PART I. FINANCIAL INFORMATION This section provides Workday's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the periods ended July 31, 2025 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents Workday, Inc.'s unaudited condensed consolidated financial statements for the periods ended July 31, 2025, and January 31, 2025, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, investments, debt, leases, and other financial details Condensed Consolidated Balance Sheets This section presents Workday's financial position, detailing assets, liabilities, and stockholders' equity as of July 31, 2025, and January 31, 2025 | Metric | July 31, 2025 (in millions) | January 31, 2025 (in millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Total assets | $17,961 | $17,977 | | Total liabilities | $8,789 | $8,943 | | Total stockholders' equity | $9,172 | $9,034 | - Total assets remained relatively stable, while total liabilities decreased by $154 million and total stockholders' equity increased by $138 million from January 31, 2025, to July 31, 20259 Condensed Consolidated Statements of Operations This section details Workday's financial performance, including revenues, operating income, and net income for the three and six months ended July 31, 2025 | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Total revenues | $2,348 | $2,085 | $4,588 | $4,075 | | Operating income | $248 | $111 | $287 | $175 | | Net income | $228 | $132 | $296 | $239 | | Net income per share, diluted | $0.84 | $0.49 | $1.09 | $0.89 | - For the three months ended July 31, 2025, total revenues increased by 12.6% YoY, operating income surged by 123.4% YoY, and net income grew by 72.7% YoY. Diluted EPS increased by 71.4% YoY12 - For the six months ended July 31, 2025, total revenues increased by 12.6% YoY, operating income increased by 64% YoY, and net income grew by 23.8% YoY. Diluted EPS increased by 22.5% YoY12 Condensed Consolidated Statements of Comprehensive Income This section reports Workday's comprehensive income, reflecting net income and other comprehensive income components for the three and six months ended July 31, 2025 | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income | $228 | $132 | $296 | $239 | | Other comprehensive income (loss), net of tax | $(30) | $2 | $(158) | $(2) | | Comprehensive income | $198 | $134 | $138 | $237 | - Comprehensive income for the three months ended July 31, 2025, increased by 47.8% YoY, driven by higher net income despite a negative other comprehensive income. For the six months, comprehensive income decreased by 41.8% YoY, primarily due to a significant net change in unrealized losses on cash flow hedges15 Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in Workday's stockholders' equity, including additional paid-in capital, treasury stock, and accumulated deficit as of July 31, 2025 | Metric | July 31, 2025 (in millions) | July 31, 2024 (in millions) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Additional paid-in capital | $12,055 | $10,869 | | Treasury stock | $(1,900) | $(1,051) | | Accumulated deficit | $(909) | $(1,492) | | Total stockholders' equity | $9,172 | $8,345 | - Total stockholders' equity increased by $827 million YoY as of July 31, 2025, primarily due to an increase in additional paid-in capital and a reduction in accumulated deficit, partially offset by increased treasury stock17 Condensed Consolidated Statements of Cash Flows This section presents Workday's cash flows from operating, investing, and financing activities for the six months ended July 31, 2025 | Metric | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $1,073 | $943 | | Net cash used in investing activities | $(510) | $(603) | | Net cash used in financing activities | $(850) | $(715) | | Net decrease in cash, cash equivalents, and restricted cash | $(285) | $(375) | - Net cash provided by operating activities increased by 13.8% YoY to $1.073 billion for the six months ended July 31, 2025. Net cash used in investing activities decreased by 15.4% YoY, while net cash used in financing activities increased by 18.9% YoY19 Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on Workday's financial statements, covering business overview, accounting policies, investments, fair value measurements, deferred costs, property and equipment, acquisition-related intangibles, other assets, derivative instruments, debt, leases, commitments, contingencies, stockholders' equity, contract balances, other income, income taxes, net income per share, geographic information, restructuring, and a subsequent event regarding the acquisition of Paradox, Inc - Workday is a leading enterprise platform providing AI-powered cloud solutions for financial management, human capital management (HCM), planning, spend management, and analytics24109 - The company operates as a single operating and reportable segment: cloud applications, with the CEO assessing performance based on consolidated Net income2829 Debt Securities Fair Value (July 31, 2025) | Type | Fair Value (in millions) | | :---------------------- | :----------------------- | | U.S. treasury securities | $2,056 | | U.S. agency obligations | $538 | | Corporate bonds | $3,967 | | Commercial paper | $215 | | Asset-backed securities | $306 | | Other debt securities | $42 | | Total debt securities | $7,124 | - Workday uses foreign currency forward contracts as cash flow hedges and non-designated hedges to mitigate foreign currency exchange risk, with notional values of cash flow hedges to buy U.S. dollars increasing from $2.8 billion to $3.0 billion YoY5557596061 Outstanding Debt (in millions) | Debt Type | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | 2027 Notes | $1,000 | $1,000 | | 2029 Notes | $750 | $750 | | 2032 Notes | $1,250 | $1,250 | | Total principal amount | $3,000 | $3,000 | | Less: unamortized debt discount and issuance costs | $(15) | $(16) | | Debt, noncurrent | $2,985 | $2,984 | - Operating lease right-of-use assets significantly increased from $336 million to $719 million, and operating lease liabilities from $378 million to $791 million, primarily due to the commencement of a 20-year lease for a new European headquarters in Dublin, Ireland7374 - As of July 31, 2025, there were 217 million shares of Class A common stock and 50 million shares of Class B common stock outstanding. The company repurchased $592 million of Class A common stock during the six months ended July 31, 2025, and has $1.2 billion remaining authorization57880 - Workday announced a definitive agreement in August 2025 to acquire Paradox, Inc., a conversational AI candidate experience agent, for approximately $1.0 billion in cash, expected to close in Q3 fiscal 2026104 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Workday's financial condition and operational results, highlighting revenue growth, operating margin expansion, the impact of macroeconomic conditions, and key financial metrics. It also discusses the company's strategic focus on AI, international expansion, and partner ecosystem, alongside a recent restructuring plan Overview This section provides an overview of Workday's business model, strategic focus on AI and international expansion, and recent restructuring efforts - Workday is an AI-powered cloud platform offering applications for financial management, human capital management (HCM), planning, spend management, and analytics to over 11,000 global customers109110 - The company focuses on sustainable, long-term subscription revenue growth through new customer acquisition, expansion with existing customers, and strategic investments in AI solutions, international markets, partner ecosystem, and acquisitions110 - Workday aims to expand operating margin by driving scale and efficiencies, expecting product development, sales and marketing, and general and administrative expenses to decrease as a percentage of total revenues over the longer term111 - In February 2025, Workday initiated a restructuring plan (Fiscal 2026 Restructuring Plan) that reduced its workforce by approximately 7.5% and involved exiting certain owned office space, aiming to prioritize investments and focus on durable growth112 Impact of Current Economic Conditions This section discusses the effects of macroeconomic factors like inflation, interest rates, and geopolitical instability on Workday's revenue growth and sales cycles - Workday acknowledges ongoing macroeconomic events, including increased tariffs, elevated inflation, fluctuating interest rates, foreign currency exchange rates, and geopolitical instability, which create uncertainty and volatility113221 - The company has experienced a moderation of revenue growth rates due to increased deal scrutiny, lengthening sales cycles for new opportunities, and reduced growth in headcount commitments upon renewals114 - Workday has provided, and may continue to provide, certain customers with more flexible payment terms in response to economic uncertainty114 Financial Results Overview This section summarizes Workday's key financial performance metrics, including revenue growth, operating income, and cash flows for the reported periods | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Change (%) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------- | :------------------------------------- | :------------------------------------- | :--------- | | Total revenues | $2,348 | $2,085 | 13% | $4,588 | $4,075 | 13% | | Subscription services revenues | $2,169 | $1,903 | 14% | $4,228 | $3,719 | 14% | | GAAP operating income | $248 | $111 | 123% | $287 | $175 | 64% | | Non-GAAP operating income | $680 | $518 | 31% | $1,358 | $1,033 | 31% | | GAAP operating margin | 10.6% | 5.3% | 524 bps | 6.3% | 4.3% | 198 bps | | Non-GAAP operating margin | 29.0% | 24.9% | 412 bps | 29.6% | 25.4% | 424 bps | | Operating cash flows (Six Months) | - | - | - | $1,073 | $943 | 14% | | Free cash flows (Six Months) | - | - | - | $1,009 | $807 | 25% | | Metric | As of July 31, 2025 (in millions) | As of July 31, 2024 (in millions) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total subscription revenue backlog | $25,375 | $21,582 | 18% | | 12-month subscription revenue backlog | $7,910 | $6,797 | 16% | | Cash, cash equivalents, and marketable securities | $8,186 | $7,373 | 11% | | Headcount | 19,517 | 19,908 | (2)% | Components of Results of Operations Workday's revenues are primarily from subscription services (92% of total revenues), which are recognized over time and driven by customer count, worker count, application mix, and pricing. Professional services revenues, for deployment, optimization, and training, are billed on time and materials or fixed-price basis. Costs include subscription services (hosting, support), professional services (employee-related, subcontractors), product development (employee-related, infrastructure), sales and marketing (employee-related, commissions, programs), general and administrative (employee-related, professional fees), and restructuring expenses - Subscription services revenues accounted for approximately 92% of total revenues for the three and six months ended July 31, 2025, and 97% of total unearned revenue as of July 31, 2025117 - Subscription services contracts typically have a term of three years or longer and are generally noncancelable, with invoicing usually done annually in advance119 - Sales commissions for new revenue contracts are capitalized and amortized on a straight-line basis over a period of benefit determined to be five years125 - Restructuring expenses include charges related to workforce reductions (employee transition, severance, benefits, share-based compensation) and facility closures127 Results of Operations Workday reported a 13% increase in total revenues for both the three and six months ended July 31, 2025, driven by subscription services growth. Operating income saw significant increases, reflecting revenue growth outpacing headcount and cost savings from restructuring. Share-based compensation increased, but is expected to decline as a percentage of revenues. The company's gross revenue retention rate remained high at 97% Revenue Performance (in millions) | Revenue Type | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | % Change | 6 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Subscription services | $2,169 | $1,903 | 14% | $4,228 | $3,719 | 14% | | Professional services | $179 | $182 | (2)% | $360 | $356 | 1% | | Total revenues | $2,348 | $2,085 | 13% | $4,588 | $4,075 | 13% | - Approximately 60% of the increase in subscription services revenues was from expansion within existing customers, and 40% from new customers128129 - Gross revenue retention rate was approximately 97% as of July 31, 2025, indicating strong customer satisfaction and retention130 Total Costs and Expenses (in millions) | Expense Category | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Costs of subscription services | $370 | $304 | $720 | $594 | | Costs of professional services | $212 | $207 | $399 | $406 | | Product development | $660 | $649 | $1,322 | $1,305 | | Sales and marketing | $641 | $611 | $1,264 | $1,184 | | General and administrative | $216 | $202 | $429 | $403 | | Restructuring | $1 | $1 | $167 | $8 | | Total costs and expenses | $2,100 | $1,974 | $4,301 | $3,900 | - Total costs and expenses increased by 6% for the three months and 10% for the six months ended July 31, 2025, with the six-month increase including $159 million in restructuring expenses133134 - GAAP operating income increased by 123% YoY for the three months and 64% YoY for the six months, driven by revenue growth outpacing headcount growth, moderation of operating expenses, and restructuring-related cost savings153154 - Non-GAAP operating income increased by 31% for both the three and six months ended July 31, 2025, with non-GAAP operating margin reaching 29.0% and 29.6% respectively155156 Liquidity and Capital Resources Workday maintains strong liquidity with $8.2 billion in cash, cash equivalents, and marketable securities as of July 31, 2025. The company's operating activities generated $1.1 billion in cash for the six months ended July 31, 2025, and free cash flow improved significantly. Capital expenditures are projected at $200 million for fiscal 2026, primarily for office facilities. Share repurchase programs continue, with $1.2 billion remaining authorization - As of July 31, 2025, Workday had $8.2 billion in cash, cash equivalents, and marketable securities, primarily for working capital and general corporate purposes165 - Cash provided by operating activities increased to $1.073 billion for the six months ended July 31, 2025, up 13.8% YoY, driven by higher cash collections169 - Cash used in investing activities was $510 million, primarily due to marketable debt securities activity and capital expenditures170 - Cash used in financing activities was $850 million, mainly due to $589 million in common stock repurchases and $372 million in taxes paid for equity award settlements173 Free Cash Flows (in millions) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $1,073 | $943 | | Less: Capital expenditures | $(64) | $(136) | | Free cash flows | $1,009 | $807 | - Free cash flows increased by 25% YoY to $1.009 billion for the six months ended July 31, 2025, benefiting from increased sales and decreased capital expenditures176 - Workday expects capital expenditures to be approximately $200 million in fiscal 2026, primarily for office facilities172 - The company has $1.2 billion remaining authorization under its share repurchase programs as of July 31, 202580179 Non-GAAP Financial Measures Workday uses non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, and free cash flows, to provide a clearer view of its core business performance. These measures exclude share-based compensation, employer payroll tax-related items on employee stock transactions, amortization of acquisition-related intangible assets, acquisition-related costs, and restructuring costs, as these are considered non-operational or non-recurring - Non-GAAP operating income and margin exclude share-based compensation, employer payroll tax-related items on employee stock transactions, amortization of acquisition-related intangible assets, acquisition-related costs, and restructuring costs184191 - Free cash flows are defined as net cash provided by operating activities minus capital expenditures, used to assess cash flow generation from ongoing operations175185 - These non-GAAP measures are used for internal budgeting, forecasting, and evaluating financial performance, aiming to reflect ongoing business in a comparable manner183 Critical Accounting Policies and Estimates Workday's critical accounting policies involve significant judgment and complexity, including revenue recognition, deferred commissions, income taxes, and business combinations, goodwill, and acquisition-related intangible assets. No significant changes to these policies or estimates occurred during the three and six months ended July 31, 2025 - Key critical accounting policies include revenue recognition, deferred commissions, income taxes, and business combinations, goodwill, and acquisition-related intangible assets193 - The preparation of consolidated financial statements requires significant estimates, judgments, and assumptions, which could differ from actual results27190 - There were no significant changes to critical accounting policies and estimates during the three and six months ended July 31, 2025192 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Workday is exposed to market risks from foreign currency exchange rate fluctuations and interest rate changes on its investments and debt. The company uses derivative hedging contracts to mitigate foreign currency risk and manages its investment portfolio to preserve capital. Fixed-rate debt limits interest rate exposure on borrowings, but variable-rate credit facilities introduce risk Foreign Currency Exchange Risk This section describes Workday's exposure to foreign currency fluctuations and its use of derivative instruments to mitigate this risk - Workday conducts business globally in multiple foreign currencies, primarily exposed to the euro, British pound, Canadian dollar, and Australian dollar195 - The company uses foreign currency derivative hedging transactions to mitigate foreign currency exchange risk196 Interest Rate Risk on our Investments This section details Workday's exposure to interest rate changes on its investment portfolio and potential impacts on market value - Workday's cash, cash equivalents, and marketable securities totaled $8.2 billion as of July 31, 2025, invested primarily in U.S. treasury securities, corporate bonds, and money market funds197 - A hypothetical 100 basis point increase or decrease in interest rates would result in an approximately $114 million market value reduction or increase in the investment portfolio as of July 31, 2025199 Interest Rate Risk on our Debt This section outlines Workday's interest rate exposure related to its fixed-rate Senior Notes and variable-rate credit facilities - The Senior Notes have fixed annual interest rates, limiting economic interest rate exposure, but their fair values are subject to interest rate risk200 - Borrowings under the 2022 Credit Agreement bear variable interest rates (base rate or SOFR plus margins), exposing the company to market risk from changes in underlying index rates201 ITEM 4. CONTROLS AND PROCEDURES Workday's management, including its principal executive and financial officers, evaluated the effectiveness of its disclosure controls and procedures, concluding they are effective at a reasonable assurance level as of July 31, 2025. No material changes in internal control over financial reporting were identified during the quarter Evaluation of Disclosure Controls and Procedures This section reports management's assessment of the effectiveness of Workday's disclosure controls and procedures as of July 31, 2025 - Management, including the principal executive and financial officers, concluded that Workday's disclosure controls and procedures were effective as of July 31, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely203205 Changes in Internal Control Over Financial Reporting This section confirms that no material changes in Workday's internal control over financial reporting occurred during the last quarter - No material changes in Workday's internal control over financial reporting occurred during the quarter ended July 31, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting206 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, insider trading arrangements, and exhibits ITEM 1. LEGAL PROCEEDINGS Workday is involved in various legal proceedings and claims arising in the ordinary course of business, including competition, intellectual property, data security, and employment matters. While the outcomes are unpredictable, management believes that as of July 31, 2025, there is no reasonable possibility of incurring a material loss beyond recorded accruals - Workday is regularly involved in legal proceedings and claims, including those related to competition, intellectual property, data security and privacy, and labor and employment208 - Management believes that as of July 31, 2025, there was not at least a reasonable possibility of incurring a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies77209 ITEM 1A. RISK FACTORS This section outlines significant risks that could adversely affect Workday's business, financial condition, and operating results. These risks span operational, economic, competitive, technological, legal, and financial areas, including cybersecurity threats, global economic volatility, intense market competition, reliance on partners, and challenges related to new technologies like AI Summary of Risk Factors This section provides a high-level overview of the primary risks Workday faces, including operational, economic, competitive, and technological challenges - Key risks include information technology system compromises, infrastructure slowdowns, global economic and geopolitical volatility, privacy concerns, loss of key employees, intense market competition, reliance on partners, international sales risks, and challenges with new technologies like AI212 Risks Related to Our Business and Industry Workday faces risks from potential slowdowns or failures in its technical operations infrastructure, reliance on third-party data centers, and the impact of global economic and geopolitical volatility on customer spending. The company also highlights risks related to retaining key employees, intense market competition, dependence on its partner network, and challenges in international operations and customer satisfaction with deployment and support services - Disruptions in Workday's technical operations infrastructure or third-party data centers, including those caused by high temperatures or power outages, could lead to service outages, data loss, reputational damage, and increased operational costs213214218 - Global economic and geopolitical volatility, including tariffs, inflation, and fluctuating interest rates, may lead to delays in customer purchasing decisions, increased demand for price concessions, and reduced customer demand221222 - The company faces intense competition from established providers like Oracle and SAP, as well as other enterprise software vendors, and new technologies like generative AI are expected to intensify this competition228229230 - Workday's success depends on its ability to attract, develop, and retain highly skilled employees, particularly after the Fiscal 2026 Restructuring Plan which reduced the workforce by 7.5%224225226 - Failure to effectively manage and grow its network of partners, or if partners do not perform as expected, could impact Workday's ability to sell and distribute products and harm its operating results231232 - The use of new and evolving technologies, especially AI, in Workday's offerings may lead to reputational harm, increased litigation, and compliance challenges due to a rapidly evolving technical, legal, and regulatory environment240 Risks Related to Cybersecurity, Data Privacy, and Intellectual Property Workday faces significant risks from cybersecurity threats, unauthorized data access, and evolving data privacy regulations. Compromises to IT systems or third-party providers could disrupt operations, lead to data loss, and incur substantial liabilities. The company must navigate complex and fragmented global data privacy laws, including GDPR and CCPA, and protect its intellectual property rights against infringement and unauthorized use - Compromises of Workday's information technology systems or unauthorized access to customer or user data could disrupt operations, damage reputation, and lead to significant liabilities, regulatory actions, and customer loss258 - Cybersecurity threats are increasing in sophistication, with threat actors using AI to create more automated and targeted attacks, making defense more challenging261 - Workday relies on third-party information systems and technology, and any security events impacting these third parties could lead to unauthorized data access or disruption of operations266 - Evolving global data privacy laws (e.g., GDPR, CCPA, CPRA) and new regulations like the U.S. Department of Justice's 'Data Security Program' impose significant compliance costs, potential fines, and may restrict data transfers and business operations267268269 - Failure to protect intellectual property rights, including patents, copyrights, and trade secrets, could impair Workday's ability to protect its proprietary technology and brand, and lead to costly litigation272274 - The company may be sued by third parties for alleged infringement of proprietary rights, incurring significant expenses, damages, or requiring changes to products or business practices275 Risks Related to Legal and Regulatory Matters Workday faces risks from unfavorable laws and regulations, particularly those governing new technologies like AI, which are rapidly evolving and vary across jurisdictions. Adverse litigation outcomes could significantly impact the business. Government contracts expose the company to specific procurement regulations and potential audits. Unanticipated tax law changes or interpretations could also adversely affect profitability and financial results - New and evolving technologies, such as AI, are subject to increasing regulation (e.g., EU AI Act), which could lead to significant compliance costs, litigation, penalties, and restrictions on product use277278279 - Adverse outcomes in legal proceedings, including claims related to competition, intellectual property, and data security, could result in significant monetary damages, injunctive relief, and reputational harm280 - Government contracts expose Workday to complex procurement regulations, potential audits, and risks of contract termination or debarment from future government business if compliance is not maintained (e.g., FedRAMP authorization)281282283 - Changes in federal, state, local, or international tax laws, or adverse interpretations of existing laws, could impact Workday's effective tax rate, increase tax liabilities, or negatively affect customer demand for services284285 Risks Related to Financial Matters Workday's long sales cycles and subscription revenue recognition model mean that changes in new sales are not immediately reflected in operating results, making performance difficult to discern. The company has a history of cumulative losses and may not sustain GAAP profitability due to ongoing investments. Its current and future indebtedness could adversely affect financial condition and liquidity, while equity investments carry risks of capital loss and fair value volatility - Long sales cycles (6-18+ months) for large enterprise customers and ratable subscription revenue recognition mean that downturns or upturns in new sales are not immediately reflected in operating results, making it difficult to discern underlying performance287288 - Workday has a history of cumulative losses and may not sustain GAAP profitability in the future due to substantial investments in customer acquisition and application development, and increasing operating expenses289 - The company's $3.0 billion in Senior Notes and $1.0 billion revolving credit facility (2022 Credit Agreement) could adversely affect its financial condition, liquidity, and flexibility, and require compliance with specific covenants290291292 - Equity investments in early to late-stage companies carry risks of partial or complete loss of invested capital, as their financial success depends on liquidity events and market conditions, and valuations are complex due to lack of readily available market data293294 - Weaknesses in internal controls over financial reporting could adversely affect investor confidence, stock price, and potentially lead to investigations by regulatory authorities295297 Risks Related to Ownership of Our Class A Common Stock Workday's Co-Founders maintain significant voting control through a dual-class stock structure, limiting the influence of non-affiliates on corporate matters. The Class A common stock has historically been volatile, and future fluctuations are expected. Share repurchase programs may not always enhance long-term stockholder value, and Delaware law and company organizational documents contain anti-takeover provisions that could depress the stock price. The company does not intend to pay dividends in the foreseeable future - Workday's Co-Founders, David Duffield and Aneel Bhusri, control a substantial majority of the voting power through their Class B common stock holdings, limiting the ability of non-affiliates to influence corporate matters298300 - The Class A common stock's trading price has been volatile and may fluctuate significantly due to factors like guidance, market expectations, technological innovations, service disruptions, and economic conditions302 - Share repurchase programs may not enhance long-term stockholder value if the stock price declines below repurchase levels, and they reduce cash available for other corporate purposes306307 - Delaware law and provisions in Workday's organizational documents, such as a classified Board of Directors and supermajority voting requirements for certain amendments, could make a merger, tender offer, or proxy contest difficult309310312 - Workday does not intend to pay cash dividends on its capital stock for the foreseeable future, with stockholders relying on stock price appreciation for gains318 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports on Workday's equity security transactions, noting no recent unregistered sales. It details the company's Class A common stock repurchases under publicly announced programs, totaling 1,216 thousand shares for $299 million during the three months ended July 31, 2025 Recent Sales of Unregistered Securities This section confirms that Workday had no recent unregistered sales of equity securities - There were no recent sales of unregistered securities319 Purchases of Equity Securities by the Issuer This section details Workday's repurchases of Class A common stock under its publicly announced programs Class A Common Stock Repurchases (Three Months Ended July 31, 2025) | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | Amount Repurchased (in millions) | | :--------------------------- | :------------------------------------------ | :--------------------------- | :------------------------------- | | May 1, 2025 - May 31, 2025 | 351 | $251.64 | $88 | | June 1, 2025 - June 30, 2025 | 597 | $246.78 | $147 | | July 1, 2025 - July 31, 2025 | 268 | $234.95 | $63 | | Total | 1,216 | - | $299 | - Workday repurchased 1,216 thousand shares of Class A common stock for $299 million during the three months ended July 31, 2025, under its August 2024 and May 2025 Share Repurchase Programs320 ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there are no defaults upon senior securities to report - Not applicable; there were no defaults upon senior securities321 ITEM 4. MINE SAFETY DISCLOSURES This section indicates that there are no mine safety disclosures required - Not applicable; there are no mine safety disclosures322 ITEM 5. OTHER INFORMATION This section provides other information, specifically detailing insider trading arrangements. It lists directors and officers who adopted or terminated Rule 10b5-1 trading arrangements during the three months ended July 31, 2025 Insider Trading Arrangements This section lists directors and officers who adopted or terminated Rule 10b5-1 trading arrangements - Richard Sauer (Chief Legal Officer) adopted a Rule 10b5-1 trading arrangement on June 12, 2025, to sell 41,656 shares of Class A Common Stock by July 14, 2026323 - Michael McNamara (Director) adopted a Rule 10b5-1 trading arrangement on July 10, 2025, to sell 15,393 shares of Class A Common Stock by April 14, 2026323 ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer under Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents - Exhibits include certifications of periodic reports by the Principal Executive Officer and Principal Financial Officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002325 - The filing also includes various Inline XBRL Taxonomy documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase Documents) and the Cover Page Interactive Data File325 SIGNATURES This section contains the signatures of Workday, Inc.'s Chief Financial Officer, Zane Rowe, and Chief Accounting Officer, Mark Garfield, certifying the filing of the report on August 22, 2025 - The report is signed by Zane Rowe, Chief Financial Officer, and Mark Garfield, Chief Accounting Officer, on August 22, 2025329
Workday(WDAY) - 2026 Q2 - Quarterly Report