Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WORKDAY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm			41
Consolidated Balance Sheets			44
Consolidated Statements of Operations			45
Consolidated Statements of Comprehensive Loss			46
Consolidated Statements of Stockholders’ Equity			47
Consolidated Statements of Cash Flows			49
Notes to Consolidated Financial Statements			51

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Workday, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Workday, Inc. (the Company) as of January 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 3, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

			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 can be challenging. For example, there may be nonstandard terms and conditions that require judgment to determine the distinct performance obligations and relative standalone selling prices are 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.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.

San Jose, California

March 3, 2020

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Workday, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Workday, Inc.’s internal control over financial reporting as of January 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Workday, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2020, and the related notes and our report dated March 3, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

March 3, 2020

WORKDAY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value data)

			January 31,
			2020						2019
Assets
Current assets:
Cash and cash equivalents			$	731,141					$	638,554
Marketable securities			1,213,432						1,139,864
Trade and other receivables, net of allowance for doubtful accounts of $6,762 and $5,965, respectively			877,578						704,680
Deferred costs			100,459						80,809
Prepaid expenses and other current assets			172,012						136,689
Total current assets			3,094,622						2,700,596
Property and equipment, net			936,179						796,907
Operating lease right-of-use assets			290,902						—
Deferred costs, noncurrent			222,395						183,518
Acquisition-related intangible assets, net			308,401						313,240
Goodwill			1,819,261						1,379,125
Other assets			144,605						147,360
Total assets			$	6,816,365					$	5,520,746
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	57,556					$	29,093
Accrued expenses and other current liabilities			130,050						123,542
Accrued compensation			248,154						207,924
Unearned revenue			2,223,178						1,837,618
Operating lease liabilities			66,147						—
Current portion of convertible senior notes, net			244,319						232,514
Total current liabilities			2,969,404						2,430,691
Convertible senior notes, net			1,017,967						972,264
Unearned revenue, noncurrent			86,025						111,652
Operating lease liabilities, noncurrent			241,425						—
Other liabilities			14,993						47,697
Total liabilities			4,329,814						3,562,304
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10 million shares authorized as of January 31, 2020, and 2019; no shares issued and outstanding as of January 31, 2020, and 2019			—						—
Class A common stock, $0.001 par value; 750 million shares authorized as of January 31, 2020, and 2019; 170 million and 157 million shares issued and outstanding as of January 31, 2020, and 2019, respectively			170						157
Class B common stock, $0.001 par value; 240 million shares authorized as of January 31, 2020, and 2019; 62 million and 65 million shares issued and outstanding as of January 31, 2020, and 2019, respectively			61						64
Additional paid-in capital			5,090,187						4,105,334
Accumulated other comprehensive income (loss)			23,492						(809)
Accumulated deficit			(2,627,359)						(2,146,304)
Total stockholders’ equity			2,486,551						1,958,442
Total liabilities and stockholders’ equity			$	6,816,365					$	5,520,746

See Notes to Consolidated Financial Statements

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

			Year Ended January 31,
			2020						2019						2018
Revenues:
Subscription services			$	3,096,389					$	2,385,769					$	1,787,833
Professional services			530,817						436,411						355,217
Total revenues			3,627,206						2,822,180						2,143,050
Costs and expenses (1):
Costs of subscription services			488,513						379,877						273,461
Costs of professional services			576,745						455,073						355,952
Product development			1,549,906						1,211,832						910,584
Sales and marketing			1,146,548						891,345						683,367
General and administrative			367,724						347,337						222,909
Total costs and expenses			4,129,436						3,285,464						2,446,273
Operating loss			(502,230)						(463,284)						(303,223)
Other income (expense), net			19,783						39,532						(11,563)
Loss before provision for (benefit from) income taxes			(482,447)						(423,752)						(314,786)
Provision for (benefit from) income taxes			(1,773)						(5,494)						6,436
Net loss			$	(480,674)					$	(418,258)					$	(321,222)
Net loss attributable to Class A and Class B common stockholders			$	(480,674)					$	(418,258)					$	(321,222)
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted			$	(2.12)					$	(1.93)					$	(1.55)
Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders			227,185						216,789						207,774

(1)Costs and expenses include share-based compensation expenses as follows:

			Year Ended January 31,
			2020						2019						2018
Costs of subscription services			$	49,919					$	36,754					$	26,280
Costs of professional services			80,401						55,535						37,592
Product development			434,188						320,876						229,819
Sales and marketing			176,758						132,810						100,762
General and administrative			118,614						127,443						83,972

See Notes to Consolidated Financial Statements

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

			Year Ended January 31,
			2020						2019						2018
Net loss			$	(480,674)					$	(418,258)					$	(321,222)
Other comprehensive income (loss), net of tax:
Net change in foreign currency translation adjustment			(575)						(1,635)						1,581
Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision of $839, $660, and $0, respectively			2,392						2,534						(2,687)
Net change in market value of effective foreign currency forward exchange contracts, net of tax provision of $3,216, $6,386, and $0, respectively			22,484						44,705						(47,378)
Other comprehensive income (loss), net of tax:			24,301						45,604						(48,484)
Comprehensive loss			$	(456,373)					$	(372,654)					$	(369,706)

See Notes to Consolidated Financial Statements

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

			Year Ended January 31,
			2020						2019						2018
Common stock:
Balance, beginning of period			$	221					$	211					$	202
Issuance of common stock under employee equity plans			3						2						3
Vested restricted stock units			7						6						6
Settlement of convertible senior notes			—						2						—
Balance, end of period			231						221						211
Additional paid-in capital:
Balance, beginning of period			4,105,334						3,354,423						2,681,200
Issuance of common stock under employee equity plans			125,670						37,752						69,052
Vesting of early exercised stock options			—						—						775
Vested restricted stock units			(7)						(6)						(6)
Share-based compensation			858,809						652,404						478,425
Purchase of convertible senior notes hedges			—						—						(175,530)
Issuance of warrants			—						—						80,805
Equity component of convertible senior notes			—						—						219,702
Equity awards assumed in business combination			—						4,350						—
Exercise of convertible senior notes hedges			—						193,680						—
Settlement of convertible senior notes			—						(24)						—
Settlement of warrants			—						(137,245)						—
Cumulative-effect adjustment to Accumulated deficit related to the adoption of ASU No. 2018-07			381						—						—
Balance, end of period			5,090,187						4,105,334						3,354,423
Treasury stock:
Balance, beginning of period			—						—						—
Issuance of common stock under employee equity plans			—						55,813						—
Exercise of convertible senior notes hedges			—						(193,679)						—
Settlement of convertible senior notes			—						17						—
Settlement of warrants			—						137,849						—
Balance, end of period			—						—						—
Accumulated other comprehensive income (loss):
Balance, beginning of period			(809)						(46,413)						2,071
Other comprehensive income (loss)			24,301						45,604						(48,484)
Balance, end of period			23,492						(809)						(46,413)
Accumulated deficit:
Balance, beginning of period			(2,146,304)						(1,727,856)						(1,406,865)
Net loss			(480,674)						(418,258)						(321,222)
Settlement of warrants			—						(617)						—
Cumulative-effect adjustment to Accumulated deficit related to the adoption of ASU No. 2018-07			(381)						—						—
Cumulative-effect adjustment to Accumulated deficit related to the adoption of ASU No. 2016-16			—						427						—
Cumulative-effect adjustment to Accumulated deficit related to the adoption of ASU No. 2016-09			—						—						231
Balance, end of period			(2,627,359)						(2,146,304)						(1,727,856)
Total stockholders' equity			$	2,486,551					$	1,958,442					$	1,580,365

See Notes to Consolidated Financial Statements

			Year Ended January 31,
			2020						2019						2018
Common stock (in shares):
Balance, beginning of period			222,052,063						211,977,495						202,943,405
Issuance of common stock under employee equity plans			3,073,454						2,317,463						3,318,514
Vested restricted stock units			6,582,657						6,273,733						5,715,576
Settlement of warrants			—						25,990						—
Settlement of convertible senior notes			217						1,457,382						—
Balance, end of period			231,708,391						222,052,063						211,977,495

See Notes to Consolidated Financial Statements

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			Year Ended January 31,
			2020						2019						2018
Cash flows from operating activities
Net loss			$	(480,674)					$	(418,258)					$	(321,222)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			276,278						198,111						135,723
Share-based compensation expenses			859,571						652,465						478,425
Amortization of deferred costs			90,641						71,238						57,562
Amortization of debt discount and issuance costs			54,034						59,974						43,916
Non-cash lease expense			67,325						—						—
Other			(35,063)						(53,195)						(8,379)
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net			(176,141)						(160,527)						(114,613)
Deferred costs			(149,168)						(131,996)						(92,552)
Prepaid expenses and other assets			(17,736)						(16,344)						(68,983)
Accounts payable			20,293						5,877						(7,249)
Accrued expenses and other liabilities			220						54,895						47,515
Unearned revenue			355,018						344,418						315,584
Net cash provided by (used in) operating activities			864,598						606,658						465,727
Cash flows from investing activities
Purchases of marketable securities			(1,797,468)						(1,989,868)						(2,515,997)
Maturities of marketable securities			1,686,643						2,090,693						1,591,554
Sales of marketable securities			56,508						949,970						243,727
Owned real estate projects			(99,308)						(181,180)						(124,811)
Capital expenditures, excluding owned real estate projects			(243,694)						(202,507)						(141,536)
Business combinations, net of cash acquired			(473,603)						(1,474,337)						(5,744)
Purchase of other intangible assets			(850)						(10,450)						(11,000)
Purchases of non-marketable equity and other investments			(25,393)						(43,016)						(16,199)
Sales and maturities of non-marketable equity and other investments			252						17,911						1,026
Other			(9)						—						—
Net cash provided by (used in) investing activities			(896,922)						(842,784)						(978,980)
Cash flows from financing activities
Proceeds from borrowings on convertible senior notes, net of issuance costs			—						—						1,132,101
Proceeds from issuance of warrants			—						—						80,805
Purchase of convertible senior notes hedges			—						—						(175,530)
Payments on convertible senior notes			(30)						(350,030)						—
Proceeds from issuance of common stock from employee equity plans			125,673						93,567						69,056
Other			(519)						(248)						(170)
Net cash provided by (used in) financing activities			125,124						(256,711)						1,106,262
Effect of exchange rate changes			(282)						(614)						751
Net increase (decrease) in cash, cash equivalents, and restricted cash			92,518						(493,451)						593,760
Cash, cash equivalents, and restricted cash at the beginning of period			642,203						1,135,654						541,894
Cash, cash equivalents, and restricted cash at the end of period			$	734,721					$	642,203					$	1,135,654

See Notes to Consolidated Financial Statements

			Year Ended January 31,
			2020						2019						2018
Supplemental cash flow data
Cash paid for interest, net of amounts capitalized			$	3,306					$	38					$	76
Cash paid for income taxes			9,010						6,007						3,418
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid			46,027						56,308						51,545

			As of January 31,
			2020						2019						2018
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows
Cash and cash equivalents			$	731,141					$	638,554					$	1,134,355
Restricted cash included in Prepaid expenses and other current assets			3,459						3,519						—
Restricted cash included in Other assets			121						130						1,299
Total cash, cash equivalents, and restricted cash			$	734,721					$	642,203					$	1,135,654

See Notes to Consolidated Financial Statements

Workday, Inc.

Notes to Consolidated Financial Statements

Note 1. Overview and Basis of Presentation

Company and Background

Workday delivers financial 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 provide our customers highly adaptable, accessible, and reliable applications to manage critical business functions that help enable them to optimize their financial and human capital resources. 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.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2020, for example, refer to the fiscal year ended January 31, 2020.

Basis of Presentation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the results of Workday, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Certain prior period amounts reported in our consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. These estimates and judgments include, but are not limited to the fair value of assets acquired and liabilities assumed through business combinations, the determination of the period of benefit for deferred commissions, certain assumptions used in the valuation of equity awards, and assumptions used in the valuation of non-marketable equity investments. Actual results could differ from those estimates and such differences could be material to our consolidated financial position and results of operations.

Segment Information

We operate in one operating segment, cloud applications. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker, who is our chief executive officer, in deciding how to allocate resources and assessing performance. Our chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level.

Note 2. Accounting Standards and Significant Accounting Policies

Summary of Significant Accounting Policies

Revenue Recognition

We derive our revenues primarily from subscription services and professional services. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for these services.

We determine revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, we satisfy a performance obligation

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to one or more of our cloud applications for finance, human resources, planning, and analytics, with routine customer support. Revenue is generally recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our subscription contracts are generally three years or longer in length, billed annually in advance, and are non-cancelable.

Professional Services Revenues

Professional services revenues primarily consist of consulting fees for deployment and optimization services, as well as training. Our consulting contracts are billed on a time and materials basis or a fixed price basis. For contracts billed on a time and materials basis, revenue is recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenue is recognized over time based on the proportion of the professional services performed.

Contracts with Multiple Performance Obligations

Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the cloud applications sold, customer demographics, geographic locations, and the number and types of users within our contracts.

Fair Value Measurement

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. 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.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase. Our cash equivalents primarily consist of investments in U.S. treasury securities, U.S. agency obligations, corporate bonds, commercial paper, and money market funds.

Debt Securities

Our debt securities primarily consist of investments in U.S. treasury securities, U.S. agency obligations, corporate bonds, and commercial paper. 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 in the accompanying consolidated balance sheets.

All debt securities are recorded at their estimated fair value. Unrealized gains and losses on available-for-sale debt securities are recorded in Accumulated other comprehensive income (loss) (“AOCI”). We evaluate our investments to assess whether those in unrealized loss positions are other-than-temporarily impaired. We consider impairments to be other-than-temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other-than-temporary are determined based on the specific identification method and are reported in Other income (expense), net on the consolidated statements of operations.

If quoted prices for identical instruments are available in an active market, debt securities are classified within Level 1 of the fair value hierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instruments and are classified within Level 2 of the fair value hierarchy. To date, all of our debt securities can be valued using one of these two methodologies.

Equity Investments

We hold marketable and non-marketable equity investments, over which we do not have a controlling interest or significant influence. Marketable equity investments are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the consolidated statements of operations. Non-marketable equity investments have no readily determinable fair values and are measured using the measurement alternative, which is defined as cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. Adjustments are recorded in Other income (expense), net on the consolidated statements of operations.

Non-marketable equity investments are valued using significant unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of market prices and inherent lack of liquidity. The carrying value for these investments is not adjusted if there are no observable transactions for identical or similar investments of the same issuer or if there are no identified events or changes in circumstances that may indicate impairment. Valuations of non-marketable equity investments are inherently complex due to the lack of readily available market data. In addition, the determination of whether an orderly transaction is for an identical or similar investment requires significant management judgment, including understanding the differences in the rights and obligations of the investments and the extent to which those differences would affect the fair values of those investments.

We assess our non-marketable equity investments quarterly for impairment. Our impairment analysis encompasses an assessment of the severity and duration of the impairment and a qualitative and quantitative analysis of other key factors including the investee’s financial metrics, market acceptance of the investee’s product or technology, other competitive products or technology in the market, general market conditions, and the rate at which the investee is using its cash. If our investment is considered to be impaired, we will record an impairment in Other income (expense), net on the consolidated statements of operations and establish a new carrying value for the investment.

Trade and Other Receivables

Trade and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for doubtful accounts, which is not material. Other receivables represent unbilled receivables related to subscription and professional services contracts.

Deferred Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be five years. We determined the period of benefit by taking into consideration our customer contracts, our technology, and other factors. Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related contractual renewal period. Amortization expense is included in Sales and marketing expenses on the consolidated statements of operations.

Derivative Financial Instruments and Hedging Activities

We use derivative financial instruments to manage foreign currency risks. Derivative instruments are carried at fair value and recorded as either an asset or liability on the consolidated balance sheets. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. For derivative instruments designated as cash flow hedges, which we use to hedge certain customer contracts denominated in foreign currencies, the gains or losses are recorded in AOCI and subsequently reclassified to income in the same period that the underlying revenues are earned. For derivative instruments not designated as hedging instruments, which we use to hedge a portion of our net outstanding monetary assets and liabilities, the gains or losses are recorded in Other income (expense), net on the consolidated statement of operations in the period of change. We use nonderivative financial instruments designated as net investment hedges to hedge our net investment in certain foreign subsidiaries. The gains or losses, which are not material, are recorded in the currency translation adjustment component of AOCI, and are reclassified to income in the period in which the hedged subsidiary is either sold or substantially liquidated.

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.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are depreciated over the shorter of the related lease term or ten years. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Business Combinations

We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed as of the acquisition date. Our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

Goodwill and Acquisition-Related Intangible Assets

Acquisition-related intangible assets with finite lives are amortized over their estimated useful lives. Goodwill amounts are not amortized. Acquisition-related intangible assets and goodwill are tested for impairment at least annually, and more frequently upon the occurrence of certain events.

Unearned Revenue

Unearned revenue primarily consists of customer billings in advance of revenues being recognized from our subscription contracts. We generally invoice our customers annually in advance for our subscription services. Our typical payment terms provide that customers pay a portion of the total arrangement fee within 30 days of the contract date. Unearned revenue that is anticipated to be recognized during the succeeding twelve-month period is recorded as current unearned revenue and the remaining portion is recorded as noncurrent.

Convertible Senior Notes

In June 2013, we issued 0.75% convertible senior notes due July 15, 2018, (“2018 Notes”) with a principal amount of $350 million, which were subsequently converted by note holders during the second quarter of fiscal 2019. Concurrently in June 2013, we issued 1.50% convertible senior notes due July 15, 2020 (“2020 Notes”) with a principal amount of $250 million. In September 2017, we issued 0.25% convertible senior notes due October 1, 2022, (“2022 Notes”) with a principal amount of $1.15 billion (together with the 2018 Notes and 2020 Notes, referred to as the “Notes”). In accounting for the issuance of the Notes, we separated each of the Notes into liability and equity components. The carrying amounts of the liability components were calculated by measuring the fair value of similar liabilities that do not have associated convertible features. The carrying amount of the equity components representing the conversion option were determined by deducting the fair value of the liability components from the par value of the respective Notes. These differences represent debt discounts that are amortized to interest expense over the respective terms of the Notes using the effective interest rate method. The equity components are not remeasured as long as they continue to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, we allocated the total amount of issuance costs incurred to the liability and equity components based on their relative values. Issuance costs attributable to the liability components are being amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the respective terms of the Notes. The issuance costs attributable to the equity components were netted against the respective equity components in Additional paid-in capital.

Leases

We have entered into operating lease agreements for our office space, data centers, and other property and equipment. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Right-of-use assets also include adjustments related to prepaid or deferred lease payments and lease incentives. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate as of the first day of each fiscal quarter for the leases commenced in the respective quarter to determine the present value of lease payments.

We recognize variable lease costs in our consolidated statement of operations in the period incurred. Variable lease costs include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor.

Options to extend or terminate a lease are included in the lease term when it is reasonably certain that we will exercise such options. The remaining lease term of our leases generally ranges from less than one year to ten years.

Advertising Expenses

Advertising is expensed as incurred. Advertising expense was $61 million, $51 million, and $43 million for fiscal 2020, 2019, and 2018, respectively.

Share-Based Compensation

We measure and recognize compensation expense for share-based awards issued to employees and non-employees, including restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), stock options, and purchases under the 2012 Employee Stock Purchase Plan (“ESPP”), on our consolidated statements of operations.

For RSUs and PRSUs, fair value is based on the closing price of our common stock on the grant date. Compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period. The requisite service period of the awards is generally the same as the vesting period.

For stock options assumed, fair value is estimated using the Black-Scholes option-pricing model. Compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period. We determine the assumptions for the option-pricing model as follows:

• Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date closest to the grant date for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock option grants.

• Expected Term. The expected term represents the period that our share-based award is expected to be outstanding. The expected term for stock options was determined based on the vesting terms, exercise terms, and contractual lives.

• Volatility. The volatility is based on a blend of historical volatility and implied volatility of our common stock. Implied volatility is based on market traded options of our common stock.

• Dividend Yield. The dividend yield is assumed to be zero as we have not paid and do not expect to pay dividends.

For shares issued under the ESPP, fair value is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight-line basis over the offering period. We determine the assumptions for the option-pricing model as follows:

• Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date closest to the grant date for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the ESPP purchase rights.

• Expected Term. The expected term represents the period that our ESPP is expected to be outstanding. The expected term for the ESPP approximates the offering period.

• Volatility. The volatility is based on a blend of historical volatility and implied volatility of our common stock. Implied volatility is based on market traded options of our common stock.

• Dividend Yield. The dividend yield is assumed to be zero as we have not paid and do not expect to pay dividends.

Income Taxes

We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. The provision for income taxes includes the effects of any accruals that we believe are appropriate, as well as the related net interest and penalties.

Warranties and Indemnification

Our cloud applications are generally warranted to perform materially in accordance with our online documentation under normal use and circumstances. Additionally, our contracts generally include provisions for indemnifying customers against liabilities if use of our cloud applications infringe a third party’s intellectual property rights. We may also incur liabilities if we breach the security, privacy and/or confidentiality obligations in our contracts. To date, we have not incurred any material costs, and we have not accrued any liabilities in the accompanying consolidated financial statements, as a result of these obligations.

In our standard agreements with customers, we commit to defined levels of service availability and performance and, under certain circumstances, permit customers to receive credits in the event that we fail to meet those levels. In the event our failure to meet those levels triggers a termination right for a customer, we permit a terminating customer to receive a refund of prepaid amounts related to unused subscription services. To date, we have not experienced any significant failures to meet defined levels of availability and performance of those obligations and, as a result, we have not accrued any liabilities related to these agreements on the consolidated financial statements.

Foreign Currency Exchange

The functional currency for certain of our foreign subsidiaries is the U.S. dollar, while others use local currencies. We translate the foreign functional currency financial statements to U.S. dollars for those entities that do not have U.S. dollars as their functional currency using the exchange rates at the balance sheet date for assets and liabilities, the period average exchange rates for revenues and expenses, and the historical exchange rates for equity transactions. The effects of foreign currency translation adjustments are recorded in other comprehensive income (“OCI”) as a component of stockholders’ equity and related periodic movements are summarized as a line item in our consolidated statements of comprehensive loss. Foreign currency transaction gains and losses are included in Other income (expense), net on the consolidated statements of operations.

Concentrations of Risk and Significant Customers

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 January 31, 2020, or 2019. No customer individually accounted for more than 10% of total revenues for any of the periods on the consolidated financial statements.

In order to reduce the risk of down-time of our cloud applications, we have established data centers in various geographic regions. We have internal procedures to restore services in the event of disaster at one of our current data center facilities. We serve our customers and users from data center facilities operated by third parties, located in the United States, Europe, and Canada. 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 and Dimension Data, to serve customers and operate certain aspects of our services, such as environments for development testing, training, sales demonstrations, and production usage. Given this, any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.

Other than the United States, no country individually accounted for more than 10% of total revenues for any of the periods on the consolidated financial statements.

Recently Adopted Accounting Pronouncements

ASU No. 2016-02

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires the recognition of right-of-use assets and lease liabilities on the balance sheet for those leases currently classified as operating leases under Accounting Standards Codification Topic 840 Leases. Accounting for finance leases remains substantially unchanged.

We adopted this standard effective February 1, 2019, using a modified retrospective method, under which financial results reported in periods prior to February 1, 2019, were not adjusted. We elected the package of transition practical expedients, which among other things, does not require reassessment of lease classifications. Additionally, we elected to combine lease and non-lease components for each of our existing underlying asset classes and to not include leases with a term of 12 months or less on our consolidated balance sheets.

The most significant impact of adopting this standard was the recognition of $279 million of operating lease right-of-use assets and $307 million of operating lease liabilities on our consolidated balance sheet as of February 1, 2019. Additionally, we reclassified $28 million in previously recognized deferred rent obligations and lease incentives to operating lease right-of-use assets. This adoption did not result in any cumulative-effect adjustments to Accumulated deficit, and there was no material impact on our consolidated statement of operations. For further information, see Note 12, Leases.

ASU No. 2017-12

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. We adopted this new standard effective February 1, 2019. As a result of adopting the standard, the entire change in the fair value of our foreign currency forward contracts designated as cash flow hedges will be presented in the same income statement line item as the respective hedged items. This adoption did not result in any cumulative-effect adjustments to Accumulated deficit, and the amended presentation guidance was applied prospectively. For further information, see Note 10, Derivative Instruments.

ASU No. 2018-02

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the 2017 Tax Cuts and Jobs Act to retained earnings. We adopted this new standard effective February 1, 2019. The adoption of this new standard did not have a material impact on our consolidated financial statements.

ASU No. 2018-07

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees, with certain exceptions. We adopted this standard effective February 1, 2019, and remeasured all outstanding equity-classified non-employee share-based payment awards at fair value as of the adoption date, which resulted in a $0.4 million cumulative-effect adjustment to Accumulated deficit.

Recently Issued Accounting Pronouncements

ASU No. 2016-13

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU No. 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes may result in more timely recognition of credit losses. We plan to adopt this new standard in the first quarter of our fiscal 2021. The impact on our consolidated financial statements from the adoption of this standard is expected to be immaterial.

ASU No. 2018-15

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. We plan to adopt this standard in the first quarter of our fiscal 2021, on a prospective basis. The impact of our adoption of this standard on our consolidated financial statements will largely depend on the magnitude of implementation costs incurred in our cloud computing arrangements beginning February 1, 2020. Implementation costs capitalized subsequent to adoption will be recognized in operating expenses in our consolidated financial statements over the related contract life.

ASU No. 2019-12

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies accounting guidance for certain tax matters including franchise taxes, certain transactions that result in a step-up in tax basis of goodwill, and enacted changes in tax laws in interim periods. In addition, it eliminates a company’s need to evaluate certain exceptions relating to the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The standard is applicable to our consolidated financial statements in interim and annual periods beginning February 1, 2021. Early adoption is permitted. We plan to adopt this guidance in the first quarter of our fiscal 2021. We are currently evaluating the accounting, transition, and disclosure requirements of this standard.

Note 3. Investments

Debt Securities

As of January 31, 2020, debt securities consisted of the following (in thousands):

			Amortized Cost						Unrealized Gains						Unrealized Losses						Aggregate Fair Value
U.S. treasury securities			$	312,183					$	492					$	(5)					$	312,670
U.S. agency obligations			169,613						99						(44)						169,668
Corporate bonds			504,434						2,476						—						506,910
Commercial paper			364,701						—						—						364,701
			$	1,350,931					$	3,067					$	(49)					$	1,353,949
Included in cash and cash equivalents			$	140,517					$	—					$	—					$	140,517
Included in marketable securities			$	1,210,414					$	3,067					$	(49)					$	1,213,432

As of January 31, 2019, debt securities consisted of the following (in thousands):

			Amortized Cost						Unrealized Gains						Unrealized Losses						Aggregate Fair Value
U.S. treasury securities			$	396,347					$	61					$	(178)					$	396,230
U.S. agency obligations			241,914						73						(151)						241,836
Corporate bonds			419,784						336						(352)						419,768
Commercial paper			254,175						—						(2)						254,173
			$	1,312,220					$	470					$	(683)					$	1,312,007
Included in cash and cash equivalents			$	216,270					$	—					$	—					$	216,270
Included in marketable securities			$	1,095,950					$	470					$	(683)					$	1,095,737

We do not believe the unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence as of January 31, 2020, which includes an assessment of whether it is more likely than not we will be required to sell the investment before recovery of the investment’s amortized cost basis. The unrealized losses on debt securities that have been in a net loss position for 12 months or more were not material as of January 31, 2020. Debt securities included in Marketable securities on the consolidated balance sheets consist of securities with original maturities at the time of purchase greater than three months, and the remainder of the securities is included in Cash and cash equivalents.

We sold $6 million, $950 million, and $244 million of our debt securities during fiscal 2020, 2019, and 2018, respectively. The realized gains and losses from the sales were immaterial.

Equity Investments

Equity investments consisted of the following (in thousands):

									January 31,
			Consolidated Balance Sheets Location						2020						2019
Money market funds (1)			Cash and cash equivalents						$	386,909					$	237,071
Marketable equity investments (1)			Marketable securities						—						44,127
Non-marketable equity investments (2)			Other assets						59,026						36,925
									$	445,935					$	318,123

(1)Investments with readily determinable fair values.

(2)Investments in privately held companies without readily determinable fair values.

We sold $51 million of marketable equity investments during fiscal 2020, with a corresponding gain recognized of $7 million. There were no sales of marketable equity investments during fiscal 2019 and 2018, respectively.

During fiscal 2020, there were $6 million in upward adjustments to the carrying values of non-marketable equity investments and an immaterial amount of downward adjustments. No material adjustments were made to the carrying values during fiscal 2019. In addition, we also recognized a $20 million non-cash gain on the sale of a non-marketable equity investment as part of the Scout acquisition. See Note 7, Business Combinations for further details on the Scout acquisition.

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

			Year Ended January 31,
			2020						2019						2018
Net realized gains (losses) recognized on equity investments sold			$	26,837					$	8,333					$	720
Net unrealized gains (losses) recognized on equity investments held			6,057						32,127						(692)
Total net gains (losses) recognized in other income (expense), net			$	32,894					$	40,460					$	28

In February 2020, we purchased an ownership interest in a limited partnership for $50 million. This investment will be accounted for as an equity method investment.

Note 4. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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, 2020 (in thousands):

						Level 1						Level 2						Level 3						Total
U.S. treasury securities						$	312,670					$	—					$	—					$	312,670
U.S. agency obligations						—						169,668						—						169,668
Corporate bonds						—						506,910						—						506,910
Commercial paper						—						364,701						—						364,701
Money market funds						386,909						—						—						386,909
Foreign currency derivative assets						—						33,274						—						33,274
Total assets						$	699,579					$	1,074,553					$	—					$	1,774,132
Foreign currency derivative liabilities						$	—					$	3,996					$	—					$	3,996
Total liabilities						$	—					$	3,996					$	—					$	3,996

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, 2019 (in thousands):

						Level 1						Level 2						Level 3						Total
U.S. treasury securities						$	396,230					$	—					$	—					$	396,230
U.S. agency obligations						—						241,836						—						241,836
Corporate bonds						—						419,768						—						419,768
Commercial paper						—						254,173						—						254,173
Money market funds						237,071						—						—						237,071
Marketable equity investments						44,127						—						—						44,127
Foreign currency derivative assets						—						22,570						—						22,570
Total assets						$	677,428					$	938,347					$	—					$	1,615,775
Foreign currency derivative liabilities						$	—					$	3,135					$	—					$	3,135
Total liabilities						$	—					$	3,135					$	—					$	3,135

Fair Value Measurements of Other Financial Instruments

The following table presents the carrying amounts and estimated fair values of our financial instruments that are not recorded at fair value on the consolidated balance sheets (in thousands):

			January 31, 2020																		January 31, 2019
			Net Carrying Amount						Estimated Fair Value						Net Carrying Amount						Estimated Fair Value
1.50% Convertible senior notes			$	244,319					$	571,057					$	232,514					$	557,074
0.25% Convertible senior notes			1,017,967						1,587,978						972,264						1,560,228

The carrying amounts of the Notes represent the liability components of the principal balances as of January 31, 2020, and 2019. The estimated fair values of the Notes, which we have classified as Level 2 financial instruments, were determined based on the quoted bid prices of the Notes in an over-the-counter market on the last trading day of fiscal 2020 and 2019. The if-converted values of the 2020 and 2022 Notes exceeded the principal amounts by $315 million and $293 million, respectively. The if-converted values were determined based on the closing price of our common stock of $184.63 on January 31, 2020. For further information, see Note 11, Convertible Senior Notes, Net.

Note 5. Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $323 million and $264 million as of January 31, 2020, and 2019, respectively. Amortization expense for the deferred costs was $91 million, $71 million, and $58 million for fiscal 2020, 2019, and 2018, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

Note 6. Property and Equipment, Net

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

			January 31,
			2020						2019
Land and land improvements			$	38,737					$	22,694
Buildings			489,028						433,863
Computers, equipment, and software			723,482						539,090
Furniture and fixtures			51,917						38,840
Leasehold improvements			189,668						162,657
Property and equipment, gross (1)			1,492,832						1,197,144
Less accumulated depreciation and amortization			(556,653)						(400,237)
Property and equipment, net			$	936,179					$	796,907

(1)Property and equipment, gross included construction-in-progress for owned real estate projects of $3 million, and $355 million that had not yet been placed in service as of January 31, 2020, and 2019, respectively. The decrease in construction-in-progress for owned real estate projects was due to the completion of our development center in the second quarter of fiscal 2020.

Depreciation expense totaled $201 million, $147 million, and $115 million for fiscal 2020, 2019, and 2018, respectively. Interest costs capitalized to property and equipment totaled $6 million, $11 million, and $8 million for fiscal 2020, 2019, and 2018, respectively.

Note 7. Business Combinations

Fiscal 2020

Scout Acquisition

On December 9, 2019, we acquired all outstanding stock of Scout RFP (“Scout”), a cloud-based platform for strategic sourcing and supplier engagement, for total purchase consideration of $513 million, attributable to cash consideration of $485 million and the fair value of a previously held equity interest of $28 million. We believe the acquisition of Scout will accelerate our ability to deliver a comprehensive source-to-pay solution to our customers.

The purchase consideration was preliminarily allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received. The primary areas that are subject to change include income taxes payable and deferred taxes. The measurement period will end no later than one year from the acquisition date. The preliminary purchase consideration allocation was as follows (in thousands):

Acquisition-related intangible assets						$	63,400
Other assets acquired						37,087
Liabilities assumed						(16,907)
Total purchase consideration, inclusive of previously held equity interest						513,492
Estimated goodwill						$	429,912

The fair values and estimated useful lives of the acquired intangible assets by category are as follows (in thousands, except years):

			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

The goodwill recognized was primarily attributable to the assembled workforce and the expected synergies from integrating Scout's technology into our product portfolio. The goodwill is not deductible for U.S. federal income tax purposes.

We have included the financial results of Scout in our consolidated financial statements from the date of acquisition. Separate operating results and pro forma results of operations for Scout have not been presented as the effect of this acquisition was not material to our financial results.

Other Acquisitions

In the second quarter of fiscal 2020, acquisition activity resulted in an increase of $4 million and $9 million in acquired developed technology and goodwill, respectively.

Fiscal 2019

Adaptive Insights Acquisition

On August 1, 2018, we acquired all outstanding stock of Adaptive Insights for $1.5 billion. The acquisition of Adaptive Insights, a cloud-based provider of business planning software, strengthens our product portfolio and helps enable our customers to better plan, execute, and analyze in one system.

The purchase consideration transferred consisted of the following (in thousands):

						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

(1)The assumed awards were primarily options, which were valued based upon the Black-Scholes option-pricing model.

The purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill as shown below.

The purchase consideration allocation, which includes measurement period adjustments, was as follows (in thousands):

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

(1)The cost build-up method was used to determine the fair value of unearned revenue.

The goodwill recognized was primarily attributable to the value of the acquired workforce, the opportunity to expand our customer base, and the ability to add breadth and depth to our product portfolio by accelerating our financial planning roadmap. The goodwill is not deductible for U.S. federal income tax purposes.

The fair values and estimated useful lives of the acquired intangible assets by category are as follows (in thousands, except years):

			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

The fair values of the trade name and developed technology were determined utilizing the relief-from-royalty method, and the multi-period excess earnings method was utilized to fair value customer relationships and backlog. The valuation model inputs required the application of considerable judgment by management. The acquired finite-lived intangible assets have a total weighted-average amortization period of eight years. The weighted-average amortization period of customer relationships is ten years.

We have included the financial results of Adaptive Insights in our consolidated financial statements from the date of acquisition. One-time acquisition related transaction costs of $25 million were expensed as incurred during fiscal 2019, and were recorded in general and administrative expense on our consolidated statements of operations.

The pro forma financial information shown below summarizes the combined results of operations for Workday and Adaptive Insights as if the closing of the acquisition had occurred on February 1, 2017, the first day of our fiscal year 2018. The pro forma financial information includes adjustments that are directly attributable to the business combination and are factually supportable. The adjustments primarily reflect the amortization of acquired intangible assets, share-based compensation expense for replacement awards, as well as the pro forma tax impact for such adjustments. The pro forma financial information reflects $67 million of nonrecurring expenses related to acquisition costs and certain compensation expenses.

			Year Ended January 31,
			2019						2018
			(in thousands, except per share data)
Total revenues			$	2,886,057					$	2,228,917
Net loss			(425,604)						(529,404)
Net loss per share, basic and diluted			(1.96)						(2.55)

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been realized if the acquisition had taken place on February 1, 2017.

Other Acquisitions

In the second quarter of fiscal 2019, we completed two acquisitions resulting in an increase of $12 million and $16 million in developed technology and goodwill, respectively.

Note 8. Acquisition-Related Intangible Assets, Net

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

			January 31,
			2020						2019
Developed technology			$	218,400					$	186,800
Customer relationships			224,000						189,000
Trade name			12,400						12,000
Backlog			11,000						11,000
Acquisition-related intangible assets, gross			465,800						398,800
Less accumulated amortization			(157,399)						(85,560)
Acquisition-related intangible assets, net			$	308,401					$	313,240

Amortization expense related to acquisition-related intangible assets was $72 million, $49 million, and $19 million for fiscal 2020, 2019, and 2018, respectively.

As of January 31, 2020, our future estimated amortization expense related to acquisition-related intangible assets is as follows (in thousands):

Fiscal Period:
2021			$	59,775
2022			52,833
2023			50,109
2024			38,933
2025			27,500
Thereafter			79,251
Total			$	308,401

Note 9. Other Assets

Other assets consisted of the following (in thousands):

			January 31,
			2020						2019
Non-marketable equity and other investments			$	75,004					$	50,546
Technology patents and other intangible assets, net			17,898						20,335
Derivative assets			9,529						10,035
Deposits			6,335						4,383
Prepayments for third-party hosted infrastructure platforms			4,797						16,976
Net deferred tax assets			6,912						4,544
Other			24,130						40,541
Total			$	144,605					$	147,360

Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis. As of January 31, 2020, the future estimated amortization expense is as follows (in thousands):

Fiscal Period:
2021			$	3,053
2022			2,620
2023			2,348
2024			2,040
2025			1,569
Thereafter			6,268
Total			$	17,898

Note 10. Derivative Instruments

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

Foreign Currency Forward Contracts Designated as Cash Flow Hedges

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. 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 flow hedges are recorded on the 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 AOCI on the consolidated balance sheets and will be subsequently reclassified to the related revenue line item on the consolidated statements of operations in the same period that the underlying revenues are earned. As of January 31, 2020, we estimate that $16 million of net 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 January 31, 2020, and 2019, we had outstanding foreign currency forward contracts designated as cash flow hedges with total notional values of $908 million and $717 million, respectively. All contracts have maturities not greater than 48 months. The notional value represents the amount that will be bought or sold upon maturity of the forward contract.

Foreign Currency Forward Contracts Not Designated as Hedges

We also enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets and liabilities. 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 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 consolidated statements of operations. Cash flows from such forward contracts are classified as operating activities.

As of January 31, 2020, and 2019, we had outstanding forward contracts not designated as hedges with total notional values of $246 million and $198 million, respectively.

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

						Consolidated Balance Sheets Location						January 31,
												2020						2019
Derivative assets:
Foreign currency forward contracts designated as cash flow hedges						Prepaid expenses and other current assets						$	20,944					$	12,076
Foreign currency forward contracts designated as cash flow hedges						Other assets						9,529						10,015
Foreign currency forward contracts not designated as hedges						Prepaid expenses and other current assets						2,801						459
Foreign currency forward contracts not designated as hedges						Other assets						—						20
Total derivative assets												$	33,274					$	22,570
Derivative liabilities:
Foreign currency forward contracts designated as cash flow hedges						Accrued expenses and other current liabilities						$	1,211					$	983
Foreign currency forward contracts designated as cash flow hedges						Other liabilities						1,809						706
Foreign currency forward contracts not designated as hedges						Accrued expenses and other current liabilities						976						1,446
Foreign currency forward contracts not designated as hedges						Other liabilities						—						—
Total derivative liabilities												$	3,996					$	3,135

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

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

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

						Consolidated Statements of Operations and Statements of Comprehensive Loss Locations						Year Ended January 31,
												2020						2019						2018
Gains (losses) recognized in OCI						Net change in market value of effective foreign currency forward exchange contracts						$	31,842					$	44,079					$	(45,869)
Gains (losses) reclassified from AOCI into income (effective portion)						Revenues						6,142						(7,012)						1,509
Gains (losses) recognized in income (amount excluded from effectiveness testing and ineffective portion) (1)						Other income (expense), net						—						13,868						1,607

(1)Prior to the adoption of ASU No. 2017-12, the changes in value of these foreign currency forward contracts resulting from changes in forward points were excluded from the assessment of hedge effectiveness and were recorded as incurred in Other income (expense), net on the consolidated statements of operations. Upon adoption of ASU No. 2017-12, we elected to prospectively include changes in the value of these contracts resulting from changes in forward points in the assessment of hedge effectiveness. These changes are recorded in AOCI on the consolidated balance sheets and will be subsequently reclassified to the related revenue line item on the consolidated statements of operations in the same period that the underlying revenues are earned.

Gains (losses) associated with foreign currency forward contracts not designated as cash flow hedges were as follows (in thousands):

						Consolidated Statements of Operations Location						Year Ended January 31,
Derivative Type												2020						2019						2018
Foreign currency forward contracts not designated as hedges						Other income (expense), net						$	3,671					$	4,706					$	(5,641)

We are subject to master netting agreements with certain 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 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.

As of January 31, 2020, information related to these offsetting arrangements was as follows (in thousands):

			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			$	782					$	—					$	782					$	(902)					$	—					$	(120)
Counterparty B			28,113						—						28,113						(1,078)						—						27,035
Counterparty C			4,379						—						4,379						(2,016)						—						2,363
Total			$	33,274					$	—					$	33,274					$	(3,996)					$	—					$	29,278

			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			$	902					$	—					$	902					$	(902)					$	—					$	—
Counterparty B			1,078						—						1,078						(1,078)						—						—
Counterparty C			2,016						—						2,016						(2,016)						—						—
Total			$	3,996					$	—					$	3,996					$	(3,996)					$	—					$	—

Note 11. Convertible Senior Notes, Net

Convertible Senior Notes

In June 2013, we issued 0.75% convertible senior notes due July 15, 2018 with a principal amount of $350 million. The 2018 Notes were unsecured, unsubordinated obligations, and interest was payable in cash in arrears at a fixed rate of 0.75% on January 15 and July 15 of each year. During fiscal 2019, the 2018 Notes were converted by note holders and we repaid the $350 million principal balance in cash. We also distributed approximately 1.5 million shares of our Class A common stock to note holders during fiscal 2019, which represented the conversion value in excess of the principal amount.

In June 2013, we issued 1.50% convertible senior notes due July 15, 2020, with a principal amount of $250 million. The 2020 Notes are unsecured, unsubordinated obligations, and interest is payable in cash in arrears at a fixed rate of 1.50% on January 15 and July 15 of each year. The 2020 Notes mature on July 15, 2020, unless repurchased or converted in accordance with their terms prior to such date. We cannot redeem the 2020 Notes prior to maturity.

In September 2017, we issued 0.25% convertible senior notes due October 1, 2022, with a principal amount of $1.15 billion. 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 Notes are governed by Indentures by and between us and Wells Fargo Bank, National Association, as Trustee (“Indentures”). Upon conversion, holders of the 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.

For the 2020 Notes, the initial conversion rate is 12.2340 shares of Class A common stock per $1,000 principal amount, which is equal to an initial conversion price of approximately $81.74 per share of Class A common stock, subject to adjustment. Prior to the close of business on March 13, 2020, conversion of the 2020 Notes is subject to the satisfaction of certain conditions, as described below. For the 2022 Notes, the initial conversion rate 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 Notes who convert their Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the Indentures) 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 Indentures), holders of the Notes may require us to repurchase all or a portion of their Notes at a price equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest.

Holders of the 2020 Notes and 2022 Notes may convert all or a portion of their Notes prior to the close of business on March 13, 2020, and May 31, 2022, respectively, in multiples of $1,000 principal amount, only under the following circumstances:

• if the last reported sale price of our Class A common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the respective Notes on each applicable trading day;

• during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the respective Notes for each day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate of the respective Notes on such trading day; or

• upon the occurrence of specified corporate events, as noted in the Indentures.

On or after March 15, 2020, for the 2020 Notes, and June 1, 2022, for the 2022 Notes, holders of the respective Notes may convert their Notes at any time until the close of business on the second scheduled trading day immediately preceding the respective maturity date of their Notes.

In accounting for the issuance of the Notes, we separated each of the Notes into liability and equity components. The carrying amounts of the liability components were calculated by measuring the fair value of similar liabilities that do not have associated convertible features. The carrying amounts of the equity components representing the conversion option were determined by deducting the fair value of the liability components from the par value of the respective Notes. These differences represent debt discounts that are amortized to interest expense over the respective terms of the Notes using the effective interest rate method. The equity components are not remeasured as long as they continue to meet the conditions for equity classification.

In accounting for the issuance costs related to the Notes, we allocated the total amount of issuance costs incurred to liability and equity components based on their relative values. Issuance costs attributable to the liability components are being amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the respective terms of the Notes. The issuance costs attributable to the equity components were netted against the respective equity components in Additional paid-in capital. For the 2018 Notes, we recorded liability issuance costs of $7 million and equity issuance costs of $2 million. The 2018 Notes were converted and repaid during fiscal 2019. Accordingly, there was no related amortization expense for fiscal 2020. Amortization expense was less than $1 million for fiscal 2019, and $1 million for fiscal 2018. For the 2020 Notes, we recorded liability issuance costs of $5 million and equity issuance costs of $2 million. Amortization expense for the liability issuance costs was less than $1 million for each of fiscal 2020, 2019, and 2018. For the 2022 Notes, we recorded liability issuance costs of $14 million and equity issuance costs of $4 million. Amortization expense for the liability issuance costs was $3 million, $3 million, and $1 million for each of fiscal 2020, 2019, and 2018, respectively.

Our outstanding convertible senior notes consist of the following (in thousands):

						January 31, 2020																		January 31, 2019
						2020 Notes						2022 Notes						2020 Notes						2022 Notes
Principal amounts:
Principal						$	249,945					$	1,150,000					$	249,975					$	1,150,000
Unamortized debt discount						(5,319)						(124,403)						(16,480)						(167,249)
Unamortized debt issuance costs						(307)						(7,630)						(981)						(10,487)
Net carrying amount of the liability component						$	244,319					$	1,017,967					$	232,514					$	972,264
Carrying amount of the equity component (1)						$	66,007					$	219,702					$	66,007					$	219,702

(1)Included on the consolidated balance sheets within Additional paid-in capital, net of $2 million and $4 million in equity issuance costs for the 2020 Notes and 2022 Notes, respectively.

As of January 31, 2020, the 2020 Notes and 2022 Notes have remaining lives of approximately 5 months and 32 months, respectively.

For more than 20 trading days during the 30 consecutive trading days ended January 31, 2020, and 2019, the last reported sale price of our Class A common stock exceeded 130% of the conversion price of the 2020 Notes. As a result, the 2020 Notes were convertible at the option of the holders during the first quarter of fiscal 2020, and continue to be convertible at the option of the holders during the first quarter of fiscal 2021. Accordingly, the 2020 Notes are classified as current on the consolidated balance sheets as of January 31, 2020, and 2019. As of the date of this filing, the total amount of the principal balance of the 2020 Notes that has been converted or for which conversion has been requested was not material.

The 2022 Notes are classified as noncurrent on the consolidated balance sheets as of January 31, 2020, and 2019, since the criteria for conversion was not met.

The effective interest rates of the liability components of the 2018 Notes, 2020 Notes, and 2022 Notes are 5.75%, 6.25%, and 4.60%, respectively. These interest rates were based on the interest rates of similar liabilities at the time of issuance that did not have associated convertible features. The following table sets forth total interest expense recognized related to the Notes (in thousands):

						Year Ended January 31,
						2020																		2019																														2018
						2020 Notes						2022 Notes						2018 Notes						2020 Notes						2022 Notes						2018 Notes						2020 Notes						2022 Notes
Contractual interest expense						$	3,749					$	2,875					$	1,196					$	3,750					$	2,875					$	2,625					$	3,750					$	1,086
Interest cost related to amortization of debt issuance costs						674						2,857						641						673						2,858						1,409						673						1,080
Interest cost related to amortization of the debt discount						11,161						42,846						7,850						10,488						40,939						16,530						9,852						14,989

Interest costs capitalized to property and equipment totaled $6 million, $11 million, and $8 million for fiscal 2020, 2019, and 2018, respectively.

Notes Hedges

In connection with the issuance of the 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.

We paid an aggregate amount of $144 million for the Purchased Options relating to the 2018 Notes and 2020 Notes, and $176 million for the Purchased Options relating to the 2022 Notes. The amount paid for the Purchased Options is included in Additional paid-in capital on the consolidated balance sheets.

The Purchased Options relating to the 2018 Notes gave us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2018 Notes, approximately 4.2 million shares of our Class A common stock for $83.28 per share, exercisable upon conversion of the 2018 Notes. During the second quarter of fiscal 2019, we received approximately 1.5 million shares of our Class A common stock from the exercise of the Purchased Options relating to the 2018 Notes. These shares were recorded as treasury stock.

The Purchased Options relating to the 2020 Notes give us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2020 Notes, approximately 3.1 million shares of our Class A common stock for $81.74 per share, exercisable upon conversion of the 2020 Notes. The Purchased Options relating to the 2022 Notes give us the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2022 Notes, approximately 7.8 million shares of our Class A common stock for $147.10 per share, exercisable upon conversion of the 2022 Notes. The Purchased Options will expire in 2020 for the 2020 Notes and in 2022 for the 2022 Notes, if not exercised earlier.

Warrants

In connection with the issuance of the Notes, we also entered into warrant transactions to sell warrants (“Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 4.2 million shares over 60 scheduled trading days beginning in October 2018, 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, $107.96, and $213.96 per share, respectively. If the Warrants are not exercised on their exercise dates, they will expire. 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 Notes or the Purchased Options.

We received aggregate proceeds of $93 million from the sale of the Warrants related to the 2018 Notes and the 2020 Notes, and $81 million from the sale of the Warrants related to the 2022 Notes. The proceeds from the sale of the Warrants are recorded in Additional paid-in capital on the consolidated balance sheets.

During fiscal 2019, Warrants related to the 2018 Notes were exercised, and we distributed approximately 1.1 million shares of our Class A common stock to warrant holders primarily utilizing treasury stock. Accordingly, no Warrants remain outstanding related to the 2018 Notes. The number of net shares distributed was determined based on the number of Warrants exercised multiplied by the difference between the exercise price of the Warrants and their daily volume weighted-average stock price.

Note 12. Leases

We have entered into operating lease agreements for our office space, data centers, and other property and equipment. As of January 31, 2020, total operating lease right-of-use assets and operating lease liabilities were approximately $291 million and $308 million, respectively. We have also entered into finance lease agreements for other property and equipment. As of January 31, 2020, finance leases were not material.

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

						Year Ended January 31, 2020
Operating lease cost						$	85,154
Short-term lease cost						16,260
Variable lease cost						17,845
Total operating lease cost						$	119,259

Prior to the adoption of ASU No. 2016-02 in the first quarter of fiscal 2020, we generally recognized rent expense on a straight-line basis over the period in which we benefited from the lease. Total rent expense associated with operating leases was $99 million and $82 million for fiscal 2019, and 2018, respectively.

Information related to our operating lease right-of-use assets and operating lease liabilities was as follows (in thousands, except periods and percentages):

						Year Ended January 31, 2020
Cash paid for operating lease liabilities						$	75,029
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities (1)						365,305
						Year Ended January 31, 2020
Weighted average remaining lease term (in years)						6
Weighted average discount rate						3.36%

(1)Includes $279 million for operating leases existing on February 1, 2019, and $86 million for operating leases that commenced during the fiscal year ended January 31, 2020.

As of January 31, 2020, maturities of operating lease liabilities were as follows (in thousands):

Fiscal period:
2021			$	75,003
2022			72,938
2023			62,216
2024			53,064
2025			38,614
Thereafter			45,980
Total lease payments			347,815
Less imputed interest			(40,243)
Total			$	307,572

As of January 31, 2020, we have additional operating leases, primarily for office space, that have not yet commenced with total undiscounted lease payments of $37 million. These operating leases will commence in fiscal 2021, with lease terms ranging from one to ten years.

Related-Party Lease Transactions

We lease certain office space from an affiliate of our Chairman, Mr. Duffield, adjacent to our corporate headquarters in Pleasanton, California, under various lease agreements. As of January 31, 2020, the operating lease right-of-use assets and operating lease liabilities related to these agreements were $57 million and $70 million, respectively. The weighted average remaining lease term of these agreements is five years. The total rent expense under these agreements was $13 million, $11 million, and $8 million for fiscal 2020, 2019, and 2018, respectively.

Note 13. Commitments and Contingencies

Third-Party Hosted Infrastructure Platform-Related Commitments

We have entered into non-cancelable agreements with third-party hosted infrastructure platform vendors with various expiration dates. In June 2019, we entered into a $500 million agreement for the use of cloud services that superseded a previous agreement and expires in June 2025.

As of January 31, 2020, future non-cancelable minimum payments for third-party hosted infrastructure platforms are as follows (in thousands):

			Third-Party Hosted Infrastructure Platforms
2021			$	40,375
2022			40,000
2023			40,000
2024			40,000
2025			40,000
Thereafter			272,084
Total			$	472,459

Legal Matters

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 January 31, 2020, 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.

Note 14. Stockholders’ Equity

Common Stock

As of January 31, 2020, there were 170 million shares of Class A common stock and 62 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 one vote per share and each share of Class B common stock is entitled to ten 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. All of our Class A and Class B shares will convert to a single class of common stock upon the date that is the first to occur of (i) October 17, 2032, (ii) such time as the shares of Class B common stock represent less than 9% of the outstanding Class A common stock and Class B common stock, (iii) nine months following the death of both Mr. Duffield and Mr. Bhusri, and (iv) the date on which the holders of a majority of the shares of Class B common stock elect to convert all shares of Class A common stock and Class B common stock into a single class of common stock.

Employee Equity Plans

Our 2012 Equity Incentive Plan (“EIP”) serves as the successor to our 2005 Stock Plan (together with the EIP, the “Stock Plans”). Pursuant to the terms of the EIP, the share reserve increased by 11 million shares in March 2019. As of January 31, 2020, we had approximately 71 million shares of Class A common stock available for future grants.

In connection with the acquisition of Adaptive Insights, we assumed unvested awards that had been granted under the Adaptive Insights, Inc. 2013 Equity Incentive Plan.

We also have a 2012 Employee Stock Purchase Plan. 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 exercisable on or about the succeeding November 30, and May 31, respectively, of each year. As of January 31, 2020, approximately 5 million shares of Class A common stock were available for issuance under the ESPP.

Restricted Stock Units

The Stock Plans provide for the issuance of RSUs to employees and non-employees. RSUs generally vest over four years. A summary of information related to RSU activity during fiscal 2020, is as follows:

			Number of Shares						Weighted-Average Grant Date Fair Value
Balance as of January 31, 2019			13,013,289						$	108.12
RSUs granted			5,918,077						187.89
RSUs vested			(6,074,429)						104.64
RSUs forfeited			(942,873)						127.83
Balance as of January 31, 2020			11,914,064						147.96

The weighted-average grant date fair value of RSUs granted during fiscal 2020, 2019, and 2018 was $187.89, $129.62, and $88.90, respectively. The total fair value of RSUs vested as of the vesting dates during fiscal 2020, 2019, and 2018 was $1.2 billion, $801 million, and $528 million, respectively.

As of January 31, 2020, there was a total of $1.6 billion in unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years.

Performance-Based Restricted Stock Units

During fiscal 2019, 0.5 million shares of performance-based restricted stock units were granted to all employees other than executive management 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, 2019. During fiscal 2020, we recognized $15 million in compensation cost related to these PRSUs.

Additionally, during fiscal 2020, 0.6 million shares of PRSUs were granted to all employees other than executive management that included both service conditions and performance conditions related to company-wide goals. These performance conditions were met and the PRSU awards will vest if the individual employee continues to provide service through the vesting date of March 15, 2020. During fiscal 2020, we recognized $97 million in compensation cost related to these PRSUs, and as of January 31, 2020, there was a total of $21 million in unrecognized compensation cost which is expected to be recognized over a weighted-average period of approximately two months.

Stock Options

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 fiscal 2020, is as follows (in millions, except share and per share data):

			Outstanding Stock Options						Weighted-Average Exercise Price						Aggregate Intrinsic Value
Balance as of January 31, 2019			5,780,742						$	7.96					$	1,003
Stock options exercised			(2,298,649)						4.95
Stock options canceled			(46,516)						22.34
Balance as of January 31, 2020			3,435,577						9.78						601
Vested and expected to vest as of January 31, 2020			3,413,967						9.62						597
Exercisable as of January 31, 2020			3,042,269						7.13						540

The total grant date fair value of stock options vested during fiscal 2020, 2019, and 2018 was $37 million, $29 million, and $5 million, respectively. The total intrinsic value of stock options exercised during fiscal 2020, 2019, and 2018 was $407 million, $261 million, and $234 million, respectively. The intrinsic value is the difference between the current fair value of the stock and the exercise price of the stock option. The weighted-average remaining contractual life of vested and expected to vest stock options as of January 31, 2020, is approximately three years.

As of January 31, 2020, there was a total of $34 million in unrecognized compensation cost related to unvested assumed stock options, which is expected to be recognized over a weighted-average period of approximately two years.

The stock options that are exercisable as of January 31, 2020, have a weighted-average remaining contractual life of approximately two years. The weighted-average remaining contractual life of outstanding stock options as of January 31, 2020, is approximately three years.

No stock options were assumed during fiscal 2020. The weighted-average grant date fair value of stock options assumed during fiscal 2019, was $100.69. The fair value of stock options assumed was estimated using the following assumptions:

			Year Ended January 31, 2019
Expected volatility			31.5% - 34.3%
Expected term (in years)			0.03 - 2.42
Risk-free interest rate			2.10% - 2.72%
Dividend yield			—%

There were no stock options granted during fiscal 2020, 2019, and 2018.

Employee Stock Purchase Plan

For fiscal 2020, approximately 1 million shares of Class A common shares were purchased under the ESPP at a weighted-average price of $147.51 per share, resulting in cash proceeds of $114 million.

The fair value of stock purchase rights granted under the ESPP was estimated using the following assumptions:

			Year Ended January 31,
			2020						2019						2018
Expected volatility			36.9% - 41.7%						30.9% - 41.7%						25.3% - 32.0%
Expected term (in years)			0.5						0.5						0.5
Risk-free interest rate			1.62% - 2.50%						2.09% - 2.50%						1.11% - 1.45%
Dividend yield			—%						—%						—%
Grant date fair value per share			$167.80 - $191.88						$126.29 - $167.80						$98.39 - $100.52

Note 15. Unearned Revenue and Performance Obligations

$1.8 billion, $1.4 billion, and $1.0 billion of subscription services revenue was recognized during fiscal 2020, 2019, and 2018, respectively, that was included in the unearned revenue balances at the beginning of the respective periods. Professional services revenue recognized in the same periods from unearned revenue balances at the beginning of the respective periods was not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of January 31, 2020, approximately $8.29 billion of revenue is expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize revenue on approximately $5.48 billion of these remaining performance obligations over the next 24 months, with the balance recognized thereafter. Revenue from remaining performance obligations for professional services contracts as of January 31, 2020, was not material.

Note 16. Other Income (Expense), Net

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

			Year Ended January 31,
			2020						2019						2018
Interest income			$	41,268					$	42,461					$	25,252
Interest expense (1)			(58,685)						(60,209)						(44,549)
Other (2)			37,200						57,280						7,734
Other income (expense), net			$	19,783					$	39,532					$	(11,563)

(1)Interest expense includes the contractual interest expense of the Notes, and related non-cash interest expense attributable to amortization of the related debt discount and debt issuance costs, net of capitalized interest costs. For further information, see Note 11, Convertible Senior Notes, Net.

(2)Other includes the net gains (losses) from our equity investments. For further information, see Note 3, Investments.

Note 17. Income Taxes

The components of loss before provision for (benefit from) income taxes were as follows (in thousands):

			Year Ended January 31,
			2020						2019						2018
Domestic			$	(256,772)					$	(263,505)					$	(85,167)
Foreign			(225,675)						(160,247)						(229,619)
Total			$	(482,447)					$	(423,752)					$	(314,786)

The provision for (benefit from) income taxes consisted of the following (in thousands):

			Year Ended January 31,
			2020						2019						2018
Current:
Federal			$	—					$	—					$	—
State			438						270						177
Foreign			7,707						6,596						4,251
Total			8,145						6,866						4,428
Deferred:
Federal			(1,258)						(760)						(535)
State			(2,014)						(2,446)						(100)
Foreign			(6,646)						(9,154)						2,643
Total			(9,918)						(12,360)						2,008
Provision for (benefit from) income taxes			$	(1,773)					$	(5,494)					$	6,436

The items accounting for the difference between income taxes computed at the federal statutory income tax rate and the provision for (benefit from) income taxes consisted of the following:

			Year Ended January 31,
			2020						2019						2018
Federal statutory rate			21.0		%				21.0		%				33.8		%
Effect of:
Foreign income at other than U.S. rates			(10.7)		%				(8.9)		%				(26.9)		%
Intercompany transactions			4.6		%				3.7		%				10.2		%
Research tax credits			13.1		%				12.6		%				9.1		%
State taxes, net of federal benefit			(0.1)		%				(0.1)		%				—		%
U.S. corporate tax rate reduction			—		%				—		%				(81.3)		%
Changes in valuation allowance			(48.3)		%				(39.7)		%				33.4		%
Stock compensation			21.6		%				12.7		%				20.0		%
Other			(0.8)		%				—		%				(0.4)		%
			0.4		%				1.3		%				(2.1)		%

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which allowed companies to record provisional amounts for the Tax Act during a measurement period not to extend beyond one year from the enactment date. We completed our analysis in fiscal 2019, recording no adjustments.

As a result of our history of net operating losses, the current provision for income taxes primarily relates to state income taxes and the current foreign provision from our profitable foreign entities. The benefit from domestic deferred federal and state income tax primarily relates to the release of the valuation allowance for certain intangibles from fiscal 2020, business acquisitions, where the balance for financial reporting exceeded the tax basis. The foreign deferred income tax benefit primarily relates to the application of intra-period tax allocation rules for the gains from other comprehensive income and the excess tax benefit in certain foreign jurisdictions from share-based compensation.

Significant components of our deferred tax assets and liabilities were as follows (in thousands):

			January 31,
			2020						2019
Deferred tax assets:
Unearned revenue			$	20,613					$	22,494
Other reserves and accruals			20,691						24,365
Federal net operating loss carryforwards			746,020						602,310
State net operating loss and foreign tax attributes carryforwards			371,233						232,815
Property and equipment			11,235						6,939
Share-based compensation			72,055						53,295
Research and development credits			243,617						183,323
Intangibles			488,626						516,416
Operating lease liabilities			73,563						—
Other			12,360						3,268
			2,060,013						1,645,225
Valuation allowance			(1,903,837)						(1,563,825)
Deferred tax assets, net of valuation allowance			156,176						81,400
Deferred tax liabilities:
Intercompany transactions			(19,609)						(30,900)
Other prepaid assets			(1,364)						(466)
Deferred commissions			(61,459)						(47,165)
Operating lease right-of-use assets			(67,775)						—
			(150,207)						(78,531)
Net deferred tax assets			$	5,969					$	2,869

We regularly assess the need for a valuation allowance against our deferred tax assets by considering both positive and negative evidence related to whether it is more likely than not that our deferred tax assets will be realized. In evaluating the need for a valuation allowance, we consider the cumulative losses in recent years as a significant piece of negative evidence that is generally difficult to overcome. As of January 31, 2020, we continue to maintain a full valuation allowance against our U.S. federal, state, and certain foreign jurisdiction deferred tax assets.

As of January 31, 2020, we recorded a valuation allowance of $1.9 billion for the portion of the deferred tax assets that we do not expect to be realized. The valuation allowance on our net deferred tax assets increased by $340 million and $939 million during fiscal 2020 and 2019, respectively. The increase in the valuation allowance during fiscal 2020, is mainly due to an increase in deferred tax assets on our net operating losses and research and development credits during the fiscal year.

As of January 31, 2020, we had approximately $3.4 billion of federal, $2.3 billion of state, and $1.5 billion of foreign net operating loss and other tax attributes carryforwards available to offset future taxable income. If not utilized, the pre-fiscal 2018 federal and the state net operating loss carryforwards expire in varying amounts between fiscal 2021, and 2040. The federal net operating losses generated in and after fiscal 2018 and the foreign net operating losses and other tax attributes do not expire and may be carried forward indefinitely.

We also had approximately $163 million of federal and $160 million of California research and development tax credit carryforwards as of January 31, 2020. The federal credits expire in varying amounts between fiscal 2021, and 2040. The California research credits do not expire and may be carried forward indefinitely.

Our ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state tax law.

We intend to permanently reinvest any future earnings in our foreign operations unless such earnings are subject to U.S. federal income taxes. As of January 31, 2020, we estimate any such hypothetical foreign withholding tax expense to be immaterial to our financial statements.

A reconciliation of the gross unrecognized tax benefit is as follows (in thousands):

			Year Ended January 31,
			2020						2019						2018
Unrecognized tax benefits at the beginning of the period			$	130,771					$	107,849					$	116,801
Additions for tax positions taken in prior years			309						10,586						1,500
Reductions for tax positions taken in prior years			—						—						(8,121)
Decrease for tax positions taken in prior years due to federal rate reduction			—						—						(10,062)
Additions for tax positions related to the current year			13,109						12,336						7,731
Reductions related to a lapse of applicable statute of limitations			(568)						—						—
Unrecognized tax benefits at the end of the period			$	143,621					$	130,771					$	107,849

Our policy is to include interest and penalties related to unrecognized tax benefits within our provision for income taxes. We did not accrue any interest expense or penalties during fiscal 2020, 2019, or 2018.

Of the total amount of unrecognized tax benefits of $144 million, $1 million, if recognized, would impact the effective tax rate, as of January 31, 2020.

We file federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. Due to our net operating loss carryforwards, our income tax returns generally remain subject to examination by federal and most state and foreign tax authorities.

On December 1, 2015, the United States Tax Court (“Tax Court”) issued its final decision with respect to Altera Corporation’s litigation with the Internal Revenue Service (“IRS”). The litigation related to the treatment of share-based compensation expense in an inter-company cost-sharing arrangement with the taxpayer’s foreign subsidiary for fiscal 2004 through 2007. In its final decision, the Tax Court accepted Altera’s position of excluding share-based compensation in its cost sharing arrangement and concluded that the related IRS Regulations were invalid. Subsequent to the decision, the IRS filed an appeal on February 23, 2016. On June 7, 2019, the U.S. Tax Court of Appeals of the Ninth Circuit (“Ninth Circuit”) reversed the United States Tax Court decision and on November 11, 2019, the Ninth Circuit released a court order denying an en banc rehearing of the case following Altera’s petition filed on July 22, 2019. Altera submitted a petition for writ of certiorari to the U.S. Supreme Court on February 10, 2020. Based on the facts and circumstances of the Tax Court Case, we believe that it is more likely than not that the decision will be upheld. We have therefore recorded the effects of the decision and determined that there was no material impact to our effective tax rate and income tax expense due to our current full valuation allowance position. We will continue to monitor ongoing developments and potential impacts to our consolidated financial statements.

Note 18. Net Loss Per Share

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. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including our outstanding stock options, outstanding warrants, common stock related to unvested early exercised stock options, common stock related to unvested RSUs and PRSUs, common stock related to convertible senior notes to the extent dilutive, 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.

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 year had been distributed. As the liquidation and dividend rights are identical, the net loss attributable to common stockholders is allocated on a proportionate basis.

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

			Year Ended January 31,
			2020																		2019																		2018
			Class A						Class B						Class A						Class B						Class A						Class B
Basic and diluted net loss attributable to Class A and Class B common stockholders per share:
Numerator:
Allocation of distributed net loss attributable to common stockholders			$	(345,958)					$	(134,716)					$	(287,021)					$	(131,237)					$	(208,159)					$	(113,063)
Denominator:
Weighted-average common shares outstanding			163,513						63,672						148,767						68,022						134,642						73,132
Basic and diluted net loss per share			$	(2.12)					$	(2.12)					$	(1.93)					$	(1.93)					$	(1.55)					$	(1.55)

The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows (in thousands):

			January 31,
			2020						2019						2018
Outstanding common stock options			3,436						5,781						6,595
Unvested restricted stock awards, units, and PRSUs			12,530						13,551						13,209
Shares related to the convertible senior notes			10,876						10,876						15,079
Shares subject to warrants related to the issuance of convertible senior notes			10,876						10,876						15,079
Shares issuable pursuant to the ESPP			491						402						466
Total			38,209						41,486						50,428

Note 19. Geographic Information

Disaggregation of Revenue

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

			Year Ended January 31,
			2020						2019						2018
United States			$	2,741,427					$	2,173,346					$	1,694,347
Other countries			885,779						648,834						448,703
Total			$	3,627,206					$	2,822,180					$	2,143,050

Long-Lived Assets

We attribute our long-lived assets, which primarily consist of property and equipment and operating lease right-of-use assets, 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 is as follows (in thousands):

			January 31,
			2020						2019
United States			$	1,064,292					$	726,801
Ireland			122,619						55,306
Other countries			40,170						14,800
Total			$	1,227,081					$	796,907

Note 20. 401(k) Plan

We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code covering eligible employees. We match a certain portion of employee contributions up to a fixed maximum per employee. Our contributions to the plan were $36 million, $28 million, and $15 million in fiscal 2020, 2019, and 2018, respectively.

Note 21. Selected Quarterly Financial Data (unaudited)

The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in fiscal 2020 and 2019 (in thousands, except per share data):

			Quarter ended
			1/31/2020						10/31/2019						7/31/2019						4/30/2019						1/31/2019						10/31/2018						7/31/2018						4/30/2018
Consolidated Statements of Operations Data:
Total revenues			$	976,299					$	938,100					$	887,752					$	825,055					$	788,628					$	743,189					$	671,720					$	618,643
Operating loss			(146,097)						(110,250)						(122,497)						(123,386)						(120,283)						(182,755)						(88,982)						(71,264)
Net loss			(127,958)						(115,729)						(120,712)						(116,275)						(104,361)						(153,331)						(86,156)						(74,410)
Net loss per share, basic and diluted			(0.56)						(0.51)						(0.53)						(0.52)						(0.47)						(0.70)						(0.40)						(0.35)