Item 8. 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									56
Consolidated Statements of Operations									57
Consolidated Statements of Comprehensive Income									58
Consolidated Statements of Stockholders’ Equity									59
Consolidated Statements of Cash Flows									60
Notes to Consolidated Financial Statements									62

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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, 2026 and 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2026, 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, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, 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, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 6, 2026 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.

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			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. Auditing the Company’s determination of distinct performance obligations related to subscription services contracts was challenging. For example, there were nonstandard terms and conditions in certain subscription services contracts that required judgment to determine whether the distinct performance obligations were identified and 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 in subscription services contracts. Among other audit procedures, we selected a sample of subscription services 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 in these contracts.

/s/ Ernst & Young LLP

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

San Francisco, California

March 6, 2026

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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, 2026, 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, 2026, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Paradox and Sana, which are included in the fiscal 2026 consolidated financial statements of the Company and constituted less than 1% of total and net assets (excluding goodwill and intangible assets, which were integrated into the Company’s control environment) as of January 31, 2026 and less than 1% and 1.2% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Paradox and Sana.

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, 2026 and 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2026, and the related notes and our report dated March 6, 2026 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.

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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

March 6, 2026

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WORKDAY, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except number of shares which are reflected in thousands and per share data)

			As of January 31,
			2026						2025
Assets
Current assets:
Cash and cash equivalents			$	1,501					$	1,543
Marketable securities			3,942						6,474
Trade and other receivables, net of allowance for credit losses of $16 and $10, respectively			2,332						1,950
Deferred costs			306						267
Prepaid expenses and other current assets			348						311
Total current assets			8,429						10,545
Property and equipment, net			1,093						1,239
Operating lease right-of-use assets			719						336
Deferred costs, noncurrent			634						561
Acquisition-related intangible assets, net			681						361
Deferred tax assets			829						1,039
Goodwill			5,229						3,478
Other assets			460						418
Total assets			$	18,074					$	17,977
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	142					$	108
Accrued expenses and other current liabilities			454						296
Accrued compensation			642						578
Unearned revenue			5,010						4,467
Operating lease liabilities			130						99
Total current liabilities			6,378						5,548
Debt, noncurrent			2,987						2,984
Unearned revenue, noncurrent			71						80
Operating lease liabilities, noncurrent			704						279
Other liabilities			129						52
Total liabilities			10,269						8,943
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding			0						0
Class A common stock, $0.001 par value; 750,000 shares authorized; 230,770 and 220,938 shares issued, respectively; 212,082 and 215,022 shares outstanding, respectively			0						0
Class B common stock, $0.001 par value; 240,000 shares authorized; 47,049 and 51,330 shares issued and outstanding, respectively			0						0
Additional paid-in capital			12,673						11,463
Treasury stock, at cost; 18,688 and 5,916 shares held, respectively			(4,220)						(1,308)
Accumulated other comprehensive income (loss)			(136)						84
Accumulated deficit			(512)						(1,205)
Total stockholders’ equity			7,805						9,034
Total liabilities and stockholders’ equity			$	18,074					$	17,977

See Notes to Consolidated Financial Statements

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WORKDAY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except number of shares which are reflected in thousands and per share data)

			Year Ended January 31,
			2026						2025						2024
Revenues:
Subscription services			$	8,833					$	7,718					$	6,603
Professional services			719						728						656
Total revenues			9,552						8,446						7,259
Costs and expenses (1)****:
Costs of subscription services			1,531						1,266						1,031
Costs of professional services			790						803						740
Product development			2,679						2,626						2,464
Sales and marketing			2,616						2,432						2,139
General and administrative			912						820						702
Restructuring			303						84						0
Total costs and expenses			8,831						8,031						7,076
Operating income			721						415						183
Other income, net			288						223						173
Income before provision for (benefit from) income taxes			1,009						638						356
Provision for (benefit from) income taxes			316						112						(1,025)
Net income			$	693					$	526					$	1,381
Net income per share, basic			$	2.61					$	1.98					$	5.28
Net income per share, diluted			$	2.59					$	1.95					$	5.21
Weighted-average shares used to compute net income per share, basic			265,097						265,257						261,344
Weighted-average shares used to compute net income per share, diluted			268,117						269,205						265,285

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

			Year Ended January 31,
			2026						2025						2024
Costs of subscription services			$	156					$	145					$	120
Costs of professional services			111						114						116
Product development			690						670						653
Sales and marketing			344						310						282
General and administrative			269						272						245
Restructuring			56						8						0
Total share-based compensation expense			$	1,626					$	1,519					$	1,416

See Notes to Consolidated Financial Statements

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WORKDAY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

			Year Ended January 31,
			2026						2025						2024
Net income			$	693					$	526					$	1,381
Other comprehensive income (loss), net of tax:
Net change in foreign currency translation adjustment			5						(7)						(1)
Net change in unrealized gains on available-for-sale debt securities, net of tax provision of $6, $2, $5, respectively			17						4						18
Net change in unrealized gains (losses) on cash flow hedges, net of tax provision (benefit) of $(11), $3, and $2, respectively			(242)						66						(49)
Other comprehensive income (loss), net of tax			(220)						63						(32)
Comprehensive income			$	473					$	589					$	1,349

See Notes to Consolidated Financial Statements

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WORKDAY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except number of shares which are reflected in thousands)

			Year Ended January 31,
			2026						2025						2024
Common stock:
Balance, beginning of period			$	0					$	0					$	0
Issuance of common stock under employee equity plans			0						0						0
Shares withheld related to net share settlement of equity awards			0						0						0
Balance, end of period			0						0						0
Additional paid-in capital:
Balance, beginning of period			$	11,463					$	10,400					$	8,829
Issuance of common stock under employee equity plans			192						186						177
Shares withheld related to net share settlement of equity awards			(614)						(649)						(22)
Share-based compensation			1,632						1,526						1,416
Balance, end of period			12,673						11,463						10,400
Treasury stock:
Balance, beginning of period			(1,308)						(608)						(185)
Common stock repurchases under share repurchase programs			(2,912)						(700)						(423)
Balance, end of period			(4,220)						(1,308)						(608)
Accumulated other comprehensive income:
Balance, beginning of period			84						21						53
Other comprehensive income (loss)			(220)						63						(32)
Balance, end of period			(136)						84						21
Accumulated deficit:
Balance, beginning of period			(1,205)						(1,731)						(3,112)
Net income			693						526						1,381
Balance, end of period			(512)						(1,205)						(1,731)
Total stockholders’ equity			$	7,805					$	9,034					$	8,082

			Year Ended January 31,
			2026						2025						2024
Common stock shares:
Balance, beginning of period			266,352						263,862						257,991
Issuance of common stock under employee equity plans			7,869						7,959						7,739
Shares withheld related to net share settlement of equity awards			(2,700)						(2,579)						(95)
Common stock repurchased			(12,772)						(2,914)						(1,849)
Other share issuances			382						24						76
Balance, end of period			259,131						266,352						263,862

See Notes to Consolidated Financial Statements

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WORKDAY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

			Year Ended January 31,
			2026						2025						2024
Cash flows from operating activities:
Net income			$	693					$	526					$	1,381
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			347						326						282
Share-based compensation expense			1,626						1,519						1,416
Amortization of deferred costs			292						251						213
Non-cash lease expense			116						103						96
Net (gains) losses on investments			(87)						16						19
Accretion of discounts on marketable debt securities, net			(61)						(113)						(149)
Deferred income taxes			218						33						(1,058)
Asset impairments			117						19						0
Other			7						(1)						(17)
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net			(360)						(313)						(87)
Deferred costs			(404)						(337)						(342)
Prepaid expenses and other assets			(14)						50						69
Accounts payable			6						25						(72)
Accrued expenses and other liabilities			(26)						(41)						(95)
Unearned revenue			469						398						493
Net cash provided by operating activities			2,939						2,461						2,149
Cash flows from investing activities:
Purchases of marketable securities			(2,721)						(4,786)						(6,150)
Maturities of marketable securities			2,339						3,846						4,519
Sales of marketable securities			2,937						273						144
Capital expenditures			(162)						(269)						(232)
Business combinations, net of cash acquired			(2,079)						(825)						(8)
Purchases of other intangible assets			0						(3)						(10)
Purchases of non-marketable equity and other investments			(21)						(22)						(16)
Sales of non-marketable equity and other investments			19						5						2
Other			21						0						0
Net cash provided by (used in) investing activities			333						(1,781)						(1,751)
Cash flows from financing activities:
Repurchases of common stock			(2,895)						(700)						(423)
Proceeds from issuance of common stock from employee equity plans			192						186						177
Taxes paid related to net share settlement of equity awards			(616)						(636)						(22)
Net cash used in financing activities			(3,319)						(1,150)						(268)
Effect of exchange rate changes			2						0						(1)
Net increase (decrease) in cash, cash equivalents, and restricted cash			(45)						(470)						129
Cash, cash equivalents, and restricted cash at the beginning of period			1,554						2,024						1,895
Cash, cash equivalents, and restricted cash at the end of period			$	1,509					$	1,554					$	2,024

See Notes to Consolidated Financial Statements

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			Year Ended January 31,
			2026						2025						2024
Supplemental cash flow data:
Cash paid for interest			$	110					$	110					$	110
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid			64						27						52
Taxes related to net share settlement of equity awards, accrued but not paid			11						13						0

			As of January 31,
			2026						2025						2024
Reconciliation of cash, cash equivalents, and restricted cash as shown in the Consolidated Statements of Cash Flows:
Cash and cash equivalents			$	1,501					$	1,543					$	2,012
Restricted cash included in Prepaid expenses and other current assets			8						11						12
Total cash, cash equivalents, and restricted cash			$	1,509					$	1,554					$	2,024

See Notes to Consolidated Financial Statements

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Workday, Inc.

Notes to Consolidated Financial Statements

As used in this report, the terms “Workday,” “registrant,” “we,” “us,” and “our” mean Workday, Inc. and its subsidiaries unless the context indicates otherwise.

Amounts in this report may not recalculate due to rounding. Year-over-year comparisons, operating margin, and net income per share are calculated using unrounded data.

Note 1. Overview and Basis of Presentation

Description of the Business

Workday is a leading enterprise platform that provides organizations with solutions for human capital management (“HCM”), financial management, spend management, and planning. With Workday, our customers have an artificial intelligence (“AI”)-powered cloud platform that helps them manage their people, money, and agents.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2026, for example, refer to the fiscal year ended January 31, 2026.

Basis of Presentation

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

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

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, judgments, and assumptions include, but are not limited to, the identification of distinct performance obligations for revenue recognition, the determination of the period of benefit for deferred commissions, the realizability of deferred tax assets, the measurement of uncertain tax positions, 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, judgments, and assumptions, and such differences could be material to our consolidated financial statements.

Segment Information

We operate as a single operating and reportable segment: cloud applications. Although we offer a variety of enterprise cloud solutions to a diverse global customer base, we operate in one operating segment because our business activities are managed on a consolidated basis, our service offerings all operate on the Workday platform and are deployed in a similar manner, and our Chief Operating Decision Maker (“CODM”), who is our Chief Executive Officer, allocates resources and assesses performance based upon discrete financial information at the consolidated level.

Our CODM assesses performance and decides how to allocate resources based on Net income, as reported on the Consolidated Statements of Operations. Net income is used to evaluate the overall profitability of the business and to guide decisions on how to invest in and grow the business. Our CODM also reviews Total assets, as reported on the Consolidated Balance Sheets, and Capital expenditures, as reported on the Consolidated Statements of Cash Flows. Significant segment expenses include the costs and expenses presented on the Consolidated Statements of Operations. Other segment items include Other income, net and Provision for (benefit from) income taxes.

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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. Revenues are recognized net of any taxes collected from customers which are subsequently remitted to governmental authorities.

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.

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to our cloud applications, with standard and enhanced 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. To date, we have not allocated any significant variable consideration to the transaction price. Our subscription contracts are generally three years or longer in length 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, and the number and types of users within our contracts.

We use a range of amounts to estimate SSP for both subscription and professional services sold together in a contract to determine whether there is a discount to be allocated based on the relative SSP of the performance obligations. We use historical sales transaction data, among other factors, to determine the SSP for each distinct performance obligation. Our SSP ranges are reassessed on a periodic basis or when facts and circumstances change. Changes in SSP for our services can evolve over time due to changes in our pricing practices that are influenced by market competition, changes in demand for our services, and other economic factors.

Contract Balances

We generally invoice our customers annually in advance for our subscription services. For our professional services, we generally invoice customers as the work is performed for time and materials arrangements, and in advance for fixed price arrangements. Payment terms and conditions vary by contract type and by customer, and payment is generally required within 30 days from date of invoicing. The timing of revenue recognition may differ from the timing of invoicing customers, and these timing differences result in trade receivables, contract assets, or contract liabilities (unearned revenue) on the Consolidated Balance Sheets.

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Trade Receivables and Contract Assets

We record a trade receivable when an unconditional right to consideration exists, such that only the passage of time is required before payment of consideration is due. A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. The current and noncurrent portions of contract assets are included in Trade and other receivables, net and Other assets, respectively, on the Consolidated Balance Sheets.

We maintain an allowance for credit losses for expected uncollectible trade receivables and contract assets, which is recorded as an offset to trade receivables or contract assets. We assess our allowance for credit losses 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. For current trade receivables and contract assets, we assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The allowance for credit losses is recorded in General and administrative expenses on the Consolidated Statements of Operations.

Unearned Revenue

Contract liabilities consist of unearned revenue, which is recorded when we invoice in advance of revenues being recognized from our contracts. 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.

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 impairment or 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 generally consist of investments in U.S. treasury securities, commercial paper, and money market funds.

Debt Securities

Debt securities generally consist of investments in U.S. treasury securities, U.S. agency obligations, corporate bonds, commercial paper, asset-backed securities, and supranational securities. 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 funds available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the Consolidated Balance Sheets. Debt securities included in Marketable securities on the Consolidated Balance Sheets consist of securities with original maturities at the time of purchase greater than three months, and the remaining securities are included in Cash and cash equivalents. Realized gains or losses from the sales of debt securities are based on the specific identification method.

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, net on the Consolidated Statements of Operations. Non-credit related losses are recorded in Accumulated other comprehensive income (loss) (“AOCI”).

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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

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 recorded at cost and are adjusted for observable transactions for same or similar securities of the same issuer or impairment events. These investments are included in Other assets on the Consolidated Balance Sheets. Additionally, we assess our non-marketable equity investments quarterly for impairment. Adjustments and impairments are recorded in Other income, net on the Consolidated Statements of Operations.

Marketable Equity Investments

We may 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, net on the Consolidated Statements of Operations.

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.

Derivative Financial Instruments and Hedging Activities

We use derivative financial instruments to manage foreign currency exchange risk. Derivative instruments are measured 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 AOCI on the Consolidated Balance Sheets and 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. The effectiveness of the cash flow hedges is assessed quantitatively using regression at inception of the hedge and on an ongoing basis. 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, net on the Consolidated Statements of Operations in the period incurred. Cash flows from the settlement of forward contracts designated as cash flow hedges and non-designated hedges are classified as operating activities on the Consolidated Statements of Cash Flows.

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, except for land which is stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as shown in the table below.

Computers, equipment, and software			2 - 10 years
Buildings			10 - 60 years
Leasehold improvements			shorter of the related lease term or ten years
Furniture, fixtures, and transportation equipment			5 - 12 years
Land improvements			15 years

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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 on the acquisition date, with the exception of contract assets and unearned revenue which are measured and recognized on the acquisition date in accordance with our revenue recognition policy. Any residual purchase price is recorded as 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 within Other income, 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 is not amortized, but is tested for impairment at least annually, and more frequently upon the occurrence of certain events.

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.

We have elected to combine lease and non-lease components for each of our existing underlying leases and to exclude leases with a term of 12 months or less from our Consolidated Balance Sheets. We recognize variable lease costs, including common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor, in the Consolidated Statements of Operations in the period incurred. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that we will exercise such options.

Impairment of Long-Lived Assets

We evaluate long-lived assets, including property and equipment, acquisition-related intangible assets, and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Recoverability is measured by comparing the carrying value to the future undiscounted cash flows we expect the asset or asset group to generate. Any excess of the carrying value of the asset or asset group above its fair value is recognized as an impairment loss.

Treasury Stock

Treasury stock is accounted for using the cost method and recorded as a reduction to Stockholders’ equity on the Consolidated Balance Sheets. Incremental direct costs to purchase treasury stock, including excise tax and commissions, are included in the cost of the shares acquired.

Advertising Expenses

Advertising is expensed as incurred. Advertising expense was $181 million, $204 million, and $194 million for fiscal 2026, 2025, and 2024, respectively.

Share-Based Compensation

We measure and recognize compensation expense for share-based awards issued to employees and non-employees, primarily including restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and purchases under our employee stock purchase plan (“ESPP”), on the Consolidated Statements of Operations.

For RSUs and PSUs, fair value is based on the closing price of our common stock on the grant date. Compensation expense for RSUs, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period, which is generally the same as the vesting period. Compensation expense for PSUs is recognized using the accelerated attribution method over the requisite service period when it is probable that the performance conditions will be satisfied.

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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.

Restructuring

Restructuring costs are associated with a formal restructuring plan and are primarily related to workforce reductions, the closure of facilities, and other exit and disposal activities. For involuntary employee termination benefits not provided under an ongoing benefit arrangement, costs are recognized when the plan is communicated to the employees. For ongoing employee benefit arrangements, inclusive of statutory requirements, costs are recognized when it becomes probable that an obligation has been incurred and the amount can be reasonably estimated. Costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates, and losses on owned real estate are recognized when all of the held-for-sale criteria are met. The liabilities for restructuring charges are generally included in Accrued expenses and other liabilities or Accrued compensation on the Consolidated Balance Sheets.

Income Taxes

We record a provision for (benefit from) 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. A valuation allowance is established when necessary to reduce deferred tax assets to the net amount that is more likely than not to be realized. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for (benefit from) income taxes in the period in which such determination is made.

We recognize the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50% likely to be realized upon settlement with the taxing authority. To the extent the assessment of such tax position changes, such difference will affect the provision for (benefit from) income taxes in the period in which we make the determination. We recognize interest accrued and penalties related to unrecognized tax benefits in the provision for (benefit from) income taxes.

Warranties and Indemnification

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

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

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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, 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, derivative instruments, 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, 2026, or 2025. No customer individually accounted for more than 10% of total revenues during fiscal 2026, 2025, or 2024.

Other than the United States (“U.S.”), no country individually accounted for more than 10% of total revenues during fiscal 2026, 2025, or 2024.

In order to reduce the risk of disruption of our cloud applications, we host our applications in data centers operated by third parties located in the U.S., Europe, Canada, and the Asia-Pacific region. These data centers include third-party hosted infrastructure, including Amazon Web Services and Google Cloud, and co-location data centers. Procedures are in place to restore services in the event of disruption at one of these 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.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. We adopted this ASU on a prospective basis effective February 1, 2025. For further information, see Note 17, Income Taxes.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. We early adopted this ASU on a prospective basis effective November 1, 2025. In accordance with this practical expedient, for current trade receivables and contract assets, we assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The adoption had no material impact on our consolidated financial statements during fiscal 2026.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disclosure of additional information about specific expense categories in the notes to the financial statements. This ASU is effective for annual periods beginning in our fiscal 2028, and interim periods beginning in the first quarter of our fiscal 2029, with early adoption permitted. The updated standard allows for adoption on a prospective or retrospective basis. We are currently evaluating the effect the updated standard will have on our financial statement disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the internal-use software costs capitalization model by eliminating stage-based rules and replacing them with a principles-based framework to be more aligned with modern software development practices. This ASU is effective for interim and annual reporting periods beginning in the first quarter of our fiscal 2029, with early adoption permitted as of the beginning of an annual reporting period. Entities may adopt the guidance using prospective application, retrospective application, or a modified transition approach. We are currently evaluating the effect the updated standard will have on our consolidated financial statements and related disclosures.

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Note 3. Investments

Debt Securities

As of January 31, 2026, debt securities consisted of the following (in millions):

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Aggregate Fair Value
U.S. treasury securities			$	1,820					$	11					$	0					$	1,831
U.S. agency obligations			265						1						0						266
Corporate bonds			1,874						22						0						1,896
Commercial paper			164						0						0						164
Asset-backed securities			155						2						0						157
Supranational securities			26						0						0						26
Total debt securities			$	4,304					$	36					$	0					$	4,340
Included in Cash and cash equivalents			$	398					$	0					$	0					$	398
Included in Marketable securities			$	3,906					$	36					$	0					$	3,942

As of January 31, 2025, debt securities consisted of the following (in millions):

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Aggregate Fair Value
U.S. treasury securities			$	2,069					$	4					$	(1)					$	2,072
U.S. agency obligations			634						2						0						636
Corporate bonds			3,532						11						(3)						3,540
Commercial paper			294						0						0						294
Asset-backed securities			104						0						0						104
Supranational securities			5						0						0						5
Total debt securities			$	6,638					$	17					$	(4)					$	6,651
Included in Cash and cash equivalents			$	177					$	0					$	0					$	177
Included in Marketable securities			$	6,461					$	17					$	(4)					$	6,474

The following table presents the fair values of debt securities as of January 31, 2026, by remaining contractual maturity (in millions). Actual maturities may differ from contractual maturities because borrowers may have certain prepayment conditions.

			January 31, 2026
Due within 1 year			$	1,691
Due 1 year through 5 years			2,547
Due 5 years through 10 years			73
Due after 10 years			29
Total debt securities			$	4,340

Interest receivable of $33 million and $53 million was included in Prepaid expenses and other current assets on the Consolidated Balance Sheets as of January 31, 2026, and 2025, respectively.

As of January 31, 2026, and 2025, unrealized losses on our debt securities were not material. We did not recognize any credit losses related to our debt securities during the periods presented.

We sold $2.9 billion, $273 million, and $59 million of debt securities during fiscal 2026, 2025, or 2024, respectively. The realized net gains from the sales were $27 million in fiscal 2026 and immaterial in fiscal 2025 and 2024.

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Equity Investments

Equity investments consisted of the following (in millions):

			Consolidated Balance Sheets Location						As of January 31,
						2026						2025
Money market funds			Cash and cash equivalents						$	694					$	988
Non-marketable equity investments measured using the measurement alternative			Other assets						230						244
Total equity investments									$	924					$	1,232

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

			As of January 31,
			2026						2025						2024
Net realized gains (losses) recognized on equity investments sold (1)			$	64					$	(6)					$	6
Net unrealized losses recognized on equity investments held as of the end of the period			(5)						(12)						(30)
Total net gains (losses) recognized in Other income, net			$	59					$	(18)					$	(24)

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

Non-Marketable Equity Investments Measured Using the Measurement Alternative

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

			As of January 31,
			2026						2025
Total initial cost			$	205					$	217
Cumulative net unrealized gains			25						27
Carrying value			$	230					$	244

In fiscal 2026, we recognized net gains of $64 million related to exits of non-marketable equity investments, which included a non-cash gain of $11 million related to our acquisition of Sana. For further information, see Note 7, Business Combinations. Additionally, we recognized upward adjustments of $17 million, and impairment losses of $22 million.

In fiscal 2025, we recorded losses related to impairments and exits of $18 million, upward adjustments of $5 million, and downward adjustments of $5 million on our non-marketable equity investments.

In fiscal 2024, we recorded impairment losses of $30 million.

Marketable Equity Investments

We held no marketable equity investments in fiscal 2026 and 2025. During fiscal 2024, we sold marketable equity investments for proceeds of $87 million, with corresponding realized gains of $6 million.

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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, 2026 (in millions):

			Level 1						Level 2						Level 3						Total
U.S. treasury securities			$	1,831					$	0					$	0					$	1,831
U.S. agency obligations			0						266						0						266
Corporate bonds			0						1,896						0						1,896
Commercial paper			0						164						0						164
Asset-backed securities			0						157						0						157
Supranational securities			0						26						0						26
Money market funds			694						0						0						694
Foreign currency derivative assets			0						21						0						21
Total assets			$	2,525					$	2,530					$	0					$	5,055
Foreign currency derivative liabilities			$	0					$	148					$	0					$	148
Total liabilities			$	0					$	148					$	0					$	148

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, 2025 (in millions):

			Level 1						Level 2						Level 3						Total
U.S. treasury securities			$	2,072					$	0					$	0					$	2,072
U.S. agency obligations			0						636						0						636
Corporate bonds			0						3,540						0						3,540
Commercial paper			0						294						0						294
Asset-backed securities			0						104						0						104
Supranational securities			0						5						0						5
Money market funds			988						0						0						988
Foreign currency derivative assets			0						112						0						112
Total assets			$	3,060					$	4,691					$	0					$	7,751
Foreign currency derivative liabilities			$	0					$	26					$	0					$	26
Total liabilities			$	0					$	26					$	0					$	26

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

Non-marketable equity investments that have been remeasured 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

We carry our debt at face value less unamortized debt discount and issuance costs on the Consolidated Balance Sheets and present the fair value for disclosure purposes only. The fair values of all of our debt obligations are categorized as Level 2 financial instruments. For further information on the fair values of our debt and the inputs used in the calculations, see Note 11, Debt.

Note 5. Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $940 million and $828 million as of January 31, 2026, and 2025, respectively. Amortization expense for the deferred costs was $292 million, $251 million, and $213 million for fiscal 2026, 2025, and 2024, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

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Note 6. Property and Equipment, Net

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

			As of January 31,
			2026						2025
Computers, equipment, and software			$	1,285					$	1,370
Buildings			690						752
Leasehold improvements			334						252
Furniture, fixtures, and transportation equipment			112						108
Land and land improvements			74						81
Property and equipment, gross			2,495						2,563
Less accumulated depreciation and amortization			(1,402)						(1,324)
Property and equipment, net			$	1,093					$	1,239

Depreciation expense totaled $237 million, $243 million, and $203 million for fiscal 2026, 2025, and 2024, respectively.

During fiscal 2026 and 2025, we recognized impairment charges of $101 million and $13 million, respectively, related to certain property and equipment as a result of our restructuring activities. For further information, see Note 21, Restructuring. There were no impairments of property and equipment in fiscal 2024.

Note 7. Business Combinations

Fiscal 2026

Sana Acquisition

In November 2025, we acquired all outstanding stock of Sana Labs AB (“Sana”), an AI company building the next generation of enterprise knowledge tools. We have included the financial results of Sana in our consolidated financial statements from the date of acquisition.

The total acquisition-date fair value of the purchase consideration was $1.1 billion, attributable to cash consideration of $1.0 billion and the fair value of a previously held equity interest of $16 million. The fair values of assets acquired and liabilities assumed may be subject to change over the measurement period as additional information is received and certain tax matters are finalized. The measurement period will end no later than one year from the acquisition date. The preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows (in millions):

Cash			$	40
Acquisition-related intangible assets			126
Goodwill			903
Other assets			20
Other liabilities			(34)
Total purchase consideration, inclusive of previously held equity interest			$	1,055

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

			Estimated Fair Values						Weighted-Average Useful Lives (in Years)
Developed technology			$	97					4
Customer relationships			28						8
Trade name			1						1
Total acquisition-related intangible assets			$	126					5

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

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We held a non-marketable equity investment in Sana with a carrying value of $5 million prior to the acquisition. We recognized a non-cash gain of $11 million as a result of remeasuring our prior equity interest in Sana held before the business combination. The gain is included in Other income, net on the Consolidated Statements of Operations.

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

Paradox Acquisition

In September 2025, we acquired all outstanding stock of Paradox, Inc. (“Paradox”), a candidate experience agent that uses conversational AI to simplify the job application journey. We have included the financial results of Paradox in our consolidated financial statements from the date of acquisition.

The total acquisition-date fair value of the purchase consideration was $1.1 billion, attributable to cash consideration of $1.0 billion and the fair value of a previously held equity interest of $20 million. The fair values of assets acquired and liabilities assumed may be subject to change over the measurement period as additional information is received and certain tax matters are finalized. The measurement period will end no later than one year from the acquisition date. The preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows (in millions):

Cash			$	75
Acquisition-related intangible assets			253
Goodwill			780
Other assets			49
Other liabilities			(94)
Total purchase consideration, inclusive of previously held equity interest			$	1,063

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

			Estimated Fair Values						Weighted-Average Useful Lives (in Years)
Developed technology			$	133					5
Customer relationships			116						9
Backlog			2						3
Trade name			2						1
Total acquisition-related intangible assets			$	253					7

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

We held a non-marketable equity investment in Paradox with a carrying value of $20 million prior to the acquisition. There was no gain or loss resulting from the remeasurement of our prior equity interest in Paradox held before the business combination.

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

Other Acquisitions

In December 2025, we completed an acquisition for total purchase consideration of $111 million, resulting in an increase of $46 million and $64 million in acquired developed technology and goodwill, respectively.

In August 2025, we completed an acquisition for total purchase consideration of $6 million, resulting in an increase of $1 million and $4 million in acquired developed technology and goodwill, respectively.

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Fiscal 2025

Evisort Acquisition

In October 2024, we acquired all outstanding stock of Evisort Inc. (“Evisort”), a provider of an AI-native document intelligence platform. We have included the financial results of Evisort in our consolidated financial statements from the date of acquisition.

The total acquisition-date fair value of the purchase consideration was $311 million, which was paid in cash. We recorded developed technology intangible assets of $44 million (to be amortized over an estimated useful life of 6 years), customer relationships intangible assets of $28 million (to be amortized over an estimated useful life of 14 years), and goodwill of $223 million. The goodwill recognized was primarily attributable to the expected synergies from integrating Evisort’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 Evisort have not been presented as the effect of this acquisition was not material to our financial results.

HiredScore Acquisition

In March 2024, we acquired all outstanding stock of HiredScore, Inc. (“HiredScore”), a provider of AI-powered talent orchestration solutions. We have included the financial results of HiredScore in our consolidated financial statements from the date of acquisition.

The total acquisition-date fair value of the purchase consideration was $530 million, which was paid in cash. The fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows (in millions):

Cash			$	11
Acquisition-related intangible assets			135
Goodwill			409
Other assets			13
Other liabilities			(38)
Total			$	530

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

			Estimated Fair Values						Weighted-Average Useful Lives (in Years)
Developed technology			$	111					8
Customer relationships			23						14
Trade name			1						1
Total acquisition-related intangible assets			$	135					9

The goodwill recognized was primarily attributable to the assembled workforce and the expected synergies from integrating HiredScore’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 HiredScore have not been presented as the effect of this acquisition was not material to our financial results.

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Note 8. Acquisition-Related Intangible Assets, Net

Acquisition-related intangible assets, net consisted of the following as of January 31, 2026 (in millions):

			Gross Carrying Value						Accumulated Amortization						Net Book Value
Developed technology			$	742					$	(362)					$	380
Customer relationships			506						(210)						296
Backlog			17						(15)						2
Trade name			17						(14)						3
Total			$	1,282					$	(601)					$	681

Acquisition-related intangible assets, net consisted of the following as of January 31, 2025 (in millions):

			Gross Carrying Value						Accumulated Amortization						Net Book Value
Developed technology			$	473					$	(303)					$	170
Customer relationships			362						(171)						191
Backlog			15						(15)						0
Trade name			14						(14)						0
Total			$	864					$	(503)					$	361

Amortization expense related to acquisition-related intangible assets was $106 million, $79 million, and $74 million for fiscal 2026, 2025, and 2024, respectively.

As of January 31, 2026, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in millions):

Fiscal Period:
2027			$	139
2028			132
2029			122
2030			106
2031			60
Thereafter			122
Total			$	681

Note 9. Other Assets

Other assets consisted of the following (in millions):

			As of January 31,
			2026						2025
Non-marketable equity and other investments			$	233					$	247
Prepayments for goods and services			64						16
Contract assets			59						44
Technology patents and other intangible assets, net			21						25
Deposits			14						10
Derivative assets			2						52
Other			67						24
Total other assets			$	460					$	418

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Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis. As of January 31, 2026, our future estimated amortization expense was as follows (in millions):

Fiscal Period:
2027			$	3
2028			3
2029			3
2030			2
2031			2
Thereafter			8
Total			$	21

Note 10. Derivative Instruments

We conduct business on a global basis in multiple foreign currencies, subjecting Workday to foreign currency exchange 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 has been met.

As of January 31, 2026, we estimate that $38 million of net losses recorded in AOCI related to our cash flow hedges will be reclassified into earnings within the next 12 months.

As of January 31, 2026, and 2025, the notional values of the cash flow hedges that we held to buy U.S. dollars in exchange for other currencies were $3.0 billion and $2.8 billion, respectively, and the notional values of the cash flow hedges that we held to sell U.S. dollars in exchange for other currencies were $874 million and $420 million as of January 31, 2026, and 2025, respectively. All contracts had maturities of less than 48 months.

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 foreign currency gains or losses associated with the underlying monetary assets and liabilities and are recorded on the Consolidated Balance Sheets at fair value.

As of January 31, 2026, and 2025, the notional values of the non-designated hedges that we held to buy U.S. dollars in exchange for other currencies were $442 million and $242 million, respectively, and the notional values of the non-designated hedges that we held to sell U.S. dollars in exchange for other currencies were $565 million and $91 million, respectively.

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

						Consolidated Balance Sheets Location						As of January 31,
									2026						2025
Derivative assets:
Cash flow hedges						Prepaid expenses and other current assets						$	15					$	59
Cash flow hedges						Other assets						2						52
Non-designated hedges						Prepaid expenses and other current assets						4						1
Total derivative assets												$	21					$	112
Derivative liabilities:
Cash flow hedges						Accrued expenses and other current liabilities						$	71					$	22
Cash flow hedges						Other liabilities						65						3
Non-designated hedges						Accrued expenses and other current liabilities						12						1
Total derivative liabilities												$	148					$	26

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

Consolidated Statements of Operations Location						Year Ended January 31,
			2026												2025												2024
						Total						Gains (losses) related to cash flow hedges						Total						Gains (losses) related to cash flow hedges						Total						Gains (losses) related to cash flow hedges
Revenues						$	9,552					$	18					$	8,446					$	30					$	7,259					$	62
Costs and expenses						8,831						7						8,031						(3)						7,076						1

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

						Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations						Year Ended January 31,
									2026						2025						2024
Gains (losses) recognized in OCI						Net change in unrealized gains (losses) on cash flow hedges						$	(228)					$	96					$	16
Gains (losses) reclassified from AOCI into income (effective portion)						Revenues						18						30						62
Gains (losses) reclassified from AOCI into income (effective portion)						Costs and expenses						7						(3)						1

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

						Consolidated Statements of Operations Location						Year Ended January 31,
									2026						2025						2024
Gains (losses) related to non-designated hedges						Other income, net						$	(8)					$	4					$	5

We manage our exposure to counterparty risk by entering into foreign currency forward contracts with a diversified group of nine major financial institutions and by actively monitoring outstanding positions. We are subject to netting agreements with all of these counterparties, 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. After consideration of these netting arrangements, the total net settlement amount related to our foreign currency forward contracts is an asset position of $1 million and a liability position of $128 million as of January 31, 2026, and an asset position of $86 million as of January 31, 2025.

Although legally enforceable master netting arrangements exist between Workday and each counterparty, 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.

Note 11. Debt

Outstanding debt consisted of the following (in millions):

			As of January 31,
			2026						2025
2027 Notes			$	1,000					$	1,000
2029 Notes			750						750
2032 Notes			1,250						1,250
Total principal amount			3,000						3,000
Less: unamortized debt discount and issuance costs			(13)						(16)
Debt, noncurrent			$	2,987					$	2,984

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As of January 31, 2026, our future principal payments for the outstanding debt were as follows (in millions):

Fiscal Period:
2027			$	0
2028			1,000
2029			0
2030			750
2031			0
Thereafter			1,250
Total principal amount			$	3,000

Senior Notes

In fiscal 2023, we issued $3.0 billion aggregate principal amount of senior notes, consisting of $1.0 billion aggregate principal amount of 3.500% notes due April 1, 2027 (“2027 Notes”), $750 million aggregate principal amount of 3.700% notes due April 1, 2029 (“2029 Notes”), and $1.25 billion aggregate principal amount of 3.800% notes due April 1, 2032 (“2032 Notes,” and together with the 2027 Notes and the 2029 Notes, “Senior Notes”). Interest is payable semi-annually in arrears on April 1 and October 1 of each year.

The Senior Notes are unsecured obligations and rank equally with all existing and future unsecured and unsubordinated indebtedness of Workday. We may redeem the Senior Notes in whole or in part at any time or from time to time, at specified redemption dates and prices. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms. The indenture governing the Senior Notes also includes covenants (including certain limited covenants restricting our ability to incur certain liens and enter into certain sale and leaseback transactions), events of default, and other customary provisions. As of January 31, 2026, we were in compliance with all covenants associated with the Senior Notes.

We incurred debt discount and issuance costs of approximately $27 million in connection with the Senior Notes offering, which were allocated on a pro rata basis to the 2027 Notes, 2029 Notes, and 2032 Notes. The debt discount and issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the contractual term of each arrangement. The effective interest rates on the 2027 Notes, 2029 Notes, and 2032 Notes, which are calculated as the contractual interest rates adjusted for the debt discount and issuance costs, are 3.67%, 3.82%, and 3.90%, respectively.

As of January 31, 2026, and 2025, the total estimated fair value of the Senior Notes was $2.9 billion and $2.8 billion, respectively. The estimated fair values of the Senior Notes, which we have classified as Level 2 financial instruments, were determined based on quoted bid prices in an over-the-counter market on the last trading day of the reporting period.

Credit Agreement

In fiscal 2023, we entered into a credit agreement (“2022 Credit Agreement”) which provides for a revolving credit facility in an aggregate principal amount of $1.0 billion. As of January 31, 2026, and 2025, we had no outstanding revolving loans under the 2022 Credit Agreement. The revolving loans under the 2022 Credit Agreement may be borrowed, repaid, and reborrowed until April 6, 2027, at which time all amounts borrowed must be repaid. The revolving loans under the 2022 Credit Agreement will bear interest, at our option, at a base rate plus a margin of 0.000% to 0.500% or a secured overnight financing rate (“SOFR”) plus 10 basis points, plus a margin of 0.750% to 1.500%, with such margin being determined based on our consolidated leverage ratio or debt rating. We are also obligated to pay an ongoing commitment fee on undrawn amounts.

The 2022 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 negative covenants include restrictions on the incurrence of liens and indebtedness, certain merger transactions, and other matters, all subject to certain exceptions. The financial covenant, based on a quarterly financial test, requires that we do not exceed a maximum leverage ratio of 3.50:1.00, subject to a step-up to 4.50:1.00 at our election for a certain period following an acquisition. As of January 31, 2026, and 2025, we were in compliance with all covenants included in the 2022 Credit Agreement.

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Interest Expense on Debt

The following table sets forth total interest expense recognized related to our debt (in millions):

			Year Ended January 31,
			2026						2025						2024
Contractual interest expense			$	110					$	110					$	110
Interest cost related to amortization of debt discount and issuance costs			4						4						4
Total interest expense			$	114					$	114					$	114

Note 12. 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 were $719 million and $336 million as of January 31, 2026, and 2025, respectively, and operating lease liabilities were $834 million and $378 million as of January 31, 2026, and 2025, respectively.

In July 2025, a 20-year lease for our new European headquarters in Dublin, Ireland, commenced. This resulted in the recognition of an operating lease right-of-use asset of $313 million, and a corresponding operating lease liability of $333 million.

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

			Year Ended January 31,
			2026						2025						2024
Operating lease cost (1)			$	161					$	123					$	109
Short-term lease cost			1						1						3
Variable lease cost			52						53						46
Total operating lease cost			$	214					$	177					$	158

(1)Operating lease cost includes impairment charges of $16 million and $6 million for fiscal 2026 and 2025, respectively, associated with our restructuring activities. For further information, see Note 21, Restructuring. There were no lease impairments in fiscal 2024.

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

			Year Ended January 31,
			2026						2025						2024
Cash paid for operating lease liabilities			$	134					$	111					$	112
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities			511						158						139

Other information related to our operating leases was as follows:

			As of January 31,
			2026						2025
Weighted average remaining lease term (in years)			11						5
Weighted average discount rate			4.19		%				4.20		%

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As of January 31, 2026, maturities of operating lease liabilities were as follows (in millions):

Fiscal Period:
2027			$	146
2028			155
2029			123
2030			86
2031			65
Thereafter			490
Total lease payments			1,065
Less imputed interest			(231)
Total operating lease liabilities			$	834

As of January 31, 2026, we had operating leases for office space that had not yet commenced with total undiscounted lease payments of $11 million. These operating leases will commence in fiscal 2027, with lease terms ranging from approximately one to six years.

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, 2026, were as follows (in millions):

			Third-Party Hosted Infrastructure Platform Obligations						Other Purchase Obligations
Fiscal Period:
2027			$	298					$	163
2028			414						153
2029			344						105
2030			0						51
2031			0						25
Thereafter			0						13
Total			$	1,056					$	510

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, 2026, 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.

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Note 14. Stockholders’ Equity

Common Stock

As of January 31, 2026, there were 212 million shares of Class A common stock, and 47 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.

Share Repurchase Programs

We repurchase shares of our Class A common stock under share repurchase programs authorized by our Board of Directors. Under these programs, in accordance with applicable securities laws and other restrictions, we may repurchase shares of our Class A common stock through open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, or by other means. The timing and total amount of share repurchases will depend upon business, economic, and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase programs have no expiration date, may be suspended or discontinued at any time, and do not obligate us to acquire any amount of Class A common stock.

Share repurchase programs authorized by our Board of Directors that were in effect during the periods presented were as follows (in millions):

Authorization Date						Amount Authorized						Authorization Completion Date
November 2022						$	500					Q1 fiscal 2025
February 2024						500						Q3 fiscal 2025
August 2024						1,000						Q3 fiscal 2026
May 2025						1,000						Q4 fiscal 2026
September 2025						4,000

The table below sets forth information regarding repurchase of shares under our share repurchase programs (in millions, except number of shares which are reflected in thousands, and per share data):

			Year Ended January 31,
			2026						2025						2024
Total number of shares repurchased			12,772						2,914						1,849
Average price paid per share (1)			$	226.62					$	240.20					$	228.67
Amount repurchased (1)			$	2,894					$	700					$	423

(1)Amounts exclude excise tax and commissions.

All repurchases were made in open market transactions. As of January 31, 2026, we were authorized to repurchase a remaining $2.9 billion of our outstanding shares of Class A common stock under our share repurchase programs.

Employee Equity Plans

In fiscal 2023, our stockholders approved the 2022 Equity Incentive Plan (“2022 Plan”), with a reserve of 30 million shares for issuance. The 2022 Plan serves as the successor to our 2012 Equity Incentive Plan (“2012 Plan” and, together with the 2022 Plan, “Stock Plans”). Awards that are granted on or after the effective date of the 2022 Plan will be granted pursuant to and subject to the terms and provisions of the 2022 Plan. Prior awards granted under the 2012 Plan continue to be subject to the terms and provisions of the 2012 Plan. Shares that are forfeited or withheld in connection with the net share settlement of RSUs are added to the reserves of the 2022 Plan. As of January 31, 2026, 13 million shares of Class A common stock were available for future grants under the 2022 Plan.

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In fiscal 2023, our stockholders approved the Amended and Restated 2012 Employee Stock Purchase Plan (“2012 ESPP”). Under the 2012 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, 2026, 2 million shares of Class A common stock were available for issuance under the 2012 ESPP.

Restricted Stock Units and Performance-Based Restricted Stock Units

The Stock Plans provide for the issuance of RSUs and performance-based restricted stock units (“PSUs”) to employees and non-employees. RSUs generally vest over four years. Activity during fiscal 2026 was as follows (in thousands, except per share data):

			Number of Shares						Weighted-Average Grant Date Fair Value
Outstanding balance as of January 31, 2025			14,361						$	226.52
Granted- restricted stock units			8,435						219.23
Granted- performance-based restricted stock units (1)			84						215.98
Vested			(4,153)						226.70
Forfeited and canceled (2)			(4,603)						224.11
Performance adjustment (3)			4						185.80
Outstanding balance as of January 31, 2026			14,128						222.83

(1)Includes approximately 42 thousand PSUs granted to executives in April 2025. The PSUs are subject to vesting based on the achievement of annual performance-based conditions determined at the beginning of each fiscal year and a three-year service-based condition. The PSUs will vest at the end of the three-year service period, with the number of shares vesting ranging from 0% to 150% of the target, based on the average attainment of the annual performance conditions.

(2)Includes shares withheld in connection with the net share settlement of RSUs.

(3)Represents the difference between the target PSUs granted and the actual PSUs awarded based upon the achievement level of performance measures.

The weighted-average grant date fair value of RSUs granted during fiscal 2026, 2025, and 2024 was $219.23, $252.18, and $197.22, respectively. The total fair value of RSUs vested as of the vesting dates during fiscal 2026, 2025, and 2024 was $952 million, $1.1 billion, and $1.4 billion, respectively.

As of January 31, 2026, there was a total of $2.5 billion in unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs and PSUs, which is expected to be recognized over a weighted-average period of approximately three years.

Employee Stock Purchase Plan

For fiscal 2026, approximately 1 million shares of Class A common shares were purchased under the 2012 ESPP at a weighted-average price of $198.12 per share, resulting in cash proceeds of $192 million.

The weighted-average grant date fair value for the ESPP was $60.99, $57.80, and $57.90 per share during fiscal 2026, 2025, and 2024, respectively. These values were calculated using the following assumptions:

			Year Ended January 31,
			2026						2025						2024
Expected volatility			34% - 37%						32%						32% - 33%
Expected term (in years)			0.5						0.5						0.5
Risk-free interest rate			3.75% - 4.31%						4.43% - 5.39%						5.33% - 5.44%
Dividend yield			0%						0%						0%
Fair value per share			$213.35 - $247.75						$210.83 - $251.46						$215.31 - $272.92

Tax Benefits on Share-Based Compensation

In fiscal 2026, 2025, and 2024, we recognized tax benefits on share-based compensation expense of $295 million, $277 million, and $257 million, respectively, which are reflected in the Provision for (benefit from) income taxes on the Consolidated Statements of Operations.

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Note 15. Contract Balances and Performance Obligations

Contract Balances

Contract assets and unearned revenue balances were as follows (in millions):

			Consolidated Balance Sheets Location						As of January 31,
						2026						2025
Contract assets:
Contract assets, current			Trade and other receivables, net						$	443					$	373
Contract assets, noncurrent			Other assets						59						44
Total contract assets									$	502					$	417
Unearned revenue:
Unearned revenue, current (1)			Unearned revenue						$	5,010					$	4,467
Unearned revenue, noncurrent			Unearned revenue, noncurrent						71						80
Total unearned revenue									$	5,081					$	4,547

(1)Included in this balance are amounts related to professional services that are subject to cancellation and pro-rated refund rights of $89 million and $83 million as of January 31, 2026, and 2025, respectively.

Revenues of $4.4 billion, $4.0 billion, and $3.5 billion were recognized during fiscal 2026, 2025, and 2024, respectively, that were included in the unearned revenue balances at the beginning of the respective periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of January 31, 2026, approximately $28.1 billion of revenues are expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize revenues on approximately $8.8 billion and $15.8 billion of these remaining performance obligations over the next 12 and 24 months, respectively, with the balance recognized thereafter. Revenues from remaining performance obligations for professional services contracts as of January 31, 2026, were not material.

Note 16. Other Income, Net

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

			Year Ended January 31,
			2026						2025						2024
Interest income			$	318					$	350					$	301
Interest expense (1)			(114)						(114)						(114)
Other (2)			84						(13)						(14)
Total other income, net			$	288					$	223					$	173

(1)Interest expense primarily includes the contractual interest expense of our debt obligations, and the related non-cash interest expense attributable to amortization of the debt discount and issuance costs. For further information, see Note 11, Debt.

(2)Other primarily includes the realized net gains (losses) from sales of debt securities and net gains (losses) from our equity investments. For further information, see Note 3, Investments.

Note 17. Income Taxes

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

			Year Ended January 31,
			2026						2025						2024
Domestic			$	943					$	660					$	465
Foreign			66						(22)						(109)
Income before provision for (benefit from) income taxes			$	1,009					$	638					$	356

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

			Year Ended January 31,
			2026						2025						2024
Current:
Federal			$	34					$	12					$	2
State			46						45						19
Foreign			28						23						14
Total			108						80						35
Deferred:
Federal			198						52						(855)
State			12						(20)						(207)
Foreign			(2)						0						2
Total			208						32						(1,060)
Provision for (benefit from) income taxes			$	316					$	112					$	(1,025)

The income tax provision for fiscal 2026 was primarily attributable to an increase in our U.S. pretax income and income tax expenses in profitable foreign jurisdictions.

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We adopted ASU No. 2023-09 on a prospective basis effective February 1, 2025. The following table reconciles the difference between income taxes computed at the federal statutory income tax rate and the provision for (benefit from) income taxes (in millions, except percentages):

			Year Ended January 31, 2026
			Amount						Percentage
U.S. federal statutory tax rate			$	212					21.0		%
State and local income taxes, net of federal income tax effect (1)			34						3.4		%
Foreign tax effects:
Ireland:
Intercompany transactions			(97)						(9.6)		%
Change in valuation allowance			115						11.4		%
Other			(14)						(1.4)		%
Other foreign jurisdictions			6						0.5		%
Effect of cross-border tax laws:
Foreign-derived intangible income			(24)						(2.4)		%
Other			2						0.1		%
Tax credits:
Research and development tax credit			(68)						(6.7)		%
Nontaxable or nondeductible items:
Share-based compensation			81						8.1		%
Intercompany transactions			26						2.6		%
Other			12						1.2		%
Changes in unrecognized tax benefits (2)			32						3.2		%
Other adjustments			(1)						(0.1)		%
Effective tax rate			$	316					31.3		%

(1)State and local taxes in New York state, New Jersey, Illinois, and New York city made up the majority (greater than 50 percent) of the tax effect in this category.

(2)Changes in unrecognized tax benefits are presented on an aggregated basis for all jurisdictions.

									Year Ended January 31,
									2025						2024
Federal statutory rate									21.0		%				21.0		%
Effect of:
Foreign income at other than U.S. rates									0.2		%				10.9		%
Intercompany transactions									(1.0)		%				(4.3)		%
Research tax credits									(15.4)		%				(26.3)		%
State taxes, net of federal benefit									3.1		%				5.1		%
Changes in valuation allowance									0.0		%				(315.5)		%
Share-based compensation									8.1		%				19.1		%
Permanent difference									1.6		%				1.2		%
Other									(0.1)		%				1.2		%
Total									17.5		%				(287.6)		%

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The following table presents income taxes paid, net of refunds (in millions):

			Year Ended January 31, 2026
Federal taxes			$	17
State taxes:
California			7
New York			8
Other states			38
Total state taxes			53
Total U.S. taxes			70
Foreign taxes			26
Cash paid for income taxes, net of refunds			$	96

Cash paid for income taxes, net of refunds were $65 million and $39 million in fiscal 2025 and 2024, respectively.

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

			As of January 31,
			2026						2025
Deferred tax assets:
Tax attributes carryforward			$	1,338					$	1,290
Capitalized research and development expense			497						621
Intangibles			424						429
Operating lease liabilities			148						81
Share-based compensation			77						76
Other reserves and accruals			65						65
Other			69						37
Total deferred tax assets			2,618						2,599
Valuation allowance			(1,433)						(1,259)
Deferred tax assets, net of valuation allowance			1,185						1,340
Deferred tax liabilities:
Deferred commissions			(182)						(162)
Operating lease right-of-use assets			(128)						(71)
Other			(46)						(75)
Total deferred tax liabilities			(356)						(308)
Net deferred tax assets			$	829					$	1,032

We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative, such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. The assessment requires significant judgment and is performed in each of the applicable jurisdictions. The valuation allowance of $1.4 billion and $1.3 billion as of January 31, 2026, and 2025, respectively, was primarily related to tax credits in certain state jurisdictions, foreign intangible assets from intercompany transactions, and net operating losses in certain foreign jurisdictions.

The valuation allowance increased by $174 million during fiscal 2026 primarily due to an increase in deferred tax assets on certain state tax credits and foreign intangible assets from intercompany transactions, in addition to net operating losses in certain foreign jurisdictions.

The valuation allowance increased by $77 million during fiscal 2025 primarily due to an increase in deferred tax assets on certain state tax credits and net operating losses in certain foreign jurisdictions.

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As of January 31, 2026, we had approximately $299 million of federal, $1.4 billion of state, and $4.3 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 2029 and 2047. 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 $470 million of federal and $461 million of California research and development tax credit carryforwards as of January 31, 2026. The federal credits expire in varying amounts between fiscal 2027 and 2046. The California research and development tax 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 indefinitely reinvest any future earnings in our foreign operations unless such earnings are subject to U.S. federal income taxes.

A reconciliation of the gross unrecognized tax benefits is as follows (in millions):

			Year Ended January 31,
			2026						2025						2024
Unrecognized tax benefits at the beginning of the period			$	309					$	253					$	196
Additions for tax positions taken in prior years			3						15						30
Additions for tax positions related to the current year			30						41						27
Reductions related to a lapse of applicable statute of limitations			(1)						0						0
Unrecognized tax benefits at the end of the period			$	341					$	309					$	253

Our policy is to include interest and penalties related to unrecognized tax benefits within our provision for income taxes. As of January 31, 2026, the amount of interest and penalties accrued was $5 million. We did not accrue any material interest expense or penalties during fiscal 2025 and 2024.

As of January 31, 2026, we had unrecognized tax benefits of $341 million, of which $199 million would impact the effective tax rate, if recognized.

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 Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by giving effect to all potentially dilutive shares of common stock, including outstanding share-based awards consisting primarily of unvested RSUs and ESPP obligations. We determine the dilutive effect of outstanding share-based awards using the treasury stock method.

The holders of our Class A and Class B common stock have identical liquidation and dividend rights but different voting rights. Accordingly, we present net income per share for Class A and Class B common stock together as the two-class method does not result in a difference.

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The following table presents the calculation of basic and diluted net income per share (in millions, except number of shares, which are reflected in thousands, and per share data):

			Year Ended January 31,
			2026						2025 (1)						2024 (1)
Net income per share, basic:
Numerator:
Net income			$	693					$	526					$	1,381
Denominator:
Weighted-average shares outstanding, basic			265,097						265,257						261,344
Net income per share, basic			$	2.61					$	1.98					$	5.28
Net income per share, diluted:
Numerator:
Net income			$	693					$	526					$	1,381
Denominator:
Weighted-average shares outstanding, basic			265,097						265,257						261,344
Dilutive effect of share-based awards			3,020						3,948						3,941
Weighted-average shares outstanding, diluted			268,117						269,205						265,285
Net income per share, diluted			$	2.59					$	1.95					$	5.21

(1)The prior period EPS for Class A and Class B common stock has been presented together to conform with current period presentation, which had no impact on our previously reported basic or diluted EPS.

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

			Year Ended January 31,
			2026						2025						2024
Total weighted-average shares related to outstanding share-based awards			2,193						1,682						2,206

Note 19. Geographic Information

Revenues

We sell our subscription contracts and related services in two primary geographical markets: to customers located in the U.S. and to customers located outside of the U.S.. Revenues by geography are 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 millions):

			Year Ended January 31,
			2026						2025						2024
U.S.			$	7,176					$	6,332					$	5,457
Other countries			2,376						2,114						1,802
Total revenues			$	9,552					$	8,446					$	7,259

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Long-Lived Assets

Our long-lived assets are attributed to a country based on the physical location of the assets. We define long-lived assets as property and equipment and operating lease right-of-use assets because many of these assets cannot be readily moved and are relatively illiquid, subjecting them to geographic risk. None of our other assets are subject to significant geographic risk. Aggregate Property and equipment, net and Operating lease right-of-use assets by geographic area were as follows (in millions):

			As of January 31,
			2026						2025
U.S.			$	1,080					$	1,197
Ireland			531						215
Other countries			201						163
Total long-lived assets			$	1,812					$	1,575

Note 20. Defined Contribution Plans

We provide defined contribution plans for eligible employees, including a 401(k) plan in the U.S. and similar plans in certain other countries. Our contributions to these plans were $124 million, $116 million, and $101 million during fiscal 2026, 2025, and 2024, respectively.

Note 21. Restructuring

Fiscal 2027 Restructuring Plan

In February 2026, we announced a restructuring plan (“Fiscal 2027 Restructuring Plan”) intended to better align our people and resources to our highest priorities in fiscal 2027. The plan is expected to result in the reduction of approximately 2% of our workforce, and the impairment of certain office space and long-lived assets. The activities associated with this plan are expected to be substantially completed by the first quarter of fiscal 2027.

We incurred total charges of $135 million in connection with this plan in fiscal 2026. The charges consisted of $55 million related to employee transition, severance payments, employee benefits, and share-based compensation, and $80 million related to impairments of office space and certain long-lived assets.

The following table summarizes the activity under the Fiscal 2027 Restructuring Plan (in millions):

			Workforce Reduction						Asset Impairments						Total
Restructuring liability as of January 31, 2025			$	0					$	0					$	0
Charges			55						80						135
Payments			0						0						0
Non-cash items			(14)						(80)						(94)
Restructuring liability as of January 31, 2026			$	41					$	0					$	41

Fiscal 2026 Restructuring Plan

In February 2025, we announced a restructuring plan (“Fiscal 2026 Restructuring Plan”) intended to prioritize our investments and continue advancing our ongoing focus on durable growth. This plan resulted in the reduction of approximately 7.5% of our workforce and the exit of certain owned office space. The activities associated with this plan were substantially completed in the second quarter of fiscal 2026.

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We incurred total charges of $233 million in connection with this plan, of which $65 million was recognized in fiscal 2025 and $168 million was recognized in fiscal 2026. The charges consisted of $196 million related to employee transition, severance payments, employee benefits, and share-based compensation, and $37 million related to an impairment of office space.

The following table summarizes the activity under the Fiscal 2026 Restructuring Plan (in millions):

			Workforce Reduction						Asset Impairments						Total
Restructuring liability as of January 31, 2024			$	0					$	0					$	0
Charges			65						0						65
Payments			0						0						0
Non-cash items			(8)						0						(8)
Restructuring liability as of January 31, 2025			$	57					$	0					$	57
Charges			131						37						168
Payments			(146)						0						(146)
Non-cash items			(42)						(37)						(79)
Restructuring liability as of January 31, 2026			$	0					$	0					$	0

During fiscal 2025, we recorded exit charges of $19 million associated with office space reductions under a separate restructuring plan.

Note 22. Subsequent Event

On February 6, 2026, our Board of Directors appointed Aneel Bhusri, Workday’s co-founder, as Chief Executive Officer, effective February 6, 2026. Mr. Bhusri will remain as Chair of our Board of Directors. Mr. Bhusri succeeds Carl Eschenbach, who ceased to serve as CEO and resigned as a member of Workday’s Board of Directors effective on the same date. In connection with his appointment as CEO, Mr. Bhusri is eligible to receive an initial annual base salary of $1.25 million and an annual target cash bonus of up to 200% of the amount of his base salary beginning in fiscal 2027. Additionally, he has been granted equity awards with an aggregate grant date value of $135 million, consisting of $60 million in time-based restricted stock units and $75 million in market-based restricted stock units vesting over four and five years, respectively.

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