Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WORKDAY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Reports of Independent Registered Public Accounting Firm	(PCAOB ID: 42)	52
Consolidated Balance Sheets		55
Consolidated Statements of Operations		56
Consolidated Statements of Comprehensive Income (Loss)		57
Consolidated Statements of Stockholders’ Equity		58
Consolidated Statements of Cash Flows		59
Notes to Consolidated Financial Statements		61

Table of Conten t s

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, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022, 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, 2022, 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 February 28, 2022 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.

Table of Conten t s


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

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

/s/ Ernst & Young LLP

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

San Francisco, California

February 28, 2022

Table of Conten t s

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, 2022, 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, 2022, 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, 2022 and 2021, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2022, and the related notes and our report dated February 28, 2022 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 Francisco, California

February 28, 2022

Table of Conten t s

WORKDAY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value data)


	As of January 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	1,534,273	$	1,384,181
Marketable securities	2,109,888		2,151,472
Trade and other receivables, net of allowance for credit losses of $10,790 and $14,267, respectively	1,242,545		1,032,484
Deferred costs	152,957		122,764
Prepaid expenses and other current assets	174,402		111,160
Total current assets	5,214,065		4,802,061
Property and equipment, net	1,123,075		972,403
Operating lease right-of-use assets	247,808		414,143
Deferred costs, noncurrent	341,259		271,796
Acquisition-related intangible assets, net	391,002		248,626
Goodwill	2,840,044		1,819,625
Other assets	341,252		189,757
Total assets	$	10,498,505	$	8,718,411
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	55,487	$	75,596
Accrued expenses and other current liabilities	195,590		169,266
Accrued compensation	402,885		285,061
Unearned revenue	3,110,947		2,556,624
Operating lease liabilities	80,503		93,000
Debt, current	1,222,443		1,103,101
Total current liabilities	5,067,855		4,282,648
Debt, noncurrent	617,354		691,913
Unearned revenue, noncurrent	71,533		80,111
Operating lease liabilities, noncurrent	182,456		350,051
Other liabilities	24,225		35,854
Total liabilities	5,963,423		5,440,577
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10 million shares authorized; no shares issued or outstanding as of January 31, 2022, and 2021	—		—
Class A common stock, $0.001 par value; 750 million shares authorized; 196 million and 184 million shares issued and outstanding as of January 31, 2022, and 2021, respectively	196		184
Class B common stock, $0.001 par value; 240 million shares authorized; 55 million and 59 million shares issued and outstanding as of January 31, 2022, and 2021, respectively	55		58
Additional paid-in capital	7,284,174		6,254,936
Treasury stock, at cost; 0.1 million shares as of January 31, 2022, and 2021	(12,467)		(12,384)
Accumulated other comprehensive income (loss)	7,709		(54,970)
Accumulated deficit	(2,744,585)		(2,909,990)
Total stockholders’ equity	4,535,082		3,277,834
Total liabilities and stockholders’ equity	$	10,498,505	$	8,718,411

See Notes to Consolidated Financial Statements

Table of Conten t s

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Year Ended January 31,
	2022		2021		2020
Revenues:
Subscription services	$	4,546,313	$	3,788,452	$	3,096,389
Professional services	592,485		529,544		530,817
Total revenues	5,138,798		4,317,996		3,627,206
Costs and expenses (1):
Costs of subscription services	795,854		611,912		488,513
Costs of professional services	632,241		586,220		576,745
Product development	1,879,220		1,721,222		1,549,906
Sales and marketing	1,461,921		1,233,173		1,146,548
General and administrative	486,012		414,068		367,724
Total costs and expenses	5,255,248		4,566,595		4,129,436
Operating income (loss)	(116,450)		(248,599)		(502,230)
Other income (expense), net	132,632		(26,535)		19,783
Income (loss) before provision for (benefit from) income taxes	16,182		(275,134)		(482,447)
Provision for (benefit from) income taxes	(13,191)		7,297		(1,773)
Net income (loss)	$	29,373	$	(282,431)	$	(480,674)
Net income (loss) per share, basic	$	0.12	$	(1.19)	$	(2.12)
Net income (loss) per share, diluted	$	0.12	$	(1.19)	$	(2.12)
Weighted-average shares used to compute net income (loss) per share, basic	247,249		237,019		227,185
Weighted-average shares used to compute net income (loss) per share, diluted	254,032		237,019		227,185

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


	Year Ended January 31,
	2022		2021		2020
Costs of subscription services	$	85,713	$	63,253	$	49,919
Costs of professional services	113,443		101,869		80,401
Product development	543,135		505,376		434,188
Sales and marketing	215,692		202,819		176,758
General and administrative	154,422		131,537		118,614
Total share-based compensation expenses	$	1,112,405	$	1,004,854	$	859,880

See Notes to Consolidated Financial Statements

Table of Conten t s

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)


	Year Ended January 31,
	2022		2021		2020
Net income (loss)	$	29,373	$	(282,431)	$	(480,674)
Other comprehensive income (loss), net of tax:
Net change in foreign currency translation adjustment	(3,295)		2,926		(575)
Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision of $0, $0, and $839, respectively	(6,279)		(1,437)		2,392
Net change in unrealized gains (losses) on cash flow hedges, net of tax provision of $0, $0, and $3,216, respectively	72,253		(79,951)		22,484
Other comprehensive income (loss), net of tax	62,679		(78,462)		24,301
Comprehensive income (loss)	$	92,052	$	(360,893)	$	(456,373)

See Notes to Consolidated Financial Statements

Table of Conten t s

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)


	Year Ended January 31,
	2022		2021		2020
Common stock:
Balance, beginning of period	$	242	$	231	$	221
Issuance of common stock under employee equity plans, net of shares withheld for employee taxes	9		9		10
Settlement of convertible senior notes	—		2		—
Balance, end of period	251		242		231
Additional paid-in capital:
Balance, beginning of period	6,254,936		5,090,187		4,105,334
Issuance of common stock under employee equity plans, net of shares withheld for employee taxes	148,319		148,664		125,663
Share-based compensation	1,100,536		1,003,726		858,809




Exercise of convertible senior notes hedges	88		303,238		—
Settlement of convertible senior notes	(3)		(4)		—
Settlement of warrants	—		(290,875)		—
Cumulative effect of accounting changes	(219,702)		—		381
Balance, end of period	7,284,174		6,254,936		5,090,187
Treasury stock:
Balance, beginning of period	(12,384)		—		—



Exercise of convertible senior notes hedges	(83)		(303,239)		—

Settlement of warrants	—		290,855		—
Balance, end of period	(12,467)		(12,384)		—
Accumulated other comprehensive income (loss):
Balance, beginning of period	(54,970)		23,492		(809)
Other comprehensive income (loss)	62,679		(78,462)		24,301
Balance, end of period	7,709		(54,970)		23,492
Accumulated deficit:
Balance, beginning of period	(2,909,990)		(2,627,359)		(2,146,304)
Net income (loss)	29,373		(282,431)		(480,674)


Cumulative effect of accounting changes	136,032		(200)		(381)


Balance, end of period	(2,744,585)		(2,909,990)		(2,627,359)
Total stockholders’ equity	$	4,535,082	$	3,277,834	$	2,486,551


	Year Ended January 31,
	2022	2021	2020
Common stock (in shares):
Balance, beginning of period	242,667	231,708	222,052
Issuance of common stock under employee equity plans, net of shares withheld for employee taxes	8,417	9,373	9,656
Purchase of treasury stock from the exercise of convertible senior notes hedges	—	(1,655)	—
Settlement of convertible senior notes	—	1,654	—
Settlement of warrants	—	1,587	—
Other	125	—	—
Balance, end of period	251,209	242,667	231,708

See Notes to Consolidated Financial Statements

Table of Conten t s

WORKDAY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Year Ended January 31,
	2022		2021		2020
Cash flows from operating activities:
Net income (loss)	$	29,373	$	(282,431)	$	(480,674)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	343,723		293,657		276,278
Share-based compensation expenses	1,100,584		1,004,854		859,571
Amortization of deferred costs	138,797		112,647		90,641
Amortization of debt discount and issuance costs	3,988		53,693		54,034
Non-cash lease expense	86,235		84,376		67,325
(Gains) losses on investments	(145,845)		(16,558)		(4,016)
Other	(14,213)		4,247		(31,047)
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net	(207,933)		(159,240)		(176,141)
Deferred costs	(238,453)		(184,353)		(149,168)
Prepaid expenses and other assets	(35,153)		52,117		(17,736)
Accounts payable	9,414		(3,476)		20,293
Accrued expenses and other liabilities	50,671		(18,472)		220
Unearned revenue	529,516		327,380		355,018
Net cash provided by (used in) operating activities	1,650,704		1,268,441		864,598
Cash flows from investing activities:
Purchases of marketable securities	(2,858,729)		(2,731,885)		(1,797,468)
Maturities of marketable securities	2,804,103		1,802,334		1,686,643
Sales of marketable securities	199,016		10,627		56,508
Owned real estate projects	(171,501)		(6,116)		(99,308)
Capital expenditures, excluding owned real estate projects	(264,267)		(253,380)		(243,694)
Business combinations, net of cash acquired	(1,190,199)		—		(473,603)
Purchase of other intangible assets	(8,007)		(2,950)		(850)
Purchases of non-marketable equity and other investments	(123,011)		(67,482)		(25,393)
Sales and maturities of non-marketable equity and other investments	5,169		7,228		252
Other	—		—		(9)
Net cash provided by (used in) investing activities	(1,607,426)		(1,241,624)		(896,922)
Cash flows from financing activities:
Proceeds from borrowings on Term Loan, net of debt discount and issuance costs	—		747,795		—



Payments on convertible senior notes	(114)		(250,012)		(30)
Payments on Term Loan	(37,500)		(18,750)		—
Proceeds from issuance of common stock from employee equity plans, net of taxes paid for shares withheld	148,328		148,673		125,673
Other	(463)		(2,657)		(519)
Net cash provided by (used in) financing activities	110,251		625,049		125,124
Effect of exchange rate changes	(705)		1,334		(282)
Net increase (decrease) in cash, cash equivalents, and restricted cash	152,824		653,200		92,518
Cash, cash equivalents, and restricted cash at the beginning of period	1,387,921		734,721		642,203
Cash, cash equivalents, and restricted cash at the end of period	$	1,540,745	$	1,387,921	$	734,721

See Notes to Consolidated Financial Statements

Table of Conten t s


	Year Ended January 31,
	2022		2021		2020
Supplemental cash flow data
Cash paid for interest, net of amounts capitalized	$	13,310	$	14,373	$	3,306
Cash paid for income taxes	12,563		9,939		9,010
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	47,015		54,792		46,027


	As of January 31,
	2022		2021		2020
Reconciliation of cash, cash equivalents, and restricted cash as shown in the Consolidated Statements of Cash Flows
Cash and cash equivalents	$	1,534,273	$	1,384,181	$	731,141
Restricted cash included in Prepaid expenses and other current assets	6,472		3,602		3,459
Restricted cash included in Other assets	—		138		121
Total cash, cash equivalents, and restricted cash	$	1,540,745	$	1,387,921	$	734,721

See Notes to Consolidated Financial Statements

Table of Conten t s

Workday, Inc.

Notes to Consolidated Financial Statements

Note 1. Overview and Basis of Presentation

Company and Background

Workday delivers applications for financial management, spend management, human capital management, planning, and analytics. With Workday, our customers have a unified system that can help them plan, execute, analyze, and extend to other applications and environments, thereby helping them continuously adapt how they manage their business and operations. We were originally incorporated in March 2005 in Nevada, and in June 2012, we reincorporated in Delaware.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2022, for example, refer to the fiscal year ended January 31, 2022.

Basis of Presentation

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

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 a chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. For fiscal 2022, our CODM was our Co-Chief Executive Officer and Chairman, Aneel Bhusri, and our Co-Chief Executive Officer, Chano Fernandez. Our CODM 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 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 services rendered.

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; and
Recognition of revenues when, or as, we satisfy a performance obligation.

Table of Conten t s

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to one or more of our cloud applications for financial management, spend management, human capital management, planning, and analytics, with routine customer support. Revenues are 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 generally noncancelable.

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, revenues are recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenues are recognized over time based on the proportion of the professional services performed.

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. In addition, we measure our non-marketable equity investments for which there has been an observable price change from an orderly transaction for identical or similar investments of the same issuer at fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

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

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

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

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

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. Debt securities included in Marketable securities on the Consolidated Balance Sheets consist of securities with original maturities greater than three months at the time of purchase.

When the fair value of a debt security is below its amortized cost, the amortized cost should be written down to its fair value if (i) it is more likely than not that management will be required to sell the impaired security before recovery of its amortized basis or (ii) management has the intention to sell the security. If neither of these conditions are met, we must determine whether the impairment is due to credit losses. To determine the amount of credit losses, we compare the present value of the expected cash flows of the security, derived by taking into account the issuer’s credit ratings and remaining payment terms, with its amortized cost basis. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the security. An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in Other income (expense), net on the Consolidated Statements of Operations. Non-credit related impairment losses are recorded in Other comprehensive income (loss) (“OCI”).

Table of Conten t s

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 determine at the inception of each arrangement whether an investment or other interest is considered a variable interest entity (“VIE”). If the investment or other interest is determined to be a VIE, we must evaluate whether we are considered the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to direct the activities that most significantly impact the VIE’s economic performance; and (2) has the obligation to absorb losses or the right to receive benefits from the VIE. For investments in VIEs in which we are considered the primary beneficiary, the assets, liabilities, and results of operations of the VIE are included in our consolidated financial statements. As of January 31, 2022, there were no VIEs for which we were the primary beneficiary.

Equity Investments Accounted for Under the Equity Method

Investments in VIEs for which we are not the primary beneficiary or do not own a controlling interest but can exercise significant influence over the investee are accounted for under the equity method of accounting. These investments are measured at cost, less any impairment, plus or minus our share of earnings and losses and are included in Other assets on the Consolidated Balance Sheets. Our share of earnings and losses are recorded in Other income (expense), net on the Consolidated Statements of Operations.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence. These investments are included in Other assets on the Consolidated Balance Sheets. We adjust the carrying values of non-marketable equity investments based on observable price changes from orderly transactions for identical or similar investments of the same issuer. Additionally, we assess our non-marketable equity investments quarterly for impairment. Adjustments and impairments are recorded in Other income (expense), net on the Consolidated Statements of Operations.

Marketable Equity Investments

We hold marketable equity investments with readily determinable fair values over which we do not own a controlling interest or exercise significant influence. Marketable equity investments are included in Marketable securities on the Consolidated Balance Sheets. They are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the Consolidated Statements of Operations.

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 credit losses. We assess our allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as our historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses on the Consolidated Statements of Operations. 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 new revenue contracts are capitalized 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. Amortization expense is included in Sales and marketing expenses on the Consolidated Statements of Operations.

Table of Conten t s

Derivative Financial Instruments and Hedging Activities

We use derivative financial instruments to manage foreign currency exchange risk. 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 (“cash flow hedges”), which we use to hedge a portion of our forecasted foreign currency revenue and expense transactions, the gains or losses are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets and subsequently reclassified to earnings in the same period that the hedged transaction affects earnings. For derivative instruments not designated as hedging instruments (“non-designated hedges”), 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 Statements 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 allocate the purchase consideration of acquired companies to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess recorded to goodwill. 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, including uncertain tax positions and tax-related valuation allowances, with the corresponding offset to goodwill. 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 the Consolidated Statements of Operations.

In the event that we acquire a company in which we previously held an equity interest, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the equity investment is recorded as a non-cash gain or loss and recorded within Other income (expense), net on the 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.

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 to determine the present value of lease payments.

Table of Conten t s

We recognize variable lease costs in the Consolidated Statements 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.

Advertising Expenses

Advertising is expensed as incurred. Advertising expense was $131 million, $85 million, and $61 million for fiscal 2022, 2021, and 2020, respectively.

Share-Based Compensation

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

Table of Conten t s

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 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 the U.S. dollar 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 AOCI on the Consolidated Balance Sheets. 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, 2022, or 2021. No customer individually accounted for more than 10% of total revenues during fiscal 2022, 2021, or 2020.

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

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

Other than the United States, no country individually accounted for more than 10% of total revenues during fiscal 2022, 2021, or 2020.

Recently Adopted Accounting Pronouncements

ASU No. 2020-06

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). Under ASU No. 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

We adopted this standard effective February 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted. We applied the provisions of this guidance to our 2022 Notes. Upon adoption, we recorded a decrease to Accumulated deficit of $136 million, a decrease to Additional paid-in capital of $220 million, an increase to Debt, current of $79 million, and a decrease to Property and equipment, net of $5 million, which represented non-cash interest previously capitalized. For further information, see Note 11, Debt.

Table of Conten t s

Recently Issued Accounting Pronouncements

ASU No. 2021-08

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. Under current GAAP, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. The new standard is effective for our fiscal year beginning on February 1, 2023, with early adoption permitted. We are currently evaluating the accounting, transition, and disclosure requirements of this standard.

ASU No. 2020-04 and ASU No. 2021-01

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate to alternative reference rates. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which refines the scope of Topic 848 and clarifies some of its guidance. We may elect to apply the amendments prospectively through December 31, 2022. The impact on our consolidated financial statements from the adoption of this standard is expected to be immaterial.

Note 3. Investments

Debt Securities

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


	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	$	843,627	$	5	$	(1,720)	$	841,912
U.S. agency obligations	232,093		—		(1,168)		230,925
Corporate bonds	490,867		—		(1,815)		489,052
Commercial paper	969,204		—		—		969,204
Total debt securities	$	2,535,791	$	5	$	(4,703)	$	2,531,093
Included in Cash and cash equivalents	$	525,524	$	—	$	(1)	$	525,523
Included in Marketable securities	$	2,010,267	$	5	$	(4,702)	$	2,005,570

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


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

No debt securities held as of January 31, 2022, or 2021, were in a continuous unrealized loss position for greater than 12 months, and we did not recognize any credit losses related to our debt securities during fiscal 2022, 2021, or 2020.

We sold $162 million, $11 million, and $6 million of debt securities during fiscal 2022, 2021, and 2020, respectively. The realized gains and losses from the sales were immaterial.

Table of Conten t s

Equity Investments

Equity investments consisted of the following (in thousands):


		As of January 31,
	Consolidated Balance Sheets Location	2022		2021
Money market funds	Cash and cash equivalents	$	607,640	$	659,964
Equity investments accounted for under the equity method	Other assets	—		48,222
Non-marketable equity investments measured using the measurement alternative	Other assets	256,643		73,142
Marketable equity investments	Marketable securities	104,318		21,300
Total equity investments		$	968,601	$	802,628

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


	Year Ended January 31,
	2022		2021		2020
Net realized gains (losses) recognized on equity investments sold (1)	$	22,273	$	1,667	$	26,837
Net unrealized gains (losses) recognized on equity investments held as of the end of the period	121,474		18,425		6,057
Total net gains (losses) recognized in Other income (expense), net	$	143,747	$	20,092	$	32,894

(1)Reflects the difference between the sale proceeds and the carrying value of the equity investments at the beginning of the fiscal year.

Equity Investments Accounted for Under the Equity Method

During fiscal 2021, we made an equity investment of $50 million in a limited partnership, which represented an ownership interest of approximately 6%. We determined that the limited partnership was a VIE because the at-risk equity holders, as a group, lacked the characteristics of a controlling financial interest. We did not have majority voting rights nor the power to direct the activities of this entity, and therefore, we were not the primary beneficiary. The investment was accounted for under the equity method of accounting as it was considered to be more than minor and we had the ability to exercise significant influence over the entity. Under the equity method, our share of earnings and losses of the investee was not material and there was no impairment loss recorded for the periods presented.

In June 2021, the limited partnership was liquidated and shares of common stock in a corporation were distributed to the partners. Immediately thereafter, the corporation completed its IPO. We no longer exercise significant influence over the entity and therefore we accounted for our interest in the common stock received as a marketable equity investment measured at fair value. Since the IPO, we have sold a portion of our investment for proceeds of $25 million, resulting in a realized gain of $16 million. Our remaining investment had a carrying value of $104 million as of January 31, 2022. We recorded an unrealized gain of $67 million related to this investment during fiscal 2022.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

The carrying values for our non-marketable equity investments are summarized below (in thousands):


	As of January 31,
	2022		2021
Total initial cost	$	192,694	$	65,377
Cumulative net unrealized gains (losses)	63,949		7,765
Carrying value	$	256,643	$	73,142

We recorded upward adjustments to the carrying value of non-marketable equity investments of $58 million, $9 million, and $6 million during fiscal 2022, 2021, and 2020, respectively. No material impairment losses or downward adjustments were recorded during the periods presented. Additionally, as discussed in Note 7, Business Combinations, we recognized non-cash gains of $12 million and $20 million related to our acquisitions of Zimit and Scout during fiscal 2022 and 2020, respectively.

Table of Conten t s

Marketable Equity Investments

The carrying values for our marketable equity investments are summarized below (in thousands):


	As of January 31,
	2022		2021
Total initial cost	$	40,739	$	5,000
Cumulative net unrealized gains (losses)	63,579		16,300
Carrying value	$	104,318	$	21,300

During fiscal 2022, we sold marketable equity investments of $37 million with corresponding net gains recognized of $7 million. This includes the $25 million sale of the investment previously accounted for under the equity method described above. There were no sales of marketable equity investments during fiscal 2021. During fiscal 2020, we sold marketable equity investments of $51 million with a corresponding gain recognized of $7 million.

During fiscal 2022 and 2021, we recorded unrealized gains on marketable equity investments of $67 million and $14 million, respectively. There were no unrealized gains or losses recorded during fiscal 2020.

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, 2022 (in thousands):


	Level 1		Level 2		Level 3		Total
U.S. treasury securities	$	841,912	$	—	$	—	$	841,912
U.S. agency obligations	—		230,925		—		230,925
Corporate bonds	—		489,052		—		489,052
Commercial paper	—		969,204		—		969,204
Money market funds	607,640		—		—		607,640
Marketable equity investments	104,318		—		—		104,318
Foreign currency derivative assets	—		39,031		—		39,031
Total assets	$	1,553,870	$	1,728,212	$	—	$	3,282,082
Foreign currency derivative liabilities	$	—	$	13,039	$	—	$	13,039
Total liabilities	$	—	$	13,039	$	—	$	13,039


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

Table of Conten t s

Non-Marketable Equity Investments Measured at Fair Value on a Non-Recurring Basis

Non-marketable equity investments that have been remeasured during the period due to an observable event or impairment are classified within Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the investments we hold. For further information, see Note 3, Investments.

Fair Value Measurements of Other Financial Instruments

In April 2020, we entered into a Credit Agreement pursuant to which the lenders extended to Workday a senior unsecured Term Loan facility in an aggregate principal amount of $750 million and an unsecured Revolving Credit Facility in an aggregate principal amount of $750 million. The carrying value of the Term Loan was $692 million and $729 million as of January 31, 2022, and 2021, respectively. The estimated fair value of the Term Loan, which we have classified as a Level 2 financial instrument, approximates its carrying value because it is a floating rate facility. There were no outstanding borrowings under the Revolving Credit Facility during the periods presented. For further information, see Note 11, Debt.

In September 2017, we completed an offering of $1.15 billion of 0.25% convertible senior notes due October 1, 2022. The carrying value of the 2022 Notes was $1.1 billion as of January 31, 2022, and 2021, and the estimated fair value of the 2022 Notes was $1.9 billion and $1.8 billion as of January 31, 2022, and 2021, respectively. The estimated fair value of the 2022 Notes, which we have classified as a Level 2 financial instrument, was determined based on the quoted bid price in an over-the-counter market on the last trading day of each reporting period. For further information, see Note 11, Debt.

Note 5. Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $494 million and $395 million as of January 31, 2022, and 2021, respectively. Amortization expense for the deferred costs was $139 million, $113 million, and $91 million for fiscal 2022, 2021, and 2020, 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):


	As of January 31,
	2022		2021
Computers, equipment, and software	$	1,071,141	$	931,456
Buildings	691,896		494,599
Leasehold improvements	158,037		204,273
Land and land improvements	80,553		37,065
Furniture, fixtures, and transportation equipment	79,723		54,193
Property and equipment, gross	2,081,350		1,721,586
Less accumulated depreciation and amortization	(958,275)		(749,183)
Property and equipment, net	$	1,123,075	$	972,403

Depreciation expense totaled $263 million, $231 million, and $201 million for fiscal 2022, 2021, and 2020, respectively.

Related-Party Transactions

Aircraft Purchase

During fiscal 2022, we purchased an aircraft from an affiliate of our Co-Founder and CEO Emeritus, David Duffield, for approximately $24 million in cash. The aircraft was purchased primarily for the purpose of business travel by our Co-CEO and Chairman, Mr. Bhusri, and other Workday executives. In approving the related-party transaction, the Audit Committee of our Board of Directors considered the benefits to Workday of purchasing the aircraft, independent appraisals, the terms of the related purchase agreement, and the extent and nature of Mr. Duffield’s interest in the transaction. The aircraft is included in the Furniture, fixtures, and transportation equipment category in the table above.

Table of Conten t s

Leased Property Purchase

During fiscal 2021, we entered into an agreement with an affiliate of Mr. Duffield for an option to purchase certain leased office space (“Property”) within our corporate headquarters at a price based on third-party appraisals and negotiation between Workday and the affiliated party (“Leased Property Purchase Option”). In deciding to enter into and subsequently exercise the Leased Property Purchase Option, our Board of Directors considered the benefits to Workday of purchasing the Property, including the importance of obtaining control of the Property, which is part of Workday’s headquarters campus, and the long-term cost savings from ownership as compared to continuing to lease the Property. Our Board also considered independent appraisals, comparable transaction data, and the extent and nature of Mr. Duffield’s interest in the transaction.

In the first quarter of fiscal 2022, we exercised the Leased Property Purchase Option at a purchase price of $173 million in cash, reduced by a $2 million fee paid for the Leased Property Purchase Option in the prior fiscal year. The carrying value of the Property upon purchase was $158 million, calculated as the purchase price less approximately $15 million which represents the difference between the carrying values of the right-of-use asset and lease liability of the Property immediately prior to the purchase. For further information, see Note 12, Leases.

Note 7. Business Combinations

Fiscal 2022

VNDLY Acquisition

On December 21, 2021, we acquired all outstanding stock of VNDLY, a cloud-based external workforce and vendor management technology. With VNDLY, Workday will provide organizations with a unified workforce optimization solution that will help organizations manage all types of workers—salaried, hourly, contingent, and outsourced—and support a holistic talent strategy, including insight into costs, workforce planning needs, and compliance. We have included the financial results of VNDLY in our consolidated financial statements from the date of acquisition.

The acquisition-date fair value of the purchase consideration consisted of the following (in thousands):


Cash paid to stockholders and option holders	$	473,029
Transaction costs paid by Workday on behalf of VNDLY	135
Total	$	473,164

Additionally, in connection with the acquisition, we agreed to issue approximately 152 thousand shares of our Class A common stock to certain key VNDLY employees, with 50% of such shares to be issued following the first anniversary of the closing date of the acquisition and the remaining 50% to be issued following the second anniversary of the closing date, subject to service conditions. The aggregate fair value of the equity is accounted for as post-acquisition share-based compensation expense.

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):


Cash	$	22,830
Acquisition-related intangible assets	40,000
Goodwill	412,151
Other assets	2,595
Deferred tax liability	(2,372)
Other liabilities	(2,040)
Total	$	473,164

Table of Conten t s

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


	Estimated Fair Values		Weighted-Average Useful Lives (in Years)
Developed technology	$	27,000	4
Customer relationships	13,000		13
Total acquisition-related intangible assets	$	40,000	7

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

Separate operating results and pro forma results of operations for VNDLY have not been presented as the effect of this acquisition was not material to our financial results.

Zimit Acquisition

On September 28, 2021, we acquired all outstanding stock of Zimit, a CPQ solution built for services industries. We believe the acquisition of Zimit will accelerate our ability to deliver a comprehensive quote-to-cash process automation offering that will provide services organizations increased visibility across the entire revenue cycle. We have included the financial results of Zimit in our consolidated financial statements from the date of acquisition.

The acquisition-date fair value of the purchase consideration was $76 million, with $62 million attributable to cash consideration and $14 million attributable to the fair value of a previously held equity interest. We recorded developed technology intangible assets of $7 million (to be amortized over an estimated useful life of 4 years), customer relationships intangible assets of $3 million (to be amortized over an estimated useful life of 13 years), and goodwill of $67 million. Goodwill was primarily attributable to the expected synergies from integrating Zimit’s technology into our product portfolio. The goodwill is not deductible for income tax purposes. The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received. The measurement period will end no later than one year from the acquisition date.

We invested $2 million in Zimit prior to the acquisition, which was accounted for as a non-marketable equity investment. We recognized a non-cash gain of approximately $12 million as a result of remeasuring our prior equity interest in Zimit held before the business combination. The gain is included in Other income (expense), net on the Consolidated Statements of Operations.

Separate operating results and pro forma results of operations for Zimit have not been presented as the effect of this acquisition was not material to our financial results.

Peakon Acquisition

On March 9, 2021, we acquired all outstanding stock of Peakon, an employee success platform that converts feedback into actionable insights, for $702 million. With Peakon, Workday will provide organizations with a continuous listening platform, including real-time visibility into employee experience, sentiment, and productivity, to help drive employee engagement and improve organizational performance. We have included the financial results of Peakon in our consolidated financial statements from the date of acquisition.

The acquisition-date fair value of the purchase consideration consisted of the following (in thousands):


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

Additionally, we granted certain Peakon employees restricted stock awards (“RSAs”) with service conditions, which totaled 81,695 shares of our Class A common stock. The aggregate grant date fair value of the RSAs is accounted for as post-acquisition share-based compensation expense.

Table of Conten t s

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 updated preliminary purchase consideration allocation inclusive of measurement period adjustments was as follows (in thousands):


Acquisition-related intangible assets	$	170,500
Goodwill	541,611
Other assets	34,639
Deferred tax liability	(20,021)
Other liabilities	(24,981)
Total	$	701,748

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


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

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

Separate operating results and pro forma results of operations for Peakon have not been presented as the effect of this acquisition was not material to our financial results.

Fiscal 2020

Scout Acquisition

On December 9, 2019, we acquired all outstanding stock of 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. The acquisition of Scout helps accelerate our ability to deliver a comprehensive source-to-pay solution to our customers.

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):


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

Table of Conten t s

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


	Estimated Fair Values		Weighted-Average 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.

Note 8. Acquisition-Related Intangible Assets, Net

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


	As of January 31,
	2022		2021
Developed technology	$	346,300	$	218,400
Customer relationships	311,100		223,000
Trade name	12,500		12,000
Backlog	15,000		11,000
Acquisition-related intangible assets, gross	684,900		464,400
Less accumulated amortization	(293,898)		(215,774)
Acquisition-related intangible assets, net	$	391,002	$	248,626

Amortization expense related to acquisition-related intangible assets was $78 million, $60 million, and $72 million for fiscal 2022, 2021, and 2020, respectively.

As of January 31, 2022, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in thousands):


Fiscal Period:
2023	$	85,536
2024	74,319
2025	61,663
2026	55,748
2027	31,177
Thereafter	82,559
Total	$	391,002

Table of Conten t s

Note 9. Other Assets

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


	As of January 31,
	2022		2021
Non-marketable equity and other investments (1)	$	256,759	$	85,868
Prepayments for goods and services	25,927		19,824
Technology patents and other intangible assets, net	22,792		17,766
Derivative assets	16,618		173
Net deferred tax assets	11,642		9,985
Deposits	6,701		6,218
Equity investments accounted for under the equity method	—		48,222
Other	813		1,701
Total other assets	$	341,252	$	189,757

(1)Included in the Non-marketable equity and other investments category are investments in loan receivables of privately held companies, which are carried at amortized cost. The carrying values of these loan receivables were not material as of January 31, 2022, and $13 million as of January 31, 2021. The allowance for credit losses on loan receivables was immaterial for the periods presented.

Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis. As of January 31, 2022, the future estimated amortization expense was as follows (in thousands):


Fiscal Period:
2023	$	3,409
2024	3,102
2025	2,622
2026	2,357
2027	2,077
Thereafter	9,225
Total	$	22,792

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 derivative hedging contracts as described below. We do not enter into any derivatives for trading or speculative purposes.

Cash Flow Hedges

We enter into foreign currency forward contracts to hedge a portion of our forecasted revenue and expense transactions. We designate these forward contracts as cash flow hedging instruments since the accounting criteria for such designation have been met.

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 are subsequently reclassified to the same line item as the hedged transaction on the Consolidated Statements of Operations in the same period that the hedged transaction affects earnings. As of January 31, 2022, we estimate that $4 million of net gains recorded in AOCI related to our cash flow hedges will be reclassified into income within the next 12 months.

As of January 31, 2022, and 2021, the notional values of the forward contracts designated as cash flow hedges that we held to buy U.S. dollars in exchange for other currencies were $1.4 billion and $1.3 billion, respectively. The notional values of the forward contracts designated as cash flow hedges that we held to sell U.S. dollars in exchange for other currencies were $355 million as of January 31, 2022. We did not hold forward contracts designated as cash flow hedges to sell U.S dollars as of January 31, 2021. All contracts had maturities of less than 48 months.

Table of Conten t s

Non-Designated 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, 2022, and 2021, the notional values of the forward contracts not designated as hedges that we held to buy U.S. dollars in exchange for other currencies were $217 million and $160 million, respectively, and the notional values of the forward contracts not designated as hedges that we held to sell U.S. dollars in exchange for other currencies were $8 million and $15 million, respectively.

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


	Consolidated Balance Sheets Location		As of January 31,
		2022			2021
Derivative assets:
Cash flow hedges	Prepaid expenses and other current assets		$	21,337		$	2,073
Cash flow hedges	Other assets		16,618			173
Non-designated hedges	Prepaid expenses and other current assets		1,076			975
Non-designated hedges	Other assets		—			—
Total derivative assets			$	39,031		$	3,221
Derivative liabilities:
Cash flow hedges	Accrued expenses and other current liabilities		$	7,512		$	23,647
Cash flow hedges	Other liabilities		5,175			24,586
Non-designated hedges	Accrued expenses and other current liabilities		336			1,162
Non-designated hedges	Other liabilities		16			61
Total derivative liabilities			$	13,039		$	49,456

The effect of cash flow hedges on the Consolidated Statements of Operations was as follows (in thousands):


		Year Ended January 31,
	Consolidated Statements of Operations Location	2022		2021		2020
Total revenues	Revenues	$	5,138,798	$	4,317,996	$	3,627,206
Amount of gains (losses) related to cash flow hedges	Revenues	(8,759)		18,780		6,142

Pre-tax gains (losses) associated with cash flow hedges were as follows (in thousands):


	Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations		Year Ended January 31,
		2022			2021			2020
Gains (losses) recognized in OCI	Net change in unrealized gains (losses) on cash flow hedges		$	63,494		$	(61,171)		$	31,842
Gains (losses) reclassified from AOCI into income (effective portion)	Revenues		(8,759)			18,780			6,142

Table of Conten t s

Gains (losses) associated with non-designated hedges were as follows (in thousands):


	Consolidated Statements of Operations Location		Year Ended January 31,
		2022			2021			2020
Amount of gains (losses) related to non-designated hedges	Other income (expense), net		$	6,664		$	(4,095)		$	3,671

We are subject to netting agreements with all of the counterparties of the foreign exchange contracts, under which we are permitted to net settle transactions of the same currency with a single net amount payable by one party to the other. It is our policy to present the derivatives gross on the 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, 2022, 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	$	4,414	$	—		$	4,414		$	(2,701)	$	—	$	1,713
Counterparty B	10,936		—			10,936			(5,401)		—		5,535
Counterparty C	8,082		—			8,082			(4,553)		—		3,529
Counterparty D	12,756		—			12,756			(331)		—		12,425
Counterparty E	2,843		—			2,843			(53)		—		2,790
Total	$	39,031	$	—		$	39,031		$	(13,039)	$	—	$	25,992


	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	$	2,701	$	—		$	2,701		$	(2,701)	$	—	$	—
Counterparty B	5,401		—			5,401			(5,401)		—		—
Counterparty C	4,553		—			4,553			(4,553)		—		—
Counterparty D	331		—			331			(331)		—		—
Counterparty E	53		—			53			(53)		—		—
Total	$	13,039	$	—		$	13,039		$	(13,039)	$	—	$	—

Note 11. Debt

Outstanding debt consisted of the following (in thousands):


	As of January 31,
	2022		2021
Term Loan, net of unamortized debt discounts of $1,279 and $1,682, respectively, and unamortized debt issuance costs of $117 and $155, respectively	$	692,354	$	729,413
2022 Notes, net of unamortized debt discounts of $0 and $79,562, respectively, and unamortized debt issuance costs of $2,374 and $4,771, respectively	1,147,443		1,065,601
Total debt	1,839,797		1,795,014
Less: current debt	(1,222,443)		(1,103,101)
Total debt, noncurrent	$	617,354	$	691,913

Table of Conten t s

As of January 31, 2022, contractual repayments and maturities of our outstanding debt were as follows (in thousands):


Fiscal Period:
2023	$	1,224,817
2024	75,000
2025	75,000
2026	468,750
2027	—

Total	$	1,843,567

Credit Agreement

In April 2020, we entered into a Credit Agreement pursuant to which the lenders extended to Workday a senior unsecured Term Loan in an aggregate principal amount of $750 million and an unsecured Revolving Credit Facility in an aggregate principal amount of $750 million.

The Term Loan and Revolving Credit Facility bear interest, at our option, at either (i) a floating rate per annum equal to the base rate plus a margin that ranges from 0% to 0.625%, or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market plus a margin that ranges from 1.000% to 1.625%. The base rate is defined as the greatest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50%, or (iii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market for a period of one month (but not less than zero) plus 1.00%. Actual margins under either election will be based on our consolidated leverage ratio, which is measured by dividing (a) our consolidated funded indebtedness as of the end of the fiscal quarter by (b) our consolidated EBITDA as defined in the Credit Agreement for the most recently completed four consecutive fiscal quarters.

The Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders. The financial covenant, based on a quarterly financial test, requires Workday not to exceed a maximum leverage ratio of 3.50:1.00, subject to a step-up to 4.50:1.00 at the election of Workday for a certain period following an Acquisition (as defined in the Credit Agreement). As of January 31, 2022, and 2021, we were in compliance with all covenants.

Term Loan

The Term Loan was funded in two individual tranches. On April 2, 2020, $500 million of the Term Loan was funded, and the remaining $250 million was funded on July 13, 2020. The Term Loan matures on April 2, 2025, and provides for quarterly repayment in installments of the principal amount at a rate of 1.25% of the principal amount per quarter through January 2022, and 2.50% of the principal amount per quarter thereafter. The Term Loan may be prepaid or permanently reduced by Workday without penalty or premium. As of January 31, 2022, the Term Loan had a carrying value of $692 million, of which $75 million was classified as current and $617 million was classified as noncurrent on the Consolidated Balance Sheets. As of January 31, 2021, the Term Loan had a carrying value of $729 million, of which $38 million was classified as current and $692 million was classified as noncurrent on the Consolidated Balance Sheets. As of January 31, 2022, and 2021, the interest rate on the Term Loan was 1.30% and 1.38%, respectively, and the effective interest rate was 1.38% and 1.46%, respectively.

Revolving Credit Facility

The Revolving Credit Facility may be borrowed, repaid, and reborrowed until April 2, 2025, at which time all amounts borrowed must be repaid. We may request, no more than two times during the term of the Credit Agreement, that each revolving lender extend the maturity date for the revolving loans for one year. Additionally, we may request an increase in aggregate revolving commitments of up to $250 million at any time prior to April 2, 2025. The Revolving Credit Facility may be prepaid or permanently reduced by Workday without penalty or premium. As of January 31, 2022, and 2021, there were no outstanding borrowings under the Revolving Credit Facility.

Table of Conten t s

Convertible Senior Notes

2022 Notes

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 2022 Notes are governed by an Indenture by and between us and Wells Fargo Bank, National Association, as Trustee. Upon conversion, holders of the 2022 Notes will receive cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at our election.

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

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

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

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 2022 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 2022 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 Class A common stock and the conversion rate of the 2022 Notes on such trading day; or
upon the occurrence of specified corporate events, as noted in the Indenture.

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

The 2022 Notes were convertible at the option of the holders during fiscal 2022 and continue to be convertible through the first quarter of fiscal 2023 since the trigger for early conversion was met. Specifically, the last reported sale price of our Class A common stock exceeded 130% of the conversion price of the 2022 Notes for more than 20 trading days during the 30 consecutive trading days ended January 31, 2022. Through the date of this filing, the amount of the principal balance of the 2022 Notes that has been converted or for which conversion has been requested was not material.

The 2022 Notes are classified as current on the Consolidated Balance Sheets as of January 31, 2022.

As described in Note 2, Accounting Standards and Significant Accounting Policies, we adopted ASU No. 2020-06 effective February 1, 2021, using a modified retrospective method, under which financial results reported in prior periods were not adjusted. Prior to the adoption of the standard, in accounting for the issuance of the 2022 Notes, we separated them into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that do not have associated convertible features. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes. This difference represented a debt discount that was amortized to interest expense over the term of the 2022 Notes using the effective interest rate method. The gross carrying amount of the equity component for the 2022 Notes was $223 million and was included in Additional paid-in capital on the Consolidated Balance Sheets upon issuance. The effective interest rate of the liability component of the 2022 Notes was 4.60%. Additionally, we separated the total issuance costs incurred into liability and equity components in proportion to the allocation of the initial proceeds, resulting in liability issuance costs of $14 million and equity issuance costs of $4 million. Issuance costs attributable to the liability component were amortized on a straight-line basis, which approximated the effective interest rate method, to interest expense over the term of the 2022 Notes. The issuance costs attributable to the equity component were netted against the equity component in Additional paid-in capital.

Table of Conten t s

Upon adoption of ASU No. 2020-06 on February 1, 2021, we recombined the liability and equity components of the 2022 Notes assuming that the instrument was accounted for as a single liability from inception to the date of adoption. We similarly recombined the liability and equity components of the issuance costs. The issuance costs are presented as a deduction from the outstanding principal balance of the 2022 Notes, and are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the 2022 Notes. As of January 31, 2022, the effective interest rate on the 2022 Notes was 0.55%.

2020 Notes

In June 2013, we issued 1.50% convertible senior notes due July 15, 2020, with a principal amount of $250 million. The 2020 Notes were unsecured, unsubordinated obligations, and interest was payable in cash in arrears at a fixed rate of 1.50% on January 15 and July 15 of each year. During fiscal 2021, the 2020 Notes were converted by note holders and we repaid the $250 million principal balance in cash. We also distributed approximately 1.7 million shares of our Class A common stock to note holders during fiscal 2021, which represents the conversion value in excess of the principal amount.

The adoption of ASU No. 2020-06 did not impact the accounting for the 2020 Notes since they were converted and repaid prior to the date of adoption.

Notes Hedges

In connection with the issuance of the 2022 Notes and 2020 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 2022 Notes and 2020 Notes. The Purchased Options are separate transactions and are not part of the terms of the 2022 Notes or 2020 Notes. The amounts paid for the Purchased Options are included in Additional paid-in capital on the Consolidated Balance Sheets.

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 relating to the 2022 Notes will expire on October 1, 2022, if not exercised earlier.

The Purchased Options relating to the 2020 Notes gave 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. During the second quarter of fiscal 2021, we received approximately 1.7 million shares of our Class A common stock from the exercise of the Purchased Options relating to the 2020 Notes. These shares were recorded as treasury stock.

Warrants

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

During the third and fourth quarters of fiscal 2021, Warrants related to the 2020 Notes were exercised, and we distributed approximately 1.6 million shares of our Class A common stock to warrant holders primarily utilizing treasury stock. As of January 31, 2021, there were no Warrants outstanding related to the 2020 Notes.

Table of Conten t s

Interest Expense on Debt

The following table sets forth total interest expense recognized related to our debt, net of amounts capitalized (in thousands):


	Year Ended January 31,
	2022		2021		2020
Contractual interest expense	$	12,525	$	15,012	$	6,624
Interest cost related to amortization of debt issuance costs	3,584		3,196		3,531
Interest cost related to amortization of debt discount	404		50,497		54,007
Total interest expense	$	16,513	$	68,705	$	64,162

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, 2022, and 2021, operating lease right-of-use assets were $248 million and $414 million, respectively, and operating lease liabilities were $263 million and $443 million, respectively. We have also entered into finance lease agreements for other property and equipment. As of January 31, 2022, and 2021, finance leases were not material.

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



	Year Ended January 31,
	2022		2021		2020
Operating lease cost	$	93,045	$	94,183	$	85,154




Short-term lease cost	6,638		14,544		16,260
Variable lease cost	25,743		17,708		17,845

Total operating lease cost	$	125,426	$	126,435	$	119,259

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


	Year Ended January 31,
	2022		2021		2020
Cash paid for operating lease liabilities	$	91,402	$	87,450	$	75,029
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	54,846		205,103		365,305

Other information related to our operating leases was as follows:


	As of January 31,
	2022		2021
Weighted average remaining lease term (in years)	5		6
Weighted average discount rate	2.35	%	1.73	%

As of January 31, 2022, maturities of operating lease liabilities were as follows (in thousands):


Fiscal Period:
2023	$	85,578
2024	72,807
2025	56,920
2026	30,665
2027	10,464
Thereafter	32,164
Total lease payments	288,598
Less imputed interest	(25,639)
Total operating lease liabilities	$	262,959

Table of Conten t s

As of January 31, 2022, we have additional operating leases, primarily for office space and data centers, that have not yet commenced with total undiscounted lease payments of $9 million. These operating leases will commence in fiscal 2023, with lease terms ranging from two to seven years.

Related-Party Transactions

As discussed in Note 6, Property and Equipment, Net, during fiscal 2021, we entered into an agreement with an affiliated party which gave us the option to purchase certain leased properties within our corporate headquarters. We exercised the Leased Property Purchase Option in the first quarter of fiscal 2022 at a purchase price of $173 million in cash, reduced by a $2 million fee paid for the Leased Property Purchase Option in the prior fiscal year.

Subsequent to the exercise of the Leased Property Purchase Option, the Property was included in Property and equipment, net on the Consolidated Balance Sheets. As of January 31, 2021, operating lease right-of-use assets and operating lease liabilities related to these agreements were $134 million and $146 million, respectively. The total rent expense under these agreements was $2 million, $16 million, and $13 million for fiscal 2022, 2021, and 2020, respectively.

Note 13. Commitments and Contingencies

Purchase Obligations

Our purchase obligations are primarily related to agreements for third-party hosted infrastructure platforms, data center equipment and software, business technology software and support, and sales and marketing activities. These obligations consist of agreements to purchase goods and services that are enforceable and legally binding, and specify all significant terms and the approximate timing of the payments. For purchase obligations with cancellation provisions, the amounts included in the following table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fees.

Future payments under purchase obligations with a remaining term in excess of one year as of January 31, 2022, were as follows (in thousands):


	Third-party hosted infrastructure platform obligations		Other purchase obligations
Fiscal Period:
2023	$	42,985	$	127,216
2024	48,519		81,550
2025	93,916		68,224
2026	272,663		70,207
2027	120,000		35,512
Thereafter	150,000		74,629
Total	$	728,083	$	457,338

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, 2022, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such loss contingencies.

Table of Conten t s

Note 14. Stockholders’ Equity

Common Stock

As of January 31, 2022, there were 196 million shares of Class A common stock, net of treasury stock, and 55 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 10 votes per share. Each share of Class B common stock can be converted into a share of Class A common stock at any time at the option of the holder. 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”). As of January 31, 2022, we had 58 million shares of Class A common stock available for future grants.

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 are exercisable on or about the succeeding November 30 and May 31, respectively. As of January 31, 2022, 4 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 2022 is as follows (in thousands, except per share data):


	Number of Shares	Weighted-Average Grant Date Fair Value
Balance as of January 31, 2021	13,168	$	154.90
RSUs granted	6,205	259.61
RSUs vested	(6,204)	149.83
RSUs forfeited	(1,361)	184.94
Balance as of January 31, 2022	11,808	209.12

The weighted-average grant date fair value of RSUs granted during fiscal 2022, 2021, and 2020 was $259.61, $152.70, and $187.89, respectively. The total fair value of RSUs vested as of the vesting dates during fiscal 2022, 2021, and 2020 was $1.6 billion, $1.1 billion, and $1.2 billion, respectively.

As of January 31, 2022, there was a total of $1.9 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately three years.

Performance-Based Restricted Stock Units

During fiscal 2022, 0.4 million shares of PRSUs were granted to employees below the level of vice president that included both service conditions and performance conditions related to company-wide goals. These performance conditions were met and the PRSUs will vest if the individual employee continues to provide service through the vesting date of March 15, 2022. During fiscal 2022, we recognized $65 million in compensation cost related to these PRSUs, and as of January 31, 2022, there was a total of $16 million in unrecognized compensation cost which is expected to be recognized over a weighted-average period of approximately two months.

During fiscal 2021, 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 PRSUs vested on March 15, 2021. We recognized $17 million and $91 million in compensation cost related to these PRSUs during fiscal 2022 and 2021, respectively.

Table of Conten t s

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 2022 is as follows (in millions, except number of shares which are reflected in thousands and per share data):


	Outstanding Stock Options	Weighted-Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2021	1,260	$	13.55	$	270
Stock options granted	—	—
Stock options exercised	(860)	10.27
Stock options canceled	(13)	35.61
Balance as of January 31, 2022	387	20.09		90
Vested and expected to vest as of January 31, 2022	386	20.11		90
Exercisable as of January 31, 2022	366	19.21		86

The total grant date fair value of stock options vested during fiscal 2022, 2021, and 2020 was $8 million, $23 million, and $37 million, respectively. The total intrinsic value of stock options exercised during fiscal 2022, 2021, and 2020 was $209 million, $396 million, and $407 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, 2022, is approximately two years.

As of January 31, 2022, there was a total of $1 million in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately nine months.

The stock options that are exercisable as of January 31, 2022, 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, 2022, is approximately two years.

Employee Stock Purchase Plan

For fiscal 2022, approximately 1 million shares of Class A common shares were purchased under the ESPP at a weighted-average price of $192.13 per share, resulting in cash proceeds of $144 million.

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


	Year Ended January 31,
	2022	2021	2020
Expected volatility	30.4% - 41.5%	36.9% - 51.0%	36.9% - 41.7%
Expected term (in years)	0.5	0.5	0.5
Risk-free interest rate	0.04% - 0.10%	0.10% - 1.62%	1.62% - 2.50%
Dividend yield	—%	—%	—%
Grant date fair value per share	$225.70 - $260.86	$146.14 - $191.85	$167.80 - $191.88

Note 15. Unearned Revenue and Performance Obligations

Subscription services revenues of $2.5 billion, $2.2 billion, and $1.8 billion was recognized during fiscal 2022, 2021, and 2020, respectively, that was included in the unearned revenue balances at the beginning of the respective periods. Professional services revenues recognized in the same periods from unearned revenue balances at the beginning of the respective periods were not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of January 31, 2022, approximately $12.8 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize revenues on approximately $8.0 billion of these remaining performance obligations over the next 24 months, with the balance recognized thereafter. Revenues from remaining performance obligations for professional services contracts as of January 31, 2022, were not material.

Table of Conten t s

Note 16. Other Income (Expense), Net

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


	Year Ended January 31,
	2022		2021		2020
Interest income	$	5,575	$	18,788	$	41,268
Interest expense (1)	(16,602)		(68,806)		(58,685)
Other (2)	143,659		23,483		37,200
Total other income (expense), net	$	132,632	$	(26,535)	$	19,783

(1)Interest expense includes the contractual interest expense of the Term Loan and Notes, and the related non-cash interest expense attributable to amortization of the debt discounts and debt issuance costs. For further information, see Note 11, Debt.

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

Note 17. Income Taxes

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


	Year Ended January 31,
	2022		2021		2020
Domestic	$	309,061	$	(140,352)	$	(256,772)
Foreign	(292,879)		(134,782)		(225,675)
Income (loss) before provision for (benefit from) income taxes	$	16,182	$	(275,134)	$	(482,447)

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


	Year Ended January 31,
	2022		2021		2020
Current:

State	$	763	$	1,524	$	438
Foreign	7,300		9,248		7,707
Total	8,063		10,772		8,145

Deferred:
Federal	(1,953)		(81)		(1,258)
State	(721)		(177)		(2,014)
Foreign	(18,580)		(3,217)		(6,646)
Total	(21,254)		(3,475)		(9,918)
Provision for (benefit from) income taxes	$	(13,191)	$	7,297	$	(1,773)

Table of Conten t s

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,
	2022		2021		2020
Federal statutory rate	21.0	%	21.0	%	21.0	%
Effect of:
Foreign income at other than U.S. rates	321.0	%	(13.1)	%	(11.2)	%
Intercompany transactions	(158.2)	%	1.0	%	4.6	%
Research tax credits	(447.7)	%	26.6	%	13.1	%
State taxes, net of federal benefit	(0.7)	%	(0.5)	%	(0.1)	%

Changes in valuation allowance	558.5	%	(56.3)	%	(48.3)	%
Share-based compensation	(365.4)	%	19.0	%	21.6	%
Permanent difference	4.6	%	(0.3)	%	(0.7)	%
Nontaxable gain on investment	(15.7)	%	0.0	%	0.9	%
Other	1.0	%	(0.1)	%	(0.5)	%
Total	(81.6)	%	(2.7)	%	0.4	%

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 domestic income tax benefit primarily relates to the release of our valuation allowance resulting from business combinations. The foreign deferred income tax benefit primarily relates to the excess of tax benefit from share-based compensation and net operating loss in certain foreign jurisdictions.

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


	As of January 31,
	2022		2021
Deferred tax assets:
Unearned revenue	$	16,877	$	17,502
Other reserves and accruals	28,629		23,021
Tax attributes carryforward	1,790,396		1,536,758
Property and equipment	23,977		13,093
Share-based compensation	71,191		77,815
Intangibles	422,985		483,752
Operating lease liabilities	60,714		105,564
Other	39,373		40,603
Total deferred tax assets	2,454,142		2,298,108
Valuation allowance	(2,242,901)		(2,083,683)
Deferred tax assets, net of valuation allowance	211,241		214,425
Deferred tax liabilities:


Deferred commissions	(102,682)		(81,125)
Operating lease right-of-use assets	(57,001)		(100,917)

Other	(43,990)		(22,992)
Total deferred tax liabilities	(203,673)		(205,034)
Net deferred tax assets	$	7,568	$	9,391

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, 2022, we continue to maintain a full valuation allowance against our U.S. federal, state, and certain foreign jurisdiction deferred tax assets.

Table of Conten t s

As of January 31, 2022, we recorded a valuation allowance of $2.2 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 $159 million and $180 million during fiscal 2022 and 2021, respectively. The increase in the valuation allowance during fiscal 2022 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, 2022, we had approximately $4.1 billion of federal, $3.1 billion of state, and $2.6 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 2023 and 2042. 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 $265 million of federal and $252 million of California research and development tax credit carryforwards as of January 31, 2022. The federal credits expire in varying amounts between fiscal 2023 and 2042. 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, 2022, 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,
	2022		2021		2020
Unrecognized tax benefits at the beginning of the period	$	159,862	$	143,621	$	130,771
Additions for tax positions taken in prior years	572		4,640		309
Reductions for tax positions taken in prior years	(1,030)		(2,347)		—

Additions for tax positions related to the current year	14,918		15,158		13,109
Reductions related to a lapse of applicable statute of limitations	—		(807)		(568)
Reductions related to settlements	(393)		(403)		—
Unrecognized tax benefits at the end of the period	$	173,929	$	159,862	$	143,621

Our policy is to include interest and penalties related to unrecognized tax benefits within our provision for income taxes. We did not accrue any material interest expense or penalties during fiscal 2022, 2021, or 2020.

Of the total amount of unrecognized tax benefits of $174 million, $0.5 million, if recognized, would impact the effective tax rate as of January 31, 2022.

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.

Note 18. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, net of treasury stock. Diluted net income (loss) per share is computed by giving effect to all potentially dilutive shares of common stock, including our convertible senior notes, outstanding warrants related to the issuance of the convertible senior notes, and outstanding share-based awards consisting primarily of unvested RSUs and PRSUs, and ESPP obligations.

The net income (loss) per share is allocated based on the contractual participation rights of the Class A common shares and Class B common shares as if the income (loss) for the period had been distributed. As the liquidation and dividend rights are identical, the net income (loss) is allocated on a proportionate basis. The computation of the diluted net income (loss) per share of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted net income (loss) per share of Class B common stock does not assume the conversion of those shares.

Basic and diluted net loss per share was the same for fiscal 2021 and 2020 as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Table of Conten t s

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


	Year Ended January 31,
	2022				2021				2020
	Class A		Class B		Class A		Class B		Class A		Class B
Net income (loss) per share, basic:
Numerator:
Net income (loss)	$	22,556	$	6,817	$	(210,637)	$	(71,794)	$	(345,958)	$	(134,716)
Denominator:
Weighted-average shares outstanding, basic	189,864		57,385		176,758		60,261		163,513		63,672
Net income (loss) per share, basic	$	0.12	$	0.12	$	(1.19)	$	(1.19)	$	(2.12)	$	(2.12)
Net income (loss) per share, diluted:
Numerator:
Net income (loss)	$	22,556	$	6,817	$	(210,637)	$	(71,794)	$	(345,958)	$	(134,716)

Reallocation of net income as a result of conversion of Class B to Class A common stock	6,817		—		—		—		—		—
Reallocation of net income to Class B common stock	—		(182)		—		—		—		—
Net income (loss) for diluted calculation	29,373		6,635		(210,637)		(71,794)		(345,958)		(134,716)
Denominator:
Weighted-average shares outstanding, basic	189,864		57,385		176,758		60,261		163,513		63,672
Conversion of Class B to Class A common stock	57,385		—		—		—		—		—
Dilutive effect of share-based awards	5,549		—		—		—		—		—

Dilutive effect of warrants related to the issuance of convertible senior notes	1,234		—		—		—		—		—
Weighted-average shares outstanding, diluted	254,032		57,385		176,758		60,261		163,513		63,672
Net income (loss) per share, diluted	$	0.12	$	0.12	$	(1.19)	$	(1.19)	$	(2.12)	$	(2.12)

The computation of diluted net income (loss) per share does not include the effect of the following potentially outstanding weighted-average shares of common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted net income (loss) per share because the effect would have been anti-dilutive (in thousands):


	Year Ended January 31,
	2022	2021	2020

Shares related to outstanding share-based awards	1,436	15,366	18,083
Shares related to the convertible senior notes	7,817	9,205	10,876
Shares subject to warrants related to the issuance of convertible senior notes	—	10,392	10,876
Total	9,253	34,963	39,835

Note 19. Geographic Information

Revenues

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. Revenues by geography is generally based on the address of the customer as specified in our customer subscription agreement. The following table sets forth revenues by geographic area (in thousands):


	Year Ended January 31,
	2022		2021		2020
United States	$	3,845,412	$	3,249,127	$	2,741,427
Other countries	1,293,386		1,068,869		885,779
Total revenues	$	5,138,798	$	4,317,996	$	3,627,206

Table of Conten t s

Long-Lived Assets

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


	As of January 31,
	2022		2021
United States	$	1,174,371	$	1,169,820
Ireland	117,049		143,887
Other countries	79,463		72,839
Total long-lived assets	$	1,370,883	$	1,386,546

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 $46 million, $42 million, and $36 million during fiscal 2022, 2021, and 2020, respectively.

Table of Conten t s

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