Workday, Inc 10-K for FY2021

Workday, Inc. (WDAY)

10-K 2021-03-02 For: 2021-01-31

Added on April 11, 2026

About this 10-K

Workday, Inc filed this 10-K on March 2, 2021, covering the fiscal year ended January 31, 2021 (FY2021).

Headline figures

Fiscal year ended January 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.32B; up 19.0% from $3.63B a year earlier
Net loss: $282.43M; compared with a net loss of $480.67M a year earlier

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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	ý	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	32
Item 4.	Mine Safety Disclosures	32
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	33
Item 6.	Selected Consolidated Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	48
Item 8.	Consolidated Financial Statements and Supplementary Data	50
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	90
Item 9A.	Controls and Procedures	90
Item 9B.	Other Information	91
	PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	92
Item 11.	Executive Compensation	92
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	92
Item 13.	Certain Relationships and Related Transactions and Director Independence	92
Item 14.	Principal Accountant Fees and Services	92
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	93
Item 16.	Form 10-K Summary	96


Company/Index	1/31/2016		1/31/2017		1/31/2018		1/31/2019		1/31/2020		1/31/2021
Workday, Inc.	$	100.00	$	131.87	$	190.27	$	288.10	$	293.02	$	361.10
S&P 500 Index	100.00		120.03		151.72		148.20		180.31		211.39
S&P 1500 Application Software Index	100.00		127.01		187.57		226.35		302.40		398.98


☒			ANNUAL 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


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
November 1, 2020 - November 30, 2020	—	$	—	—	—
December 1, 2020 - December 31, 2020	—	—		—	—
January 1, 2021 - January 31, 2021(1)	164	228.56		—	—
Total	164	$	228.56	—	—


	Year Ended January 31,
	2021		2020		2019		2018		2017
									As Adjusted(2)

	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues:
Subscription services	$	3,788,452	$	3,096,389	$	2,385,769	$	1,787,833	$	1,290,733
Professional services	529,544		530,817		436,411		355,217		283,707
Total revenues	4,317,996		3,627,206		2,822,180		2,143,050		1,574,440
Costs and expenses (1):
Costs of subscription services	611,912		488,513		379,877		273,461		213,389
Costs of professional services	586,220		576,745		455,073		355,952		270,156
Product development	1,721,222		1,549,906		1,211,832		910,584		680,531
Sales and marketing	1,233,173		1,146,548		891,345		683,367		565,328
General and administrative	414,068		367,724		347,337		222,909		198,122
Total costs and expenses	4,566,595		4,129,436		3,285,464		2,446,273		1,927,526
Operating income (loss)	(248,599)		(502,230)		(463,284)		(303,223)		(353,086)
Other income (expense), net	(26,535)		19,783		39,532		(11,563)		(32,427)
Loss before provision for (benefit from) income taxes	(275,134)		(482,447)		(423,752)		(314,786)		(385,513)
Provision for (benefit from) income taxes	7,297		(1,773)		(5,494)		6,436		(814)
Net loss	$	(282,431)	$	(480,674)	$	(418,258)	$	(321,222)	$	(384,699)
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted	$	(1.19)	$	(2.12)	$	(1.93)	$	(1.55)	$	(1.94)
Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders	237,019		227,185		216,789		207,774		198,214


	As of January 31,
	2021		2020		2019		2018		2017
									As Adjusted(3)

			(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	1,384,181	$	731,141	$	638,554	$	1,134,355	$	539,923
Marketable securities	2,151,472		1,213,432		1,139,864		2,133,495		1,456,822
Working capital	519,413		125,218		269,905		1,898,104		1,239,202
Property and equipment, net	972,403		936,179		796,907		546,609		365,877
Operating lease right-of-use assets	414,143		290,902		—		—		—
Total assets	8,718,411		6,816,365		5,520,746		4,947,424		3,268,282
Total unearned revenue	2,636,735		2,309,203		1,949,270		1,537,147		1,221,543
Total debt	1,795,014		1,262,286		1,204,778		1,491,354		534,423
Total operating lease liabilities	443,051		307,572		—		—		—
Total liabilities	5,440,577		4,329,814		3,562,304		3,367,059		1,991,674
Total stockholders’ equity	3,277,834		2,486,551		1,958,442		1,580,365		1,276,608


	Year Ended January 31, 2021
	GAAP Operating Expenses		Share-Based Compensation Expenses		Other Operating Expenses (1)		Non-GAAP Operating Expenses (2)
Costs of subscription services	$	611,912	$	(63,253)	$	(34,799)	$	513,860
Costs of professional services	586,220		(101,869)		(6,486)		477,865
Product development	1,721,222		(505,376)		(27,567)		1,188,279
Sales and marketing	1,233,173		(202,819)		(35,797)		994,557
General and administrative	414,068		(131,537)		(6,337)		276,194
Total costs and expenses	$	4,566,595	$	(1,004,854)	$	(110,986)	$	3,450,755


	Year Ended January 31, 2020
	GAAP Operating Expenses		Share-Based Compensation Expenses		Other Operating Expenses (1)		Non-GAAP Operating Expenses (2)
Costs of subscription services	$	488,513	$	(49,919)	$	(40,326)	$	398,268
Costs of professional services	576,745		(80,401)		(6,440)		489,904
Product development	1,549,906		(434,188)		(30,684)		1,085,034
Sales and marketing	1,146,548		(176,758)		(40,774)		929,016
General and administrative	367,724		(118,614)		(8,592)		240,518
Total costs and expenses	$	4,129,436	$	(859,880)	$	(126,816)	$	3,142,740


	Year Ended January 31, 2019
	GAAP Operating Expenses		Share-Based Compensation Expenses		Other Operating Expenses (1)		Non-GAAP Operating Expenses (2)
Costs of subscription services	$	379,877	$	(36,754)	$	(31,395)	$	311,728
Costs of professional services	455,073		(55,535)		(3,653)		395,885
Product development	1,211,832		(320,876)		(21,230)		869,726
Sales and marketing	891,345		(132,810)		(19,725)		738,810
General and administrative	347,337		(127,443)		(5,120)		214,774
Total costs and expenses	$	3,285,464	$	(673,418)	$	(81,123)	$	2,530,923


	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Term Loan (1)	$	768,608	$	48,365	$	167,631	$	552,612	$	—
0.25% Convertible senior notes due 2022 (2)	1,154,734		2,875		1,151,859		—		—
Operating leases (3)	482,439		100,678		170,599		115,484		95,678
Third-party hosted infrastructure platform obligations	423,730		41,000		91,000		291,730		—
Purchase obligations (4)	323,144		194,892		86,284		41,968		—
Total	$	3,152,655	$	387,810	$	1,667,373	$	1,001,794	$	95,678


Reports of Independent Registered Public Accounting Firm			51
Consolidated Balance Sheets			54
Consolidated Statements of Operations			55
Consolidated Statements of Comprehensive Loss			56
Consolidated Statements of Stockholders’ Equity			57
Consolidated Statements of Cash Flows			58
Notes to Consolidated Financial Statements			60


	Year Ended January 31,
	2021		2020		2019		2018		2017
Costs of subscription services	$	63,253	$	49,919	$	36,754	$	26,280	$	20,773
Costs of professional services	101,869		80,401		55,535		37,592		26,833
Product development	505,376		434,188		320,876		229,819		166,529
Sales and marketing	202,819		176,758		132,810		100,762		86,229
General and administrative	131,537		118,614		127,443		83,972		78,265


	Year Ended January 31,
	2021		2020		2019
Net cash provided by (used in):
Operating activities	$	1,268,441	$	864,598	$	606,658
Investing activities	(1,241,624)		(896,922)		(842,784)
Financing activities	625,049		125,124		(256,711)
Effect of exchange rate changes	1,334		(282)		(614)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	653,200	$	92,518	$	(493,451)


			Revenue Recognition
Description of the Matter			As described in Note 2 to the consolidated financial statements, the Company recognizes revenue primarily from subscription services and professional services contracts. Some of the Company’s contracts contain multiple performance obligations. For these contracts, the Company assesses the performance obligations and accounts for those obligations separately if they are distinct. In such cases, the transaction price is allocated to the distinct performance obligations on a relative standalone selling price basis. Auditing the Company's determination of distinct performance obligations and the allocation of the transaction price to these performance obligations was challenging. For example, there were nonstandard terms and conditions that required judgment to determine the distinct performance obligations and relative standalone selling prices were accounted for appropriately.

How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to identify distinct performance obligations and allocate the transaction price to those performance obligations, including the underlying assumptions related to the relative standalone selling price. Among other audit procedures, we selected a sample of contracts and evaluated whether management appropriately identified and considered the terms and conditions and the appropriate revenue recognition. As part of our procedures, we evaluated the assessment of distinct performance obligations and the accuracy and completeness of the underlying data used in management's determination of the relative standalone selling prices.


	January 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	1,384,181	$	731,141
Marketable securities	2,151,472		1,213,432
Trade and other receivables, net of allowance for credit losses of $14,267 and $6,762, respectively	1,032,484		877,578
Deferred costs	122,764		100,459
Prepaid expenses and other current assets	111,160		172,012
Total current assets	4,802,061		3,094,622
Property and equipment, net	972,403		936,179
Operating lease right-of-use assets	414,143		290,902
Deferred costs, noncurrent	271,796		222,395
Acquisition-related intangible assets, net	248,626		308,401
Goodwill	1,819,625		1,819,261
Other assets	189,757		144,605
Total assets	$	8,718,411	$	6,816,365
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	75,596	$	57,556
Accrued expenses and other current liabilities	169,266		130,050
Accrued compensation	285,061		248,154
Unearned revenue	2,556,624		2,223,178
Operating lease liabilities	93,000		66,147
Debt, current	1,103,101		244,319
Total current liabilities	4,282,648		2,969,404
Debt, noncurrent	691,913		1,017,967
Unearned revenue, noncurrent	80,111		86,025
Operating lease liabilities, noncurrent	350,051		241,425
Other liabilities	35,854		14,993
Total liabilities	5,440,577		4,329,814
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10 million shares authorized as of January 31, 2021, and 2020; no shares issued and outstanding as of January 31, 2021, and 2020	—		—
Class A common stock, $0.001 par value; 750 million shares authorized as of January 31, 2021, and 2020; 184 million and 170 million shares issued and outstanding as of January 31, 2021, and 2020, respectively	184		170
Class B common stock, $0.001 par value; 240 million shares authorized as of January 31, 2021, and 2020; 59 million and 62 million shares issued and outstanding as of January 31, 2021, and 2020, respectively	58		61
Additional paid-in capital	6,254,936		5,090,187
Treasury stock, at cost; 0.1 million and 0 million shares as of January 31, 2021, and 2020, respectively	(12,384)		—
Accumulated other comprehensive income (loss)	(54,970)		23,492


	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	$	1,054,146	$	205	$	(10)	$	1,054,341
U.S. agency obligations	504,298		196		(49)		504,445
Corporate bonds	346,563		1,253		(14)		347,802
Commercial paper	664,262		—		—		664,262
	$	2,569,269	$	1,654	$	(73)	$	2,570,850
Included in Cash and cash equivalents	$	440,678	$	—	$	—	$	440,678
Included in Marketable securities	$	2,128,591	$	1,654	$	(73)	$	2,130,172


		January 31,
	Consolidated Balance Sheets Location	2021		2020
Money market funds (1)	Cash and cash equivalents	$	659,964	$	386,909
Marketable equity investments (1)	Marketable securities	21,300		—
Equity investments accounted for under the equity method	Other assets	48,222		—
Non-marketable equity investments measured using the measurement alternative (2)	Other assets	73,142		59,026
		$	802,628	$	445,935


	Level 1		Level 2		Level 3		Total
U.S. treasury securities	$	1,054,341	$	—	$	—	$	1,054,341
U.S. agency obligations	—		504,445		—		504,445
Corporate bonds	—		347,802		—		347,802
Commercial paper	—		664,262		—		664,262
Money market funds	659,964		—		—		659,964
Marketable equity investments	21,300		—		—		21,300
Foreign currency derivative assets	—		3,221		—		3,221
Total assets	$	1,735,605	$	1,519,730	$	—	$	3,255,335
Foreign currency derivative liabilities	$	—	$	49,456	$	—	$	49,456
Total liabilities	$	—	$	49,456	$	—	$	49,456


	January 31, 2021				January 31, 2020
	Net Carrying Amount		Estimated Fair Value		Net Carrying Amount		Estimated Fair Value

1.50% Convertible senior notes due 2020	$	—	$	—	$	244,319	$	571,057
0.25% Convertible senior notes due 2022	1,065,601		1,838,448		1,017,967		1,587,978


Acquisition-related intangible assets	$	63,400
Other assets acquired	37,087
Liabilities assumed	(17,270)
Total purchase consideration, inclusive of previously held equity interest	513,492
Estimated goodwill	$	430,275


	Estimated Fair Values		Estimated Useful Lives (in Years)
Trade name	$	400	1
Developed technology	28,000		5
Customer relationships	35,000		10
Total acquisition-related intangible assets	$	63,400	8


	Purchase Consideration
Cash paid to common and preferred stockholders, warrant holders, and vested option holders	$	1,408,422
Debt repaid by Workday on behalf of Adaptive Insights	53,696
Transaction costs paid by Workday on behalf of Adaptive Insights	23,375
Fair value of assumed Adaptive Insights awards attributable to pre-combination services (1)	5,424
Total purchase consideration	$	1,490,917


Assets acquired:
Cash and cash equivalents	$	37,892
Trade and other receivables, net	23,042
Prepaid expenses and other current assets and other assets	2,581
Property and equipment, net	2,246
Acquisition-related intangible assets	316,000
Total assets acquired	$	381,761

Liabilities assumed:
Accounts payable	$	3,115
Accrued expenses and other current liabilities	9,396
Accrued compensation	13,545
Unearned revenue (1)	67,754
Other liabilities	1,919
Total liabilities assumed	95,729
Net assets acquired, excluding goodwill	286,032
Total purchase consideration	1,490,917
Goodwill	$	1,204,885


	Estimated Fair Values		Estimated Useful Lives

			(in years)
Trade name	$	12,000	1.5
Developed technology	105,000		5
Customer relationships	188,000		9 - 10
Backlog	11,000		2
Total acquisition-related intangible assets	$	316,000	8


Fiscal Period:
2022	$	52,833
2023	50,109
2024	38,933
2025	27,500
2026	22,833
Thereafter	56,418
Total	$	248,626


Fiscal Period:
2022	$	2,960
2023	2,688
2024	2,380
2025	1,900
2026	1,636
Thereafter	6,202
Total	$	17,766


		Year Ended January 31,
	Consolidated Statements of Operations Location	2021		2020
Total revenues	Revenues	$	4,317,996	$	3,627,206
Amount of gains (losses) related to foreign currency forward contracts designated as cash flow hedges	Revenues	18,780		6,142


	Consolidated Statements of Operations and Statements of Comprehensive Loss Locations	Year Ended January 31,
		2021		2020		2019
Gains (losses) recognized in OCI	Net change in market value of effective foreign currency forward exchange contracts	$	(61,171)	$	31,842	$	44,079
Gains (losses) reclassified from AOCI into income (effective portion)	Revenues	18,780		6,142		(7,012)
Gains (losses) recognized in income (amount excluded from effectiveness testing and ineffective portion) (1)	Other income (expense), net	—		—		13,868


	Consolidated Statements of Operations Location	Year Ended January 31,
Derivative Type		2021		2020		2019
Foreign currency forward contracts not designated as hedges	Other income (expense), net	$	(4,095)	$	3,671	$	4,706


	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheets		Net Amounts of Assets Presented on the Consolidated Balance Sheets		Gross Amounts Not Offset on the Consolidated Balance Sheets				Net Assets Exposed
							Financial Instruments		Cash Collateral Received
Derivative assets:
Counterparty A	$	9	$	—	$	9	$	(9)	$	—	$	—
Counterparty B	2,968		—		2,968		(2,968)		—		—
Counterparty C	104		—		104		(104)		—		—
Counterparty D	140		—		140		(140)		—		—
Total	$	3,221	$	—	$	3,221	$	(3,221)	$	—	$	—


	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheets		Net Amounts of Liabilities Presented on the Consolidated Balance Sheets		Gross Amounts Not Offset on the Consolidated Balance Sheets				Net Liabilities Exposed
							Financial Instruments		Cash Collateral Pledged
Derivative liabilities:
Counterparty A	$	7,724	$	—	$	7,724	$	(9)	$	—	$	7,715
Counterparty B	19,401		—		19,401		(2,968)		—		16,433
Counterparty C	22,136		—		22,136		(104)		—		22,032
Counterparty D	195		—		195		(140)		—		55
Total	$	49,456	$	—	$	49,456	$	(3,221)	$	—	$	46,235


	January 31, 2021		January 31, 2020
Term Loan, net of unamortized debt discounts of $1,682 and $0, respectively, and unamortized debt issuance costs of $155 and $0, respectively	$	729,413	$	—
2020 Notes, net of unamortized debt discounts of $0 and $5,319, respectively, and unamortized debt issuance costs of $0 and $307, respectively	—		244,319
2022 Notes, net of unamortized debt discounts of $79,562 and $124,403, respectively, and unamortized debt issuance costs of $4,771 and $7,630, respectively	1,065,601		1,017,967
Total debt	$	1,795,014	$	1,262,286
Less: debt, current	$	(1,103,101)	$	(244,319)
Total debt, noncurrent	$	691,913	$	1,017,967


Fiscal Period:
2022	$	37,500
2023	1,224,934
2024	75,000
2025	75,000
2026	468,750

Total	$	1,881,184


	Number of Shares	Weighted-Average Grant Date Fair Value
Balance as of January 31, 2020	11,914,064	$	147.96
RSUs granted	8,188,933	152.70
RSUs vested	(5,761,931)	138.27
RSUs forfeited	(1,173,400)	150.73
Balance as of January 31, 2021	13,167,666	154.90


	Outstanding Stock Options	Weighted-Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2020	3,435,577	$	9.78	$	601

Stock options exercised	(2,117,729)	6.70
Stock options canceled	(58,107)	40.27
Balance as of January 31, 2021	1,259,741	13.55		270
Vested and expected to vest as of January 31, 2021	1,257,398	13.52		269
Exercisable as of January 31, 2021	1,148,056	11.64		248