Workday, Inc 10-Q for FY2022 Q1

Workday, Inc. (WDAY)

10-Q 2021-05-26 For: 2021-04-30

Added on April 11, 2026

About this 10-Q

Workday, Inc filed this 10-Q on May 26, 2021, covering the quarter ended April 30, 2021 (FY2022 Q1).

Headline figures

Quarter ended April 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.18B; up 15.4% from $1.02B a year earlier
Net loss: $46.52M; compared with a net loss of $158.37M a year earlier
Diluted EPS: -$0.19; compared with -$0.68 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	☒	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, and January 31, 2021	3

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

	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended April 30, 2021, and 2020	5

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

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

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	40

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

Item 6.	Exhibits	65

	Signatures	66


	April 30, 2021		January 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	959,358	$	1,384,181
Marketable securities	2,035,171		2,151,472
Trade and other receivables, net	647,163		1,032,484
Deferred costs	123,828		122,764
Prepaid expenses and other current assets	140,277		111,160
Total current assets	3,905,797		4,802,061
Property and equipment, net	1,155,697		972,403
Operating lease right-of-use assets	280,943		414,143
Deferred costs, noncurrent	265,388		271,796
Acquisition-related intangible assets, net	401,220		248,626
Goodwill	2,362,166		1,819,625
Other assets	252,796		189,757
Total assets	$	8,624,007	$	8,718,411
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	48,097	$	75,596
Accrued expenses and other current liabilities	208,559		169,266
Accrued compensation	320,176		285,061
Unearned revenue	2,361,095		2,556,624
Operating lease liabilities	81,106		93,000
Debt, current	1,191,722		1,103,101
Total current liabilities	4,210,755		4,282,648
Debt, noncurrent	673,273		691,913
Unearned revenue, noncurrent	64,914		80,111
Operating lease liabilities, noncurrent	213,568		350,051
Other liabilities	56,056		35,854
Total liabilities	5,218,566		5,440,577
Stockholders’ equity:
Common stock	246		242
Additional paid-in capital	6,298,516		6,254,936
Treasury stock	(12,420)		(12,384)
Accumulated other comprehensive income (loss)	(60,421)		(54,970)
Accumulated deficit	(2,820,480)		(2,909,990)
Total stockholders’ equity	3,405,441		3,277,834
Total liabilities and stockholders’ equity	$	8,624,007	$	8,718,411


☒			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,
	2021		2020
Revenues:
Subscription services	$	1,032,169	$	881,956
Professional services	142,864		136,429
Total revenues	1,175,033		1,018,385
Costs and expenses (1):
Costs of subscription services	182,208		145,263
Costs of professional services	150,845		160,367
Product development	441,616		443,484
Sales and marketing	326,494		318,557
General and administrative	112,183		95,171
Total costs and expenses	1,213,346		1,162,842
Operating income (loss)	(38,313)		(144,457)
Other income (expense), net	(9,051)		(10,973)
Loss before provision for (benefit from) income taxes	(47,364)		(155,430)
Provision for (benefit from) income taxes	(842)		2,938
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


(1) Costs and expenses include share-based compensation expenses as follows:
	Three Months Ended April 30,
	2021		2020
Costs of subscription services	$	20,717	$	13,892
Costs of professional services	27,692		22,566
Product development	129,862		122,022
Sales and marketing	50,308		46,950
General and administrative	36,056		31,242


	As of April 30,
	2021		2020
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	$	959,358	$	1,214,213
Restricted cash included in Prepaid expenses and other current assets	7,755		5,792
Restricted cash included in Other assets	698		118
Total cash, cash equivalents, and restricted cash	$	967,811	$	1,220,123


	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	$	897,929	$	203	$	(9)	$	898,123
U.S. agency obligations	364,857		89		(13)		364,933
Corporate bonds	343,176		506		(93)		343,589
Commercial paper	765,880		—		—		765,880
	$	2,371,842	$	798	$	(115)	$	2,372,525
Included in Cash and cash equivalents	$	347,014	$	—	$	—	$	347,014
Included in Marketable securities	$	2,024,828	$	798	$	(115)	$	2,025,511


	Condensed Consolidated Balance Sheets Location	April 30, 2021		January 31, 2021
Money market funds	Cash and cash equivalents	$	337,727	$	659,964
Equity investments accounted for under the equity method	Other assets	46,010		48,222
Non-marketable equity investments measured using the measurement alternative	Other assets	100,778		73,142
Marketable equity investments	Marketable securities	9,660		21,300
		$	494,175	$	802,628


	April 30, 2021		January 31, 2021
Total initial cost	$	87,704	$	65,377
Cumulative net unrealized gains (losses)	13,074		7,765
Carrying value	$	100,778	$	73,142


	Level 1		Level 2		Level 3		Total
U.S. treasury securities	$	898,123	$	—	$	—	$	898,123
U.S. agency obligations	—		364,933		—		364,933
Corporate bonds	—		343,589		—		343,589
Commercial paper	—		765,880		—		765,880
Money market funds	337,727		—		—		337,727
Marketable equity investments	9,660		—		—		9,660
Foreign currency derivative assets	—		5,265		—		5,265
Total assets	$	1,245,510	$	1,479,667	$	—	$	2,725,177
Foreign currency derivative liabilities	$	—	$	53,714	$	—	$	53,714
Total liabilities	$	—	$	53,714	$	—	$	53,714


	April 30, 2021		January 31, 2021
Land and land improvements	$	80,553	$	37,065
Buildings	672,291		494,599
Computers, equipment, and software	1,007,543		931,456
Furniture and fixtures	54,883		54,193
Leasehold improvements	144,683		204,273
Property and equipment, gross	1,959,953		1,721,586
Less accumulated depreciation and amortization	(804,256)		(749,183)
Property and equipment, net	$	1,155,697	$	972,403


	Three Months Ended April 30,
	2021		2020
Common stock:
Balance, beginning of period	$	242	$	231
Issuance of common stock under employee equity plans, net of shares withheld for employee taxes	4		4

Balance, end of period	246		235
Additional paid-in capital:
Balance, beginning of period	6,254,936		5,090,187
Issuance of common stock under employee equity plans, net of shares withheld for employee taxes	(1,361)		3,573
Share-based compensation	264,605		236,410


Exercise of convertible senior notes hedges	39		—
Settlement of convertible senior notes	(1)		—
Cumulative effect of accounting changes	(219,702)		—
Balance, end of period	6,298,516		5,330,170
Treasury stock:
Balance, beginning of period	(12,384)		—

Exercise of convertible senior notes hedges	(36)		—


Balance, end of period	(12,420)		—
Accumulated other comprehensive income (loss):
Balance, beginning of period	(54,970)		23,492
Other comprehensive income (loss)	(5,451)		34,034
Balance, end of period	(60,421)		57,526
Accumulated deficit:
Balance, beginning of period	(2,909,990)		(2,627,359)
Net loss	(46,522)		(158,368)

Cumulative effect of accounting changes	136,032		(200)
Balance, end of period	(2,820,480)		(2,785,927)
Total stockholders’ equity	$	3,405,441	$	2,602,004


	Three Months Ended April 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(46,522)	$	(158,368)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	82,463		71,514
Share-based compensation expenses	264,635		236,672
Amortization of deferred costs	31,614		26,060
Amortization of debt discount and issuance costs	997		14,840
Non-cash lease expense	22,230		18,369
Other	3,397		4,370
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net	392,119		290,902
Deferred costs	(26,270)		(18,060)
Prepaid expenses and other assets	(35,566)		19,977
Accounts payable	(170)		(22,382)
Accrued expenses and other liabilities	(10,920)		(1,504)
Unearned revenue	(225,579)		(218,707)
Net cash provided by (used in) operating activities	452,428		263,683
Cash flows from investing activities:
Purchases of marketable securities	(765,395)		(553,985)
Maturities of marketable securities	857,408		381,398
Sales of marketable securities	12,457		5,279
Owned real estate projects	(171,423)		(2,487)
Capital expenditures, excluding owned real estate projects	(69,796)		(59,940)
Business combinations, net of cash acquired	(679,220)		—

Purchases of non-marketable equity and other investments	(45,767)		(52,250)
Sales and maturities of non-marketable equity and other investments	25		4,638
Other	(5)		—
Net cash provided by (used in) investing activities	(861,716)		(277,347)
Cash flows from financing activities:



Proceeds from borrowings on Term Loan, net of debt discount and issuance costs	—		497,795


Payments on convertible senior notes	(51)		(1)


	Three Months Ended April 30,
	2021		2020
Supplemental cash flow data:
Cash paid for interest	$	4,638	$	1,438
Cash paid for income taxes	4,493		2,945
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	78,468		39,721


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:
Remainder of 2022	$	58,918
2023	75,823
2024	64,605
2025	51,950
2026	47,172
Thereafter	102,752
Total	$	401,220


	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


Fiscal Period:
Remainder of 2022	$	2,196
2023	2,688
2024	2,380
2025	1,900
2026	1,636
Thereafter	6,203
Total	$	17,003


	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
Derivative assets:
Counterparty A	$	71	$	—	$	71	$	(71)	$	—	$	—
Counterparty B	3,044		—		3,044		(3,044)		—		—
Counterparty C	867		—		867		(867)		—		—
Counterparty D	1,281		—		1,281		(1,281)		—		—
Counterparty E	2		—		2		(2)		—		—
Total	$	5,265	$	—	$	5,265	$	(5,265)	$	—	$	—


	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	$	—	$	8,285	$	(71)	$	—	$	8,214
Counterparty B	22,337		—		22,337		(3,044)		—		19,293
Counterparty C	21,405		—		21,405		(867)		—		20,538
Counterparty D	1,503		—		1,503		(1,281)		—		222
Counterparty E	184		—		184		(2)		—		182
Total	$	53,714	$	—	$	53,714	$	(5,265)	$	—	$	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


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%


Fiscal Period:
Remainder of 2022	$	62,837
2023	79,656
2024	66,961
2025	51,368
2026	25,399
Thereafter	36,507
Total lease payments	322,728
Less imputed interest	(28,054)
Total	$	294,674


	Number of Shares	Weighted-Average Grant Date Fair Value
Balance as of January 31, 2021	13,168	$	154.90
RSUs granted	4,455	260.69
RSUs vested	(2,725)	141.48
RSUs forfeited	(292)	164.50
Balance as of April 30, 2021	14,606	189.48


	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


	April 30, 2021		January 31, 2021
United States	$	1,218,542	$	1,169,820
Ireland	140,998		143,887
Other countries	77,100		72,839
Total	$	1,436,640	$	1,386,546


	Three Months Ended April 30, 2021
	GAAP Operating Expenses		Share-Based Compensation Expenses (1)		Other Operating Expenses (2)		Non-GAAP Operating Expenses (3)
Costs of subscription services	$	182,208	$	(20,717)	$	(14,204)	$	147,287
Costs of professional services	150,845		(27,692)		(6,953)		116,200
Product development	441,616		(129,862)		(19,542)		292,212
Sales and marketing	326,494		(50,308)		(17,106)		259,080
General and administrative	112,183		(36,056)		(4,386)		71,741
Total costs and expenses	$	1,213,346	$	(264,635)	$	(62,191)	$	886,520


	Three Months Ended April 30, 2020
	GAAP Operating Expenses		Share-Based Compensation Expenses (1)		Other Operating Expenses (2)		Non-GAAP Operating Expenses (3)
Costs of subscription services	$	145,263	$	(13,892)	$	(9,643)	$	121,728
Costs of professional services	160,367		(22,566)		(3,101)		134,700
Product development	443,484		(122,022)		(12,150)		309,312
Sales and marketing	318,557		(46,950)		(10,576)		261,031
General and administrative	95,171		(31,242)		(2,781)		61,148
Total costs and expenses	$	1,162,842	$	(236,672)	$	(38,251)	$	887,919


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
			Robynne D. Sisco
			President and Chief Financial Officer (Principal Financial Officer)


ELIGIBILITY			Executive officers for purposes of Section 16 of the Exchange Act of 1934, as amended (“Section 16 Officers”), other Executive Vice Presidents, and other employees designated by the Board of Directors or the Compensation Committee of the Board of Directors of Workday, Inc. (“Workday”) are eligible to participate in the Change in Control Policy (each, a “Participant”). A Participant shall cease to be a Participant under the Policy (i) upon termination of employment with Workday prior to a Change in Control (as defined below), (ii) in the event such Participant is no longer either a Section 16 Officer or an Executive Vice President, or (iii) upon the recommendation of a Co-Chief Executive Officer or the Chief People Officer and confirmation by the Board of Directors or Compensation Committee.
BENEFITS			Under this Change in Control Policy, in the event of a Qualifying Termination in connection with a Change in Control (as each is defined below) and contingent upon the Participant’s execution and non-revocation of a binding separation and release agreement within 60 days following the Qualifying Termination in a form acceptable to Workday, the Participant will be entitled to receive: (i)If the Participant was serving as a Chief Executive Officer or Co-Chief Executive Officer immediately prior to the Change in Control: a.A lump sum cash payment in an amount equal to two times such Participant’s annual base salary as in effect immediately prior to the actions that resulted in the Qualifying Termination or the Change in Control, whichever is greater, less applicable withholding taxes; b.A lump sum cash payment in an amount equal to two times such Participant’s annual target cash bonus for the period immediately prior to the actions that resulted in the Qualifying Termination or the Change in Control, whichever is greater, less applicable withholding taxes; c.Accelerated vesting of 100% of the amount of Participant’s unvested equity awards (excluding Performance Awards (as defined below)) immediately prior to the Qualifying Termination. With respect to awards that would otherwise vest only upon satisfaction of performance criteria (“Performance Awards”), the vesting will accelerate as set forth in the terms of the applicable performance-based award agreement; and d.A lump sum cash payment in an amount equal to an estimate of the aggregate premiums for continuation coverage for twenty-four months pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), less applicable withholding taxes.


			(ii)If the Participant was serving in a role other than Chief Executive Officer or Co-Chief Executive Officer immediately prior to the Change in Control: a.A lump sum cash payment in an amount equal to such Participant’s annual base salary as in effect immediately prior to the actions that resulted in the Qualifying Termination or the Change in Control, whichever is greater, less applicable withholding taxes; b.A lump sum cash payment in an amount equal to such Participant’s annual target cash bonus for the period immediately prior to the actions that resulted in the Qualifying Termination or the Change in Control, whichever is greater, less applicable withholding taxes; c.Accelerated vesting of 100% of the amount of Participant’s unvested equity awards (excluding Performance Awards) immediately prior to the Qualifying Termination. With respect to Performance Awards, the vesting will accelerate as set forth in the terms of the applicable performance-based award agreement; and d.A lump sum cash payment in an amount equal to an estimate of the aggregate premiums for continuation coverage for twelve months pursuant to COBRA, less applicable withholding taxes. The foregoing benefits payable in cash will be provided on Workday’s first customary payroll date following the sixty-first (61st) day following the Qualifying Termination.
DEFINITIONS			A “Change in Control” shall be deemed to have occurred if any one of the following events shall have occurred: (i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) other than Workday’s founders or a trust, foundation or other estate planning vehicle established by one of Workday’s founders, becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities representing fifty percent (50%) or more of the total voting power represented by Workday’s then-outstanding voting securities; (ii)the consummation of the sale or disposition of all or substantially all of Workday’s assets; or (iii)the consummation of a merger or consolidation of Workday with any other corporation, other than a merger or consolidation which would result in Workday’s voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by our voting securities or such surviving entity or its parent outstanding immediately after such merger or consolidation.