	Property and equipment, net	1,155,697		972,403		Property and equipment, net	1,186,004		1,123,075
Operating lease right-of-use assets	Operating lease right-of-use assets	280,943		414,143		Operating lease right-of-use assets	252,236		247,808
Deferred costs, noncurrent	Deferred costs, noncurrent	265,388		271,796		Deferred costs, noncurrent	339,712		341,259
Acquisition-related intangible assets, net	Acquisition-related intangible assets, net	401,220		248,626		Acquisition-related intangible assets, net	369,387		391,002
Goodwill	Goodwill	2,362,166		1,819,625		Goodwill	2,840,044		2,840,044
Other assets	Other assets	252,796		189,757		Other assets	368,497		341,252
Total assets	Total assets	$	8,624,007	$	8,718,411	Total assets	$	12,799,106	$	10,498,505
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	48,097	$	75,596	Accounts payable	$	123,361	$	55,487
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	208,559		169,266		Accrued expenses and other current liabilities	246,939		195,590
Accrued compensation	Accrued compensation	320,176		285,061		Accrued compensation	362,269		402,885
Unearned revenue	Unearned revenue	2,361,095		2,556,624		Unearned revenue	2,820,119		3,110,947
Operating lease liabilities	Operating lease liabilities	81,106		93,000		Operating lease liabilities	80,573		80,503
Debt, current	Debt, current	1,191,722		1,103,101		Debt, current	1,148,126		1,222,443
Total current liabilities	Total current liabilities	4,210,755		4,282,648		Total current liabilities	4,781,387		5,067,855
Debt, noncurrent	Debt, noncurrent	673,273		691,913		Debt, noncurrent	2,973,068		617,354
Unearned revenue, noncurrent	Unearned revenue, noncurrent	64,914		80,111		Unearned revenue, noncurrent	59,308		71,533
Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	213,568		350,051		Operating lease liabilities, noncurrent	182,237		182,456
Other liabilities	Other liabilities	56,056		35,854		Other liabilities	22,299		24,225
Total liabilities	Total liabilities	5,218,566		5,440,577		Total liabilities	8,018,299		5,963,423
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock	Common stock	246		242		Common stock	253		251
Additional paid-in capital	Additional paid-in capital	6,298,516		6,254,936		Additional paid-in capital	7,596,787		7,284,174
Treasury stock	Treasury stock	(12,420)		(12,384)		Treasury stock	(12,584)		(12,467)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(60,421)		(54,970)		Accumulated other comprehensive income (loss)	43,109		7,709
Accumulated deficit	Accumulated deficit	(2,820,480)		(2,909,990)		Accumulated deficit	(2,846,758)		(2,744,585)
Total stockholders’ equity	Total stockholders’ equity	3,405,441		3,277,834		Total stockholders’ equity	4,780,807		4,535,082
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	8,624,007	$	8,718,411	Total liabilities and stockholders’ equity	$	12,799,106	$	10,498,505


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


		Three Months Ended April 30,				Three Months Ended April 30,
		2021		2020				2022		2021
Revenues:	Revenues:						Revenues:
Subscription services	Subscription services	$	1,032,169	$	881,956		Subscription services	$	1,272,076	$	1,032,169
Professional services	Professional services	142,864		136,429			Professional services	162,581		142,864
Total revenues	Total revenues	1,175,033		1,018,385			Total revenues	1,434,657		1,175,033
Costs and expenses (1):	Costs and expenses (1):						Costs and expenses (1):
Costs of subscription services	Costs of subscription services	182,208		145,263			Costs of subscription services	232,922		182,208
Costs of professional services	Costs of professional services	150,845		160,367			Costs of professional services	169,899		150,845
Product development	Product development	441,616		443,484			Product development	541,509		441,616
Sales and marketing	Sales and marketing	326,494		318,557			Sales and marketing	429,301		326,494
General and administrative	General and administrative	112,183		95,171			General and administrative	133,869		112,183
Total costs and expenses	Total costs and expenses	1,213,346		1,162,842			Total costs and expenses	1,507,500		1,213,346
Operating income (loss)	Operating income (loss)	(38,313)		(144,457)			Operating income (loss)	(72,843)		(38,313)
Other income (expense), net	Other income (expense), net	(9,051)		(10,973)			Other income (expense), net	(20,163)		(9,051)
Loss before provision for (benefit from) income taxes		(47,364)		(155,430)
Income (loss) before provision for (benefit from) income taxes							Income (loss) before provision for (benefit from) income taxes	(93,006)		(47,364)
Provision for (benefit from) income taxes	Provision for (benefit from) income taxes	(842)		2,938			Provision for (benefit from) income taxes	9,167		(842)
Net loss		$	(46,522)	$	(158,368)
Net loss per share, basic and diluted		$	(0.19)	$	(0.68)
Weighted-average shares used to compute net loss per share, basic and diluted		243,739		232,939
Net income (loss)							Net income (loss)	$	(102,173)	$	(46,522)
Net income (loss) per share, basic and diluted							Net income (loss) per share, basic and diluted	$	(0.41)	$	(0.19)

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


(1) Costs and expenses include share-based compensation expenses as follows:	(1) Costs and expenses include share-based compensation expenses as follows:					(1) Costs and expenses include share-based compensation expenses as follows:
		Three Months Ended April 30,						Three Months Ended April 30,
		2021		2020				2022		2021
Costs of subscription services	Costs of subscription services	$	20,717	$	13,892		Costs of subscription services	$	26,230	$	20,717
Costs of professional services	Costs of professional services	27,692		22,566			Costs of professional services	27,584		27,692
Product development	Product development	129,862		122,022			Product development	153,304		129,862
Sales and marketing	Sales and marketing	50,308		46,950			Sales and marketing	59,169		50,308
General and administrative	General and administrative	36,056		31,242			General and administrative	45,219		36,056
Total share-based compensation expenses							Total share-based compensation expenses	$	311,506	$	264,635


		As of April 30,					As of April 30,
		2021		2020			2022		2021
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Reconciliation of cash, cash equivalents, and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows:						Reconciliation of cash, cash equivalents, and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows:
Cash and cash equivalents	Cash and cash equivalents	$	959,358	$	1,214,213	Cash and cash equivalents	$	2,776,336	$	959,358
Restricted cash included in Prepaid expenses and other current assets	Restricted cash included in Prepaid expenses and other current assets	7,755		5,792		Restricted cash included in Prepaid expenses and other current assets	10,402		7,755
Restricted cash included in Other assets	Restricted cash included in Other assets	698		118		Restricted cash included in Other assets	—		698
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	967,811	$	1,220,123	Total cash, cash equivalents, and restricted cash	$	2,786,738	$	967,811


		Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	U.S. treasury securities	$	897,929	$	203	$	(9)	$	898,123	U.S. treasury securities	$	2,184,775	$	6	$	(4,015)	$	2,180,766
U.S. agency obligations	U.S. agency obligations	364,857		89		(13)		364,933		U.S. agency obligations	606,874		1		(2,825)		604,050
Corporate bonds	Corporate bonds	343,176		506		(93)		343,589		Corporate bonds	523,658		1		(6,718)		516,941
Commercial paper	Commercial paper	765,880		0		0		765,880		Commercial paper	1,941,286		—		(72)		1,941,214
		$	2,371,842	$	798	$	(115)	$	2,372,525
Total debt securities										Total debt securities	$	5,256,593	$	8	$	(13,630)	$	5,242,971
Included in Cash and cash equivalents	Included in Cash and cash equivalents	$	347,014	$	0	$	0	$	347,014	Included in Cash and cash equivalents	$	1,866,271	$	6	$	(32)	$	1,866,245
Included in Marketable securities	Included in Marketable securities	$	2,024,828	$	798	$	(115)	$	2,025,511	Included in Marketable securities	$	3,390,322	$	2	$	(13,598)	$	3,376,726


		Condensed Consolidated Balance Sheets Location	April 30, 2021		January 31, 2021			Condensed Consolidated Balance Sheets Location	April 30, 2022		January 31, 2022
Money market funds	Money market funds	Cash and cash equivalents	$	337,727	$	659,964	Money market funds	Cash and cash equivalents	$	604,004	$	607,640
Equity investments accounted for under the equity method		Other assets	46,010		48,222

Non-marketable equity investments measured using the measurement alternative	Non-marketable equity investments measured using the measurement alternative	Other assets	100,778		73,142		Non-marketable equity investments measured using the measurement alternative	Other assets	257,586		256,643
Marketable equity investments	Marketable equity investments	Marketable securities	9,660		21,300		Marketable equity investments	Marketable securities	102,293		104,318
			$	494,175	$	802,628
Total equity investments							Total equity investments		$	963,883	$	968,601


		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
U.S. treasury securities	U.S. treasury securities	$	898,123	$	0	$	0	$	898,123	U.S. treasury securities	$	2,180,766	$	—	$	—	$	2,180,766
U.S. agency obligations	U.S. agency obligations	0		364,933		0		364,933		U.S. agency obligations	—		604,050		—		604,050
Corporate bonds	Corporate bonds	0		343,589		0		343,589		Corporate bonds	—		516,941		—		516,941
Commercial paper	Commercial paper	0		765,880		0		765,880		Commercial paper	—		1,941,214		—		1,941,214
Money market funds	Money market funds	337,727		0		0		337,727		Money market funds	604,004		—		—		604,004
Marketable equity investments	Marketable equity investments	9,660		0		0		9,660		Marketable equity investments	102,293		—		—		102,293
Foreign currency derivative assets	Foreign currency derivative assets	0		5,265		0		5,265		Foreign currency derivative assets	—		94,742		—		94,742
Total assets	Total assets	$	1,245,510	$	1,479,667	$	0	$	2,725,177	Total assets	$	2,887,063	$	3,156,947	$	—	$	6,044,010
Foreign currency derivative liabilities	Foreign currency derivative liabilities	$	0	$	53,714	$	0	$	53,714	Foreign currency derivative liabilities	$	—	$	24,703	$	—	$	24,703
Total liabilities	Total liabilities	$	0	$	53,714	$	0	$	53,714	Total liabilities	$	—	$	24,703	$	—	$	24,703


~~Cash paid to stockholders, warrant holders, and vested option holders~~	$	~~683,788~~
~~Transaction costs paid by Workday on behalf of Peakon~~	~~17,960~~
~~Total~~	$	~~701,748~~


~~Acquisition-related intangible assets~~	$	~~170,500~~
~~Goodwill~~	~~542,541~~
~~Other assets~~	~~34,639~~
~~Deferred tax liability~~	~~(20,857)~~
~~Other liabilities~~	~~(25,075)~~
~~Total~~	$	~~701,748~~


	Estimated Fair Values		Weighted-Average Useful Lives (in Years)
Developed technology	$	94,000	5
Customer relationships	72,000		13
Backlog	4,000		3
Trade name	500		1
Total acquisition-related intangible assets	$	170,500	8


Fiscal Period:	Fiscal Period:			Fiscal Period:
Remainder of 2022		$	58,918
2023		75,823
Remainder of 2023				Remainder of 2023	$	63,921
2024	2024	64,605		2024	74,319
2025	2025	51,950		2025	61,663
2026	2026	47,172		2026	55,748
2027				2027	31,177
Thereafter	Thereafter	102,752		Thereafter	82,559
Total	Total	$	401,220	Total	$	369,387


Fiscal Period:	Fiscal Period:			Fiscal Period:
Remainder of 2022		$	2,196
2023		2,688
Remainder of 2023				Remainder of 2023	$	2,535
2024	2024	2,380		2024	3,102
2025	2025	1,900		2025	2,622
2026	2026	1,636		2026	2,357
2027				2027	2,077
Thereafter	Thereafter	6,203		Thereafter	9,225
Total	Total	$	17,003	Total	$	21,918


	April 30, 2021		January 31, 2021
Non-marketable equity and other investments (1)	$	136,142	$	85,868
Equity investments accounted for under the equity method	46,010		48,222
Prepayments for goods and services	32,829		19,824
Technology patents and other intangible assets, net	17,003		17,766
Net deferred tax assets	9,965		9,985
Deposits	6,833		6,218
Derivative assets	1,852		173
Other	2,162		1,701
Total	$	252,796	$	189,757


		Condensed Consolidated Statements of Operations and Statements of Comprehensive Loss Locations		Three Months Ended April 30,						Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations			Three Months Ended April 30,
			2021		2020						Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations					2022				2021
Gains (losses) recognized in OCI	Gains (losses) recognized in OCI		Net change in market value of effective foreign currency forward exchange contracts		$	(4,253)		$	36,793					Gains (losses) recognized in OCI			$	44,260			$	(4,253)
Gains (losses) reclassified from AOCI into income (effective portion)	Gains (losses) reclassified from AOCI into income (effective portion)	Revenues		518			4,486						Gains (losses) reclassified from AOCI into income (effective portion)		Revenues				(1,157)				518
Gains (losses) reclassified from AOCI into income (effective portion)												Gains (losses) reclassified from AOCI into income (effective portion)	Costs and expenses				(829)				—


		Gross Amounts of Recognized Assets		Gross Amounts Offset on the Condensed Consolidated Balance Sheets			Net Amounts of Assets Presented on the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets				Net Assets Exposed			Gross Amounts of Recognized Assets				Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts of Assets Presented on the Condensed Consolidated Balance Sheets			Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets				Net Assets Exposed
						Financial Instruments			Cash Collateral Received									Financial Instruments						Cash Collateral Received
Derivative assets:	Derivative assets:																		Derivative assets:
Counterparty A	Counterparty A	$	71	$	0		$	71	$	(71)	$	0	$	0	Counterparty A	$	15,150			$	—	$	15,150		$	(3,146)	$	—	$	12,004
Counterparty B	Counterparty B	3,044		0			3,044		(3,044)		0		0		Counterparty B	23,381				—		23,381			(14,665)		—		8,716
Counterparty C	Counterparty C	867		0			867		(867)		0		0		Counterparty C	16,943				—		16,943			(5,163)		—		11,780
Counterparty D	Counterparty D	1,281		0			1,281		(1,281)		0		0		Counterparty D	33,691				—		33,691			(1,712)		—		31,979
Counterparty E	Counterparty E	2		0			2		(2)		0		0		Counterparty E	5,577				—		5,577			(17)		—		5,560
Total	Total	$	5,265	$	0		$	5,265	$	(5,265)	$	0	$	0	Total	$	94,742			$	—	$	94,742		$	(24,703)	$	—	$	70,039


	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts of Liabilities Presented on the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets				Net Liabilities Exposed
							Financial Instruments		Cash Collateral Pledged
Derivative liabilities:
Counterparty A	$	8,285	$	0	$	8,285	$	(71)	$	0	$	8,214
Counterparty B	22,337		0		22,337		(3,044)		0		19,293
Counterparty C	21,405		0		21,405		(867)		0		20,538
Counterparty D	1,503		0		1,503		(1,281)		0		222
Counterparty E	184		0		184		(2)		0		182
Total	$	53,714	$	0	$	53,714	$	(5,265)	$	0	$	48,449


	April 30, 2021		January 31, 2020
Term Loan, net of unamortized debt discounts of $1,581 and $1,682, respectively, and unamortized debt issuance costs of $146 and $155, respectively	$	720,148	$	729,413
2022 Notes, net of unamortized debt discounts of $0 and $79,562, respectively, and unamortized debt issuance costs of $5,034 and $4,771, respectively	1,144,847		1,065,601
Total debt	1,864,995		1,795,014
Less: current debt	(1,191,722)		(1,103,101)
Total debt, noncurrent	$	673,273	$	691,913


	April 30, 2022		January 31, 2022
2022 Notes	$	1,149,613	$	1,149,817
2027 Notes	1,000,000		—
2029 Notes	750,000		—
2032 Notes	1,250,000		—
Term loan under the 2020 Credit Agreement	—		693,750
Total principal amount	4,149,613		1,843,567
Less: unamortized debt discount and issuance costs	(28,419)		(3,770)
Net carrying amount	4,121,194		1,839,797
Less: debt, current	(1,148,126)		(1,222,443)
Debt, noncurrent	$	2,973,068	$	617,354


Fiscal Period:
Remainder of 2022	$	28,125
2023	1,224,881
2024	75,000
2025	75,000
2026	468,750

Total	$	1,871,756


	April 30, 2021	January 31, 2021
Weighted average remaining lease term (in years)	5	6
Weighted average discount rate	2.42%	1.73%


		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Grant Date Fair Value
Balance as of January 31, 2021		13,168	$	154.90
Balance as of January 31, 2022					Balance as of January 31, 2022	11,808	$	209.12
RSUs granted	RSUs granted	4,455	260.69		RSUs granted	6,114	221.96
RSUs vested	RSUs vested	(2,725)	141.48		RSUs vested	(2,014)	209.16
RSUs forfeited	RSUs forfeited	(292)	164.50		RSUs forfeited	(398)	198.14
Balance as of April 30, 2021		14,606	189.48
Balance as of April 30, 2022					Balance as of April 30, 2022	15,510	214.46


	Outstanding Stock Options	Weighted-Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2021	1,260	$	13.55	$	270

Stock options exercised	(248)	10.50
Stock options canceled	(6)	32.80
Balance as of April 30, 2021	1,006	14.21		234
Vested and expected to vest as of April 30, 2021	1,004	14.16		234
Exercisable as of April 30, 2021	929	12.46		218


		Three Months Ended April 30, 2021									Three Months Ended April 30, 2022
		GAAP Operating Expenses		Share-Based Compensation Expenses (1)		Other Operating Expenses (2)		Non-GAAP Operating Expenses (3)			GAAP Operating Expenses		Share-Based Compensation Expenses		Other Operating Expenses (1)		Non-GAAP Operating Expenses (2)
Costs of subscription services	Costs of subscription services	$	182,208	$	(20,717)	$	(14,204)	$	147,287	Costs of subscription services	$	232,922	$	(26,230)	$	(16,326)	$	190,366
Costs of professional services	Costs of professional services	150,845		(27,692)		(6,953)		116,200		Costs of professional services	169,899		(27,584)		(3,899)		138,416
Product development	Product development	441,616		(129,862)		(19,542)		292,212		Product development	541,509		(153,304)		(13,011)		375,194
Sales and marketing	Sales and marketing	326,494		(50,308)		(17,106)		259,080		Sales and marketing	429,301		(59,169)		(14,046)		356,086
General and administrative	General and administrative	112,183		(36,056)		(4,386)		71,741		General and administrative	133,869		(45,219)		(2,613)		86,037
Total costs and expenses	Total costs and expenses	$	1,213,346	$	(264,635)	$	(62,191)	$	886,520	Total costs and expenses	$	1,507,500	$	(311,506)	$	(49,895)	$	1,146,099


		Three Months Ended April 30, 2020									Three Months Ended April 30, 2021
		GAAP Operating Expenses		Share-Based Compensation Expenses (1)		Other Operating Expenses (2)		Non-GAAP Operating Expenses (3)			GAAP Operating Expenses		Share-Based Compensation Expenses		Other Operating Expenses (1)		Non-GAAP Operating Expenses (2)
Costs of subscription services	Costs of subscription services	$	145,263	$	(13,892)	$	(9,643)	$	121,728	Costs of subscription services	$	182,208	$	(20,717)	$	(14,204)	$	147,287
Costs of professional services	Costs of professional services	160,367		(22,566)		(3,101)		134,700		Costs of professional services	150,845		(27,692)		(6,953)		116,200
Product development	Product development	443,484		(122,022)		(12,150)		309,312		Product development	441,616		(129,862)		(19,542)		292,212
Sales and marketing	Sales and marketing	318,557		(46,950)		(10,576)		261,031		Sales and marketing	326,494		(50,308)		(17,106)		259,080
General and administrative	General and administrative	95,171		(31,242)		(2,781)		61,148		General and administrative	112,183		(36,056)		(4,386)		71,741
Total costs and expenses	Total costs and expenses	$	1,162,842	$	(236,672)	$	(38,251)	$	887,919	Total costs and expenses	$	1,213,346	$	(264,635)	$	(62,191)	$	886,520


	Three Months Ended April 30, 2022
	GAAP			Share-Based Compensation Expenses			Other Operating Expenses			Non-GAAP (1)
Operating income (loss)	$	(72,843)		$	311,506		$	49,895		$	288,558
Operating margin	(5.1)		%	21.7		%	3.5		%	20.1		%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
February 1, 2021 - February 28, 2021	32	$	270.03	—	—
March 1, 2021 - March 31, 2021	108	253.85		—	—
April 1, 2021 - April 30, 2021	—	—		—	—
Total	140			—


			Workday, Inc.

			/s/ ~~Robynne D. Sisco~~Barbara Larson
			~~Robynne D. Sisco~~
			~~President and~~ Barbara Larson Chief Financial Officer ~~(Principal~~ (Principal Financial and Accounting Officer)