FULLTEXT DEL 1 AV 2
10-Q – 2026-05-22 – wday-20260430.htm
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1934 For the quarterly period ended April 30, 2026 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For transition period from to Commission File Number: 001-35680 WORKDAY, INC. (Exact name of registrant as specified in its charter) Delaware 20-2480422 (State or other jurisdiction of incorporation or organization) (I.R.S Employer Identification No.) 6110 Stoneridge Mall Road Pleasanton , California 94588 (Address of principal executive offices, including zip code) ( 925 ) 951-9000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, par value $0.001 WDAY The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of May 20, 2026, there were approximately 201 million shares of the registrant’s Class A common stock and 46 million shares of the registrant ’ s Class B common stock outstanding. Table of Cont ents Workday, Inc. Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of April 30, 2026, and January 31, 2026 3 Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 2026, and 2025 4 Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended April 30, 2026, and 2025 5 Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended April 30, 2026, and 2025 6 Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2026, and 2025 7 Notes to Condensed Consolidated Financial Statements 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3. Quantitative and Qualitative Disclosures About Market Risk 36 Item 4. Controls and Procedures 36 PART II. OTHER INFORMATION Item 1. Legal Proceedings 38 Item 1A. Risk Factors 39 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 62 Item 3. Defaults Upon Senior Securities 62 Item 4. Mine Safety Disclosures 62 Item 5. Other Information 62 Item 6. Exhibits 63 Signatures 64 2 Table of Cont ents PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Workday, Inc. Condensed Consolidated Balance Sheets (in millions) (unaudited) April 30, 2026 January 31, 2026 Assets Current assets: Cash and cash equivalents $ 559 $ 1,501 Marketable securities 3,794 3,942 Trade and other receivables, net 1,575 2,332 Deferred costs 307 306 Prepaid expenses and other current assets 357 348 Total current assets 6,592 8,429 Property and equipment, net 1,121 1,093 Operating lease right-of-use assets 706 719 Deferred costs, noncurrent 619 634 Acquisition-related intangible assets, net 645 681 Deferred tax assets 745 829 Goodwill 5,228 5,229 Other assets 435 460 Total assets $ 16,091 $ 18,074 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 116 $ 142 Accrued expenses and other current liabilities 457 454 Accrued compensation 508 642 Unearned revenue 4,325 5,010 Operating lease liabilities 131 130 Debt, current 998 0 Total current liabilities 6,535 6,378 Debt, noncurrent 1,990 2,987 Unearned revenue, noncurrent 70 71 Operating lease liabilities, noncurrent 686 704 Other liabilities 127 129 Total liabilities 9,408 10,269 Stockholders’ equity: Common stock 0 0 Additional paid-in capital 12,932 12,673 Treasury stock ( 5,834 ) ( 4,220 ) Accumulated other comprehensive loss ( 125 ) ( 136 ) Accumulated deficit ( 290 ) ( 512 ) Total stockholders’ equity 6,683 7,805 Total liabilities and stockholders’ equity $ 16,091 $ 18,074 See Notes to Condensed Consolidated Financial Statements 3 Table of Cont ents Workday, Inc. Condensed Consolidated Statements of Operations (in millions, except number of shares which are reflected in thousands and per share data) (unaudited) Three Months Ended April 30, 2026 2025 Revenues: Subscription services $ 2,354 $ 2,059 Professional services 188 181 Total revenues 2,542 2,240 Costs and expenses (1) : Costs of subscription services 412 350 Costs of professional services 192 187 Product development 705 663 Sales and marketing 679 623 General and administrative 216 212 Restructuring 0 166 Total costs and expenses 2,204 2,201 Operating income 338 39 Other income, net 17 64 Income before provision for income taxes 355 103 Provision for income taxes 133 35 Net income $ 222 $ 68 Net income per share, basic $ 0.87 $ 0.25 Net income per share, diluted $ 0.87 $ 0.25 Weighted-average shares used to compute net income per share, basic 253,891 266,516 Weighted-average shares used to compute net income per share, diluted 254,313 270,296 (1) Costs and expenses include share-based compensation expense as follows: Three Months Ended April 30, 2026 2025 Costs of subscription services $ 37 $ 42 Costs of professional services 26 30 Product development 184 183 Sales and marketing 90 92 General and administrative 72 70 Restructuring 0 42 Total share-based compensation expense $ 409 $ 459 See Notes to Condensed Consolidated Financial Statements 4 Table of Cont ents Workday, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) (unaudited) Three Months Ended April 30, 2026 2025 Net income $ 222 $ 68 Other comprehensive income (loss), net of tax: Net change in foreign currency translation adjustment ( 1 ) 2 Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision (benefit) of $( 6 ) and $ 10 , respectively ( 18 ) 30 Net change in unrealized gains (losses) on cash flow hedges, net of tax provision (benefit) of $( 2 ) and $( 4 ), respectively 30 ( 160 ) Other comprehensive income (loss), net of tax 11 ( 128 ) Comprehensive income (loss) $ 233 $ ( 60 ) See Notes to Condensed Consolidated Financial Statements 5 Table of Cont ents Workday, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in millions, except number of shares which are reflected in thousands) (unaudited) Three Months Ended April 30, 2026 2025 Common stock: Balance, beginning of period $ 0 $ 0 Issuance of common stock under employee equity plans 0 0 Shares withheld related to net share settlement of equity awards 0 0 Balance, end of period 0 0 Additional paid-in capital: Balance, beginning of period 12,673 11,463 Issuance of common stock under employee equity plans 0 0 Shares withheld related to net share settlement of equity awards ( 151 ) ( 223 ) Share-based compensation 410 461 Balance, end of period 12,932 11,701 Treasury stock: Balance, beginning of period ( 4,220 ) ( 1,308 ) Common stock repurchases under share repurchase programs ( 1,614 ) ( 293 ) Balance, end of period ( 5,834 ) ( 1,601 ) Accumulated other comprehensive income (loss): Balance, beginning of period ( 136 ) 84 Other comprehensive income (loss) 11 ( 128 ) Balance, end of period ( 125 ) ( 44 ) Accumulated deficit: Balance, beginning of period ( 512 ) ( 1,205 ) Net income 222 68 Balance, end of period ( 290 ) ( 1,137 ) Total stockholders’ equity $ 6,683 $ 8,919 Three Months Ended April 30, 2026 2025 Common stock shares: Balance, beginning of period 259,131 266,352 Issuance of common stock under employee equity plans 2,734 2,537 Shares withheld related to net share settlement of equity awards ( 1,110 ) ( 1,003 ) Common stock repurchased ( 12,025 ) ( 1,290 ) Balance, end of period 248,730 266,596 See Notes to Condensed Consolidated Financial Statements 6 Table of Cont ents Workday, Inc. Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Three Months Ended April 30, 2026 2025 Cash flows from operating activities: Net income $ 222 $ 68 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92 84 Share-based compensation expense 409 459 Amortization of deferred costs 79 68 Non-cash lease expense 32 27 Net losses on investments 8 1 Accretion of discounts on marketable debt securities, net ( 9 ) ( 20 ) Deferred income taxes 93 18 Asset impairments 0 34 Other 5 13 Changes in operating assets and liabilities: Trade and other receivables, net 747 601 Deferred costs ( 65 ) ( 53 ) Prepaid expenses and other assets ( 31 ) ( 38 ) Accounts payable ( 1 ) ( 4 ) Accrued expenses and other liabilities ( 200 ) ( 131 ) Unearned revenue ( 685 ) ( 670 ) Net cash provided by operating activities 696 457 Cash flows from investing activities: Purchases of marketable securities ( 200 ) ( 1,345 ) Maturities of marketable securities 231 722 Sales of marketable securities 96 140 Capital expenditures ( 80 ) ( 36 ) Purchases of non-marketable equity and other investments 0 ( 4 ) Sales of non-marketable equity and other investments 41 0 Other 9 0 Net cash provided by (used in) investing activities 97 ( 523 ) Cash flows from financing activities: Repurchases of common stock ( 1,587 ) ( 290 ) Taxes paid related to net share settlement of equity awards ( 146 ) ( 211 ) Net cash used in financing activities ( 1,733 ) ( 501 ) Effect of exchange rate changes ( 1 ) 1 Net decrease in cash, cash equivalents, and restricted cash ( 941 ) ( 566 ) Cash, cash equivalents, and restricted cash at the beginning of period 1,509 1,554 Cash, cash equivalents, and restricted cash at the end of period $ 568 $ 988 See Notes to Condensed Consolidated Financial Statements 7 Table of Cont ents Three Months Ended April 30, 2026 2025 Supplemental cash flow data: Cash paid for interest, net of amounts capitalized $ 52 $ 55 Cash paid for income taxes, net of refunds 15 10 Non-cash investing and financing activities: Purchases of property and equipment, accrued but not paid 62 8 Repurchases of common stock, including excise tax, accrued but not paid 44 3 Taxes related to net share settlement of equity awards, accrued but not paid 16 25 As of April 30, 2026 2025 Reconciliation of cash, cash equivalents, and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows: Cash and cash equivalents $ 559 $ 972 Restricted cash included in Prepaid expenses and other current assets 9 16 Total cash, cash equivalents, and restricted cash $ 568 $ 988 See Notes to Condensed Consolidated Financial Statements 8 Table of Cont ents Workday, Inc. Notes to Condensed 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 AI platform that operates at the core of human resources, finance, and information technology, providing solutions for human capital management, financial management, spend management, and planning. Workday couples AI with the context, guardrails, and trusted processes that run the enterprise, delivering both AI that assists with work and agents that are capable of driving measurable outcomes for our customers. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Workday, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of our management, the information contained herein reflects all adjustments necessary for a fair presentation of Workday’s financial position, results of operations, stockholders’ equity, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the three months ended April 30, 2026, shown in this report are not necessarily indicative of the results to be expected for the full fiscal year ending January 31, 2027. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, filed with the SEC on March 6, 2026. Certain prior period amounts reported in our unaudited condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation. Use of Estimates The preparation of condensed 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 condensed 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, the measurement of share-based compensation expense, 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 condensed 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. 9 Table of Cont ents Our CODM assesses performance and decides how to allocate resources based on Net income, as reported on the Condensed 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 Condensed Consolidated Balance Sheets, and Capital expenditures, as reported on the Condensed Consolidated Statements of Cash Flows. Significant segment expenses include the costs and expenses presented on the Condensed Consolidated Statements of Operations. Other segment items include Other income, net and Provision for income taxes. Note 2. Significant Accounting Policies and Accounting Standards Significant Accounting Policies There have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 . 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 April 30, 2026, or January 31, 2026. No customer individually accounted for more than 10% of total revenues during the three months ended April 30, 2026, or 2025. Other than the United States (“U.S.”), no country individually accounted for more than 10% of total revenues during the three months ended April 30, 2026, or 2025. 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 Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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. 10 Table of Cont ents Note 3. Investments Debt Securities As of April 30, 2026, debt securities consisted of the following (in millions): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value U.S. treasury securities $ 1,491 $ 5 $ 0 $ 1,496 U.S. agency obligations 215 0 0 215 Corporate bonds 1,890 10 ( 3 ) 1,897 Asset-backed securities 158 0 0 158 Supranational securities 28 0 0 28 Total debt securities $ 3,782 $ 15 $ ( 3 ) $ 3,794 Included in Cash and cash equivalents $ 0 $ 0 $ 0 $ 0 Included in Marketable securities $ 3,782 $ 15 $ ( 3 ) $ 3,794 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 The following table presents the fair values of debt securities as of April 30, 2026, by remaining contractual maturity (in millions). Actual maturities may differ from contractual maturities because borrowers may have certain prepayment conditions. April 30, 2026 Due within 1 year $ 1,431 Due 1 year through 5 years 2,302 Due 5 years through 10 years 36 Due after 10 years 25 Total debt securities $ 3,794 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 Condensed Consolidated Balance Sheets. Debt securities included in Marketable securities on the Condensed 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. Interest receivable of $ 34 million and $ 33 million was included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of April 30, 2026, and January 31, 2026, respectively. As of April 30, 2026, and January 31, 2026, 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 $ 96 million and $ 140 million of debt securities during the three months ended April 30, 2026, and 2025, respectively. The realized gains and losses from the sales were immaterial . 11 Table of Cont ents Equity Investments Equity investments consisted of the following (in millions): Condensed Consolidated Balance Sheets Location April 30, 2026 January 31, 2026 Money market funds Cash and cash equivalents $ 204 $ 694 Non-marketable equity investments measured using the measurement alternative Other assets 220 230 Total equity investments $ 424 $ 924 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. The carrying values for our non-marketable equity investments are summarized below (in millions): April 30, 2026 January 31, 2026 Total initial cost $ 198 $ 205 Cumulative net unrealized gains 22 25 Carrying value $ 220 $ 230 During the three months ended April 30, 2026, and 2025, we recognized net losses on our non-marketable equity investments of $ 8 million and $ 1 million, respectively. Note 4. Fair Value Measurements We use a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs that are supported by little or no market activity. 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 April 30, 2026 (in millions): Level 1 Level 2 Level 3 Total U.S. treasury securities $ 1,496 $ 0 $ 0 $ 1,496 U.S. agency obligations 0 215 0 215 Corporate bonds 0 1,897 0 1,897 Asset-backed securities 0 158 0 158 Supranational securities 0 28 0 28 Money market funds 204 0 0 204 Foreign currency derivative assets 0 27 0 27 Total assets $ 1,700 $ 2,325 $ 0 $ 4,025 Foreign currency derivative liabilities $ 0 $ 128 $ 0 $ 128 Total liabilities $ 0 $ 128 $ 0 $ 128 12 Table of Cont ents 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 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 Condensed 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 10, Debt . Note 5. Deferred Costs Deferred costs, which consist of deferred sales commissions, were $ 926 million and $ 940 million as of April 30, 2026, and January 31, 2026, respectively. Amortization expense for the deferred costs was $ 79 million and $ 68 million for the three months ended April 30, 2026, and 2025, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented. Note 6. Property and Equipment, Net Property and equipment, net consisted of the following (in millions): April 30, 2026 January 31, 2026 Computers, equipment, and software $ 1,271 $ 1,285 Buildings 698 690 Leasehold improvements 385 334 Furniture, fixtures, and transportation equipment 119 112 Land and land improvements 74 74 Property and equipment, gross 2,547 2,495 Less accumulated depreciation and amortization ( 1,426 ) ( 1,402 ) Property and equipment, net $ 1,121 $ 1,093 Depreciation expense totaled $ 55 million and $ 62 million for the three months ended April 30, 2026, and 2025, respectively. There were no impairment charges recognized on property and equipment during the three months ended April 30, 2026. We recognized impairment charges of $ 34 million for the three months ended April 30, 2025, related to certain property and equipment as a result of our restructuring activities. For further information, see Note 19, Restructuring . 13 Table of Cont ents Note 7. Acquisition-Related Intangible Assets, Net Acquisition-related intangible assets, net consisted of the following as of April 30, 2026 (in millions): Gross Carrying Value Accumulated Amortization Net Book Value Developed technology $ 742 $ ( 384 ) $ 358 Customer relationships 506 ( 222 ) 284 Backlog 17 ( 15 ) 2 Trade name 17 ( 16 ) 1 Total $ 1,282 $ ( 637 ) $ 645 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 Amortization expense related to acquisition-related intangible assets was $ 36 million and $ 21 million for the three months ended April 30, 2026, and 2025, respectively. As of April 30, 2026, our future estimated amortization expense related to acquisition-related intangible assets was as follows (in millions): Fiscal Period: Remainder of 2027 $ 103 2028 132 2029 122 2030 106 2031 60 Thereafter 122 Total $ 645 Note 8. Other Assets Other assets consisted of the following (in millions): April 30, 2026 January 31, 2026 Non-marketable equity and other investments $ 223 $ 233 Contract assets 65 59 Prepayments for goods and services 46 64 Technology patents and other intangible assets, net 20 21 Deposits 15 14 Derivative assets 9 2 Other 57 67 Total other assets $ 435 $ 460 14 Table of Cont ents Technology patents and other intangible assets with estimable useful lives are amortized on a straight-line basis. As of April 30, 2026, our future estimated amortization expense was as follows (in millions): Fiscal Period: Remainder of 2027 $ 3 2028 3 2029 3 2030 2 2031 2 Thereafter 7 Total $ 20 Note 9. 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. 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. Cash Flow Hedges We enter into foreign currency forward contracts to hedge a portion of our forecasted revenue and expense transactions (“cash flow hedges”). We designate these forward contracts as cash flow hedging instruments since the accounting criteria for such designation has been met. Cash flow hedges are recorded on the Condensed Consolidated Balance Sheets at fair value. Cash flows from the settlement of these forward contracts are classified as operating activities on the Condensed Consolidated Statements of Cash Flows. Gains and losses resulting from changes in the fair value of these hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets and are subsequently reclassified to the same line item as the hedged transaction on the Condensed Consolidated Statements of Operations in the same period that the hedged transaction affects earnings. As of April 30, 2026, we estimate that $ 48 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 April 30, 2026, and January 31, 2026, the notional values of the cash flow hedges that we held to buy U.S. dollars in exchange for other currencies were $ 3.3 billion and $ 3.0 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 $ 867 million and $ 874 million, respectively. All contracts had maturities of less than 45 months. Non-Designated Hedges We also enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets and liabilities (“non-designated hedges”). 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 Condensed Consolidated Balance Sheets at fair value. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore all changes in the fair value of these forward contracts are recorded in Other income, net on the Condensed Consolidated Statements of Operations in the period incurred. Cash flows from the settlement of these forward contracts are classified as operating activities on the Condensed Consolidated Statements of Cash Flows. As of April 30, 2026, and January 31, 2026, the notional values of the non-designated hedges that we held to buy U.S. dollars in exchange for other currencies were $ 311 million and $ 442 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 $ 619 million and $ 565 million, respectively. 15 Table of Cont ents The fair values of outstanding derivative instruments were as follows (in millions): Condensed Consolidated Balance Sheets Location April 30, 2026 January 31, 2026 Derivative assets: Cash flow hedges Prepaid expenses and other current assets $ 13 $ 15 Cash flow hedges Other assets 9 2 Non-designated hedges Prepaid expenses and other current assets 5 4 Total derivative assets $ 27 $ 21 Derivative liabilities: Cash flow hedges Accrued expenses and other current liabilities $ 65 $ 71 Cash flow hedges Other liabilities 49 65 Non-designated hedges Accrued expenses and other current liabilities 14 12 Total derivative liabilities $ 128 $ 148 The effect of cash flow hedges on the Condensed Consolidated Statements of Operations was as follows (in millions): Three Months Ended April 30, Condensed Consolidated Statements of Operations Location 2026 2025 Total Gains (losses) related to cash flow hedges Total Gains (losses) related to cash flow hedges Revenues $ 2,542 $ ( 9 ) $ 2,240 $ 8 Costs and expenses 2,204 2 2,201 ( 6 ) Pre-tax gains (losses) associated with cash flow hedges were as follows (in millions): Condensed Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) Locations Three Months Ended April 30, 2026 2025 Gains (losses) recognized in OCI Net change in unrealized gains (losses) on cash flow hedges $ 21 $ ( 162 ) Gains (losses) reclassified from AOCI into income (effective portion) Revenues ( 9 ) 8 Gains (losses) reclassified from AOCI into income (effective portion) Costs and expenses 2 ( 6 ) Gains (losses) associated with non-designated hedges were as follows (in millions): Condensed Consolidated Statements of Operations Location Three Months Ended April 30, 2026 2025 Gains (losses) related to non-designated hedges Other income, net $ ( 4 ) $ 0 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 $ 4 million and a liability position of $ 105 million as of April 30, 2026, and an asset position of $ 1 million and a liability position of $ 128 million as of January 31, 2026. Although legally enforceable master netting arrangements exist between Workday and each counterparty, it is our policy to present the derivatives gross on the Condensed Consolidated Balance Sheets. Our foreign currency forward contracts are not subject to any credit contingent features or collateral requirements. 16 Table of Cont ents Note 10. Debt Outstanding debt consisted of the following (in millions): April 30, 2026 January 31, 2026 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 ( 12 ) ( 13 ) Net carrying amount 2,988 2,987 Less: debt, current ( 998 ) 0 Debt, noncurrent $ 1,990 $ 2,987 As of April 30, 2026, our future principal payments for the outstanding debt were as follows (in millions): Fiscal Period: Remainder of 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 April 30, 2026, and 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 both April 30, 2026, and January 31, 2026, the total estimated fair value of the Senior Notes was $ 2.9 billion. 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. 17 Table of Cont ents 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 April 30, 2026, and January 31, 2026, 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 April 30, 2026, and January 31, 2026, we were in compliance with all covenants included in the 2022 Credit Agreement. Interest Expense on Debt The following table sets forth total interest expense recognized related to our debt (in millions): Three Months Ended April 30, 2026 2025 Contractual interest expense $ 28 $ 28 Interest cost related to amortization of debt discount and issuance costs 1 1 Total interest expense $ 29 $ 29 Note 11. 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 $ 706 million and $ 719 million as of April 30, 2026, and January 31, 2026, respectively, and operating lease liabilities were $ 817 million and $ 834 million as of April 30, 2026, and January 31, 2026, respectively. The components of operating lease expense were as follows (in millions): Three Months Ended April 30, 2026 2025 Operating lease cost $ 42 $ 31 Variable lease cost 14 11 Total operating lease cost $ 56 $ 42 Supplemental cash flow information related to our operating leases was as follows (in millions): Three Months Ended April 30, 2026 2025 Cash paid for operating lease liabilities $ 37 $ 33 Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 21 42 Other information related to our operating leases was as follows: April 30, 2026 January 31, 2026 Weighted average remaining lease term (in years) 11 11 Weighted average discount rate 4.2 % 4.2 % 18 Table of Cont ents As of April 30, 2026, maturities of operating lease liabilities were as follows (in millions): Fiscal Period: Remainder of 2027 $ 112 2028 159 2029 127 2030 90 2031 66 Thereafter 487 Total lease payments 1,041 Less imputed interest ( 224 ) Total operating lease liabilities $ 817 Note 12. 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. During the three months ended April 30, 2026, there were no material changes outside the ordinary course of business to our non-cancelable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. 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 April 30, 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. Note 13. Stockholders’ Equity Common Stock As of April 30, 2026, there were 203 million shares of Class A common stock and 46 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. 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. 19 Table of Cont ents Share repurchase programs authorized by our Board of Directors that were in effect during the three months ended April 30, 2026, and 2025, 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): Three Months Ended April 30, 2026 2025 Total number of shares repurchased 12,025 1,290 Average price paid per share (1) $ 133.05 $ 227.20 Amount repurchased (1) $ 1,600 $ 293 (1) Amounts exclude excise tax and commissions. All repurchases were made in open market transactions. As of April 30, 2026, we were authorized to repurchase a remaining $ 1.3 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 restricted stock units (“RSUs”) are added to the reserves of the 2022 Plan. As of April 30, 2026, 13 million shares of Class A common stock were available for future grants under the 2022 Plan. 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 April 30, 2026, 2 million shares of Class A common stock were available for issuance under the 2012 ESPP. 20 Table of Cont ents 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 the three months ended April 30, 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, 2026 14,128 $ 222.83 Granted- restricted stock units 1,664 151.83 Granted- performance-based restricted stock units (1) 21 127.94 Vested ( 1,596 ) 215.41 Forfeited and canceled (2) ( 1,993 ) 220.37 Outstanding balance as of April 30, 2026 12,224 214.37 (1) Includes approximately 21 thousand PSUs granted to executives in April 2026. The PSUs are subject to vesting based on the achievement of annual performance-based conditions determined at the beginning of each fiscal year. The PSUs will vest at the end of the two -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 and PSUs. As of April 30, 2026, there was a total of $ 2.3 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 . Market-Based Restricted Stock Units In the first quarter of fiscal 2027, 0.5 million shares of market-based RSUs were granted to Mr. Bhusri in connection with his appointment as CEO that vest based on appreciation of the price of our Class A common stock over a multi-year period and upon continued service (“PVU Award”). We estimated the fair value of the PVU Award on the grant date using the Monte Carlo simulation model with the following assumptions: (i) expected volatility of 40 %, (ii) risk-free interest rate of 3.72 %, and (iii) total performance period of five years . The weighted-average grant date fair value of the PVU Award was $ 107.22 per share. We recognize expense for the PVU Award over the requisite service period of five years using the accelerated attribution method. Provided that the requisite service is rendered, the total fair value of the PVU Award at the date of grant is recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the achievement of the specified market criteria. As of April 30, 2026, there was a total of $ 55 million in unrecognized compensation cost related to the PVU Award, which is expected to be recognized over approximately five years . Note 14. Contract Balances and Performance Obligations Contract Balances Contract assets and unearned revenue balances were as follows (in millions): Condensed Consolidated Balance Sheets Location April 30, 2026 January 31, 2026 Contract assets: Contract assets, current Trade and other receivables, net $ 540 $ 443 Contract assets, noncurrent Other assets 65 59 Total contract assets $ 605 $ 502 Unearned revenue: Unearned revenue, current (1) Unearned revenue $ 4,325 $ 5,010 Unearned revenue, noncurrent Unearned revenue, noncurrent 70 71 Total unearned revenue $ 4,395 $ 5,081 (1) Included in this balance are amounts related to professional services that are subject to cancellation and pro-rated refund rights of $ 75 million and $ 89 million as of April 30, 2026, and January 31, 2026, respectively. 21 Table of Cont ents Revenues of $ 2.0 billion and $ 1.7 billion were recognized during the three months ended April 30, 2026, and 2025, respectively, that were included in the unearned revenue balances as of January 31, 2026, and 2025, respectively. Transaction Price Allocated to the Remaining Performance Obligations As of April 30, 2026, approximately $ 27.3 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 $ 15.6 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 April 30, 2026, were not material. Note 15. Other Income, Net Other income, net consisted of the following (in millions): Three Months Ended April 30, 2026 2025 Interest income $ 52 $ 93 Interest expense (1) ( 26 ) ( 29 ) Other (2) ( 9 ) 0 Total other income, net $ 17 $ 64 (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, net of amounts capitalized. For further information, see Note 10, 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 16. Income Taxes We reported an income tax provision of $ 133 million and $ 35 million for the three months ended April 30, 2026, and 2025, respectively. The income tax provision for the three months ended April 30, 2026, was primarily attributable to earnings in the U.S. and profitable foreign jurisdictions, and incremental tax expense from share-based compensation awards where the tax deduction realized was lower than the compensation expense recognized. The income tax provision for the three months ended April 30, 2025, was primarily attributable to earnings in the U.S. and profitable foreign jurisdictions. We are subject to income tax audits in the U.S. and foreign jurisdictions. We record liabilities related to uncertain tax positions and believe that we have provided adequate reserves for income tax uncertainties in all open tax years. Due to our history of tax losses, all years remain open to tax audit. 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, and 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. As of April 30, 2026, we continue to maintain valuation allowances related to tax credits in certain state jurisdictions and net operating loss in certain foreign jurisdictions. We will continue to evaluate the need for valuation allowances for our deferred tax assets. Note 17. 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. 22 Table of Cont ents 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): Three Months Ended April 30, 2026 2025 (1) Net income per share, basic: Numerator: Net income $ 222 $ 68 Denominator: Weighted-average shares outstanding, basic 253,891 266,516 Net income per share, basic $ 0.87 $ 0.25 Net income per share, diluted: Numerator: Net income $ 222 $ 68 Denominator: Weighted-average shares outstanding, basic 253,891 266,516 Dilutive effect of share-based awards 422 3,780 Weighted-average shares outstanding, diluted 254,313 270,296 Net income per share, diluted $ 0.87 $ 0.25 (1) The prior period net income per share for Class A and Class B common stock has been presented together to conform to current period presentation, which had no impact on our previously reported basic or diluted net income per share. 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): Three Months Ended April 30, 2026 2025 Total weighted-average shares related to outstanding share-based awards 13,661 201 Note 18. 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): Three Months Ended April 30, 2026 2025 U.S. $ 1,893 $ 1,681 Other countries 649 559 Total revenues $ 2,542 $ 2,240 23 Table of Cont ents 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): April 30, 2026 January 31, 2026 U.S. $ 1,046 $ 1,080 Ireland 566 531 Other countries 215 201 Total long-lived assets $ 1,827 $ 1,812 Note 19. 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 resulted 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 were substantially completed in the first quarter of fiscal 2027. The remaining liability was $ 5 million and $ 41 million as of April 30, 2026, and January 31, 2026, respectively. 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. During the three months ended April 30, 2026, we did not record any additional charges under this plan. 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, with no remaining liability as of January 31, 2026. We incurred total charges of $ 233 million in connection with this plan, consisting 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. During the three months ended April 30, 2025, we recorded charges of $ 166 million under this plan. 24 Table of Cont ents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements, which are subject to safe harbor protection under the Private Securities Litigation Reform Act of 1995. All statements contained in this report other than statements of historical fact, including statements regarding our future financial condition and operating results, business strategy and plans, and objectives for future operations, are forward-looking statements. The words “ believe, ” “ may, ” “ will, ” “ estimate, ” “ continue, ” “ anticipate, ” “ intend, ” “ expect, ” “ seek, ” “ plan, ” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, beliefs, and projections about future events, conditions, and trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control, such as those arising from the impact of recent macroeconomic events, including geopolitical instability, increased tariffs, elevated inflation and energy prices, and fluctuating interest rates and foreign currency exchange rates, as well as those described in the “ Risk Factors ” section, which we encourage you to read carefully. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, assumptions, and potential changes in circumstances, the future events, conditions, and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements. Accordingly, you should not rely upon any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activities, performance, or achievements. We are under no duty to update any of these forward-looking statements after the date of this report or to conform these statements to actual results or revised expectations, except as required by applicable law. If we do update any forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this report. Overview Workday is the enterprise AI platform that operates at the core of human resources, finance, and information technology. We deliver cloud-based, AI-powered applications for human capital management (“HCM”), financial management, spend management, and planning. Our diverse customer base includes emerging, medium-sized, and large global organizations within numerous industries, including financial services, government, healthcare, higher education, hospitality, manufacturing, professional and business services, retail, technology and media, and transportation. Workday helps customers deliver better employee experiences, increase productivity, improve operational efficiencies, and provide insights for faster, data-driven decision-making. We have achieved significant growth since our inception in 2005, when we pioneered HCM in the cloud. As a result of our innovation and commitment to customer success, today we are a Fortune 500 company with more than 11,500 customers around the world. As we continue to grow, we are focused on driving sustainable, long-term subscription revenue growth by adding new customers and expanding our relationships with existing customers through increased adoption of our suite of solutions. Central to this effort is investing in strategic growth areas including developing innovative AI solutions, expanding internationally, growing our partner ecosystem, deepening our presence in industry verticals and the emerging and medium enterprise market, and exploring strategic acquisitions to complement our organic innovation. Our investments across these targeted growth areas may require additional costs, but we remain committed to optimizing resource allocation and realizing a return on our investments. Over time, we believe these investments will support revenue growth and a more scalable business. We are focused on expanding our operating margin by driving scale and building efficiencies across the business through investments in people, processes, and systems. As a result of our focus on expanding operating margin, we expect our product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as we grow our revenues and invest in a disciplined manner to support our long-term growth objectives. 25 Table of Cont ents Financial Results Overview The following table provides an overview of our key metrics (in millions, except percentages, basis points, and headcount data): Three Months Ended April 30, 2026 2025 Change Total revenues $ 2,542 $ 2,240 13 % Subscription services revenues $ 2,354 $ 2,059 14 % GAAP operating income $ 338 $ 39 762 % Non-GAAP operating income (1) $ 809 $ 677 19 % GAAP operating margin 13.3 % 1.8 % 1,154 bps Non-GAAP operating margin (1) 31.8 % 30.2 % 159 bps Operating cash flows $ 696 $ 457 52 % Free cash flows (1) $ 616 $ 421 46 % As of April 30, 2026 2025 Change Total subscription revenue backlog $ 27,294 $ 24,621 11 % 12-month subscription revenue backlog $ 8,806 $ 7,627 15 % Cash, cash equivalents, and marketable securities $ 4,353 $ 7,970 (45) % Headcount 20,834 20,515 2 % (1) See “Non-GAAP Financial Measures” below for further information. Impact of Current Economic Conditions Recent macroeconomic events including increased tariffs, elevated inflation and energy prices, and fluctuating interest rates and foreign currency exchange rates, as well as geopolitical instability and conflicts, continue to impact the global economy and create uncertainty, volatility, and disruption of financial markets. As a result, we have experienced, and may continue to experience, a moderation of revenue growth rates due to deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, as well as reduced growth in headcount-level commitments upon renewals of existing customers. The extended sales cycles are particularly evident in the government, higher education, and healthcare industries which are tied to federal funding. Further, we have provided, and may continue to provide, certain customers with more flexible payment terms. For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report. Components of Results of Operations Revenues We derive our revenues from subscription services and professional services. Subscription services revenues primarily consist of fees that provide customers access to our cloud applications, with standard and enhanced customer support. Professional services revenues include fees for deployment services, optimization services, and training. Subscription services revenues accounted for approximately 93% of our total revenues for the three months ended April 30, 2026, and represented 97% of our total unearned revenue as of April 30, 2026. Subscription services revenues are driven primarily by the number of customers, the number of workers at each customer, the specific applications subscribed to by each customer, and the price of our applications. 26 Table of Cont ents The mix of applications to which each customer subscribes can affect our financial performance due to price differentials in our applications. Pricing for our applications varies based on many factors, including the complexity and maturity of the application and its acceptance in the marketplace. New products or services offerings by competitors in the future could also impact the mix and pricing of our offerings. Subscription services revenues are recognized over time as services are delivered, beginning on the date our service is made available to the customer. Our subscription contracts typically have a term of three years or longer and are generally noncancelable. We generally invoice our customers annually in advance for subscription services. We may provide certain customers flexible payment terms and the timing of revenue recognition may differ from the timing of invoicing to our customers. Our professional services consulting engagements are billed on a time and materials or fixed price basis. We generally invoice our customers as the work is performed for time and materials arrangements, and in advance for fixed price arrangements. 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. In some cases, we supplement our consulting teams by subcontracting resources from our service partners and deploying them on customer engagements. As the Workday-related consulting practices of our partner firms continue to develop, we expect these partners to increasingly contract directly with our subscription customers for services engagements. Subscription Revenue Backlog Our subscription revenue backlog, which is also referred to as remaining performance obligations for subscription contracts, represents contracted subscription services revenues that have not yet been recognized and includes billed and unbilled amounts. Subscription revenue backlog may fluctuate from period-to-period due to a number of factors, including the timing of renewals and overall renewal rates, new business growth, average contract duration, business combinations, and seasonality. Costs and Expenses Costs of subscription services revenues. Costs of subscription services revenues consist primarily of expenses associated with hosting our applications and delivering standard and enhanced customer support services. These costs include employee-related expenses, expenses related to data center capacity and third-party hosted infrastructure, depreciation of our data center equipment, amortization of certain acquisition-related intangible assets, and allocated overhead. Costs of professional services revenues . Costs of professional services revenues consist primarily of employee-related expenses associated with these services, subcontractor expenses, travel expenses, and allocated overhead. Product development expenses . Product development expenses consist primarily of employee-related expenses associated with our efforts to add new features and applications, increase functionality, and enhance the ease of use of our cloud applications, as well as expenses related to third-party hosted infrastructure, and allocated overhead. Sales and marketing expenses. Sales and marketing expenses consist primarily of employee-related expenses, sales commissions, marketing programs, travel expenses, amortization of certain acquisition-related intangible assets, and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand awareness, brand ambassador campaigns, and product marketing activities. Sales commissions are considered incremental costs of obtaining a contract with a customer. Sales commissions for new revenue contracts are capitalized and amortized on a straight-line basis over a period of benefit that we have determined to be five years. General and administrative expenses . General and administrative expenses consist primarily of employee-related expenses for our finance and accounting, legal, human resources, and information systems personnel, as well as professional services fees, allocated overhead, and other corporate expenses. We allocate shared costs, such as facilities, IT, benefits, and recruiting, primarily based on headcount. As such, overhead expenses are reflected in each of the costs and expenses categories. Restructuring expenses. Restructuring expenses are associated with a formal restructuring program and consist of charges related to workforce reductions, including employee transition, severance payments, and share-based compensation, as well as charges associated with the closure of facilities and other exit and disposal activities. 27 Table of Cont ents Results of Operations Revenues Our total revenues were as follows (in millions, except percentages): Three Months Ended April 30, 2026 2025 % Change Subscription services $ 2,354 $ 2,059 14 % Professional services 188 181 4 % Total revenues $ 2,542 $ 2,240 13 % Total revenues were $2.5 billion for the three months ended April 30, 2026, compared to $2.2 billion for the prior year period, an increase of $302 million, or 13% . Subscription services revenues were $2.4 billion for the three months ended April 30, 2026, compared to $2.1 billion for the prior year period, an increase of $295 million, or 14%. Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the comparable prior year period, and the remaining 40% was attributable to customers added after the beginning of the comparable prior year period. Professional services revenues were $188 million for the three months ended April 30, 2026, compared to $181 million for the prior year period, an increase of $7 million, or 4%. Professional services revenues remained relatively flat as we continued to expand and leverage our service providers. Gross Revenue Retention Rate Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of approximately 97% as of April 30, 2026. Our gross revenue retention rate measures the percentage of recurring revenue retained from existing customers and is calculated by taking total annual recurring revenue (“ARR”) of our customers as of the corresponding prior period-end and comparing that to ARR from that same set of customers as of the current period-end. The metric takes into account recurring revenues lost to product or customer churn but does not account for additional revenue earned from add-ons or net expansions, which include volume and price adjustments. Our high gross revenue retention rate demonstrates our ability to maintain our existing customer base and drive strong overall customer satisfaction. Our gross revenue retention rate is based on ARR, which represents the annualized value of active subscription contracts as of the end of each period. Each subscription contract is annualized by dividing the total contract value by the number of days in the contract term and then multiplying by 365. We exclude certain subscription contracts from the calculation, including contracts with terms less than one year that are distinct from our core product offering, such as contracts for tenants which are used for implementation and testing. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, ARR is only adjusted if the customer churns. We calculate ARR on a constant currency basis using exchange rates set at the beginning of each fiscal year. Subscription Revenue Backlog As of April 30, 2026, our total subscription revenue backlog was $27.3 billion, with $8.8 billion expected to be recognized in revenues over the next 12 months. As of April 30, 2025, our total subscription revenue backlog was $24.6 billion, with $7.6 billion expected to be recognized in revenues over the next 12 months. The increase in subscription revenue backlog was primarily driven by expansion within our existing customer base, sales to new customers, and timing of renewals for existing customers. 28 Table of Cont ents Costs and Expenses Our costs and expenses were as follows (in millions): Three Months Ended April 30, 2026 2025 Costs of subscription services $ 412 $ 350 Costs of professional services 192 187 Product development 705 663 Sales and marketing 679 623 General and administrative 216 212 Restructuring 0 166 Total costs and expenses $ 2,204 $ 2,201 Total costs and expenses were $2.2 billion for the three months ended April 30, 2026, compared to $2.2 billion for the prior year period, an increase of $4 million, or 0.2%. The increase in total costs and expenses included increases of $60 million in employee-related expenses, $51 million in third-party hosted infrastructure expenses, $36 million in facilities and IT-related expenses, $15 million in amortization of acquisition-related intangible assets, and $11 million in amortization of deferred sales commissions, offset by a reduction of $166 million in restructuring expenses. Costs of Subscription Services Costs of subscription services were $412 million for the three months ended April 30, 2026, compared to $350 million for the prior year period, an increase of $62 million, or 18%. The increase in costs of subscription services included increases of $47 million in third-party hosted infrastructure expenses and $11 million in amortization of acquisition-related intangible assets. We expect costs of subscription services will continue to increase in absolute dollars as we improve and expand our technical operations infrastructure, including third-party hosted infrastructure, and as we grow our enhanced customer support services. Costs of Professional Services Costs of professional services were $192 million for the three months ended April 30, 2026, compared to $187 million for the prior year period, an increase of $5 million, or 3%. Costs of professional services remained relatively flat. We expect costs of professional services as a percentage of total revenues to continue to decline as we expand and leverage our service partners to deploy our applications and focus on growing our subscription revenues. Product Development Product development expenses were $705 million for the three months ended April 30, 2026, compared to $663 million for the prior year period, an increase of $42 million, or 6%. The increase in product development expenses included increases of $31 million in employee-related expenses and $16 million in facilities and IT-related expenses. We expect product development expenses will continue to increase in absolute dollars as we improve and extend our applications and develop new technologies. Sales and Marketing Sales and marketing expenses were $679 million for the three months ended April 30, 2026, compared to $623 million for the prior year period, an increase of $56 million, or 9%. The increase in sales and marketing expenses included increases of $22 million in employee-related expenses, $11 million in amortization of deferred sales commissions, and $11 million in facilities and IT-related expenses. We expect sales and marketing expenses to increase in absolute dollars as we continue to invest domestically and internationally to expand awareness of our brand and product offerings to attract new and existing customers. General and Administrative General and administrative expenses were $216 million for the three months ended April 30, 2026, compared to $212 million for the prior year period, an increase of $4 million, or 2%. General and administrative expenses remained relatively flat. 29 Table of Cont ents We expect general and administrative expenses will continue to increase in absolute dollars as we continue to grow our business and invest in our people, processes, and systems to support our global operations. Restructuring There were no restructuring expenses recognized during the three months ended April 30, 2026. Restructuring expenses were $166 million for the three months ended April 30, 2025, of which $132 million related to employee transition, severance payments, employee benefits, and share-based compensation, and $34 million related to an impairment of office space. Share-based Compensation Costs and expenses include share-based compensation expense as follows (in millions): Three Months Ended April 30, 2026 2025 Costs of subscription services $ 37 $ 42 Costs of professional services 26 30 Product development 184 183 Sales and marketing 90 92 General and administrative 72 70 Restructuring 0 42 Total share-based compensation expense $ 409 $ 459 Percentage of total revenues 16.1 % 20.5 % Share-based compensation expense decreased by $50 million for the three months ended April 30, 2026, compared to the prior year period, primarily due to a reduction in restructuring expenses. Equity compensation is an important element of our compensation philosophy. While we expect share-based compensation expense to grow in absolute dollars as we expand our global workforce, we expect it to decline as a percentage of total revenues. Operating Income and Operating Margin GAAP operating income was $338 million, or 13.3% of revenues, for the three months ended April 30, 2026, compared to the prior year GAAP operating income of $39 million, or 1.8% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth, a reduction in restructuring expenses, and moderation of operating expenses, including share-based compensation. Non-GAAP operating income wa s $809 million, or 31.8% of revenues, for the three months ended April 30, 2026, compared to the prior year non-GAAP operating income of $677 million, or 30.2% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses. 30 Table of Cont ents Reconciliations of our GAAP to non-GAAP operating income and operating margin were as follows (in millions, except percentages). See “Non-GAAP Financial Measures” below for further information. Three Months Ended April 30, 2026 2025 Operating income $ 338 $ 39 Share-based compensation expense (1) 409 417 Employer payroll tax-related items on employee stock transactions 19 27 Amortization of acquisition-related intangible assets 36 21 Acquisition-related costs 7 7 Restructuring costs 0 166 Non-GAAP operating income $ 809 $ 677 Operating margin 13.3 % 1.8 % Share-based compensation expense (1) 16.1 % 18.6 % Employer payroll tax-related items on employee stock transactions 0.7 % 1.2 % Amortization of acquisition-related intangible assets 1.4 % 0.9 % Acquisition-related costs 0.3 % 0.3 % Restructuring costs 0.0 % 7.4 % Non-GAAP operating margin 31.8 % 30.2 % (1) Share-based compensation expense in the GAAP to non-GAAP reconciliation tables above excludes share-based compensation associated with restructuring activities of $42 million for the three months ended April 30, 2025. These expenses are included in Restructuring costs. Other Income, Net Other income, net was as follows (in millions): Three Months Ended April 30, 2026 2025 Total other income, net $ 17 $ 64 Other income, net decreased by $47 million for the three months ended April 30, 2026, primarily due to lower interest income following the liquidation of marketable debt securities in the prior fiscal year to fund acquisition activities and share repurchases. Provision For Income Taxes The provision for income taxes was as follows (in millions): Three Months Ended April 30, 2026 2025 Provision for income taxes $ 133 $ 35 The income tax provision for the three months ended April 30, 2026, was primarily attributable to earnings in the U.S. and profitable foreign jurisdictions, and incremental tax expense from share-based compensation awards where the tax deduction realized was lower than the compensation expense recognized. The income tax provision for the three months ended April 30, 2025, was primarily attributable to earnings in the U.S. and profitable foreign jurisdictions. For further information, see Note 16, Income Taxes , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report. 31 Table of Cont ents Liquidity and Capital Resources As of April 30, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $4.4 billion, which were primarily held for working capital and general corporate purposes. Our cash equivalents and marketable securities are primarily composed of, in order from largest to smallest, corporate bonds, U.S. treasury securities, U.S. agency obligations, money market funds, asset-backed securities, and supranational securities. We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to the remaining term of contracted noncancelable subscription agreements, which are not reflected on the Condensed Consolidated Balance Sheets, and, if necessary, our borrowing capacity under our 2022 Credit Agreement that provides for $1.0 billion of unsecured financing, are sufficient to meet our working capital, capital expenditure, share repurchase, and debt repayment needs over the next 12 months and beyond. Our long-term future capital requirements depend on many factors, including the effects of macroeconomic trends, customer growth rates, subscription renewal activity, headcount growth, the timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings, infrastructure development, and our investment and acquisition activities. As part of our strategy, we may choose to seek additional debt or equity financing, which may not be available on terms favorable to us or at all. Additionally, our cash provided by operating activities could be affected by various risks and uncertainties, including the “Risk Factors” included in Part II, Item 1A of this report. Our cash flows were as follows (in millions): Three Months Ended April 30, 2026 2025 Net cash provided by (used in): Operating activities $ 696 $ 457 Investing activities 97 (523) Financing activities (1,733) (501) Effect of exchange rate changes (1) 1 Net decrease in cash, cash equivalents, and restricted cash $ (941) $ (566) Operating Activities Cash provided by operating activities was $696 million and $457 million for the three months ended April 30, 2026, and 2025, respectively. The improvement in cash provided by operating activities was primarily driven by higher cash collections of $463 million mainly due to increased sales, partially offset by increased employee-related payments of $90 million, increased supplier payments of $66 million to support our continued growth, and decreased interest income of $30 million. Investing Activities Cash provided by investing activities was $97 million for the three months ended April 30, 2026, which primarily resulted from net inflows of $127 million related to marketable debt securities activity and inflows of $41 million from the exit of non-marketable equity investments, offset by capital expenditures of $80 million mainly for office space projects. Cash used in investing activities was $523 million for the three months ended April 30, 2025, which primarily resulted from a net outflow of $483 million related to marketable debt securities activity and capital expenditures of $36 million mainly for office space projects. We expect capital expenditures will be approximately $270 million in fiscal 2027, primarily related to investments in our office facilities to support our continued growth. Financing Activities Cash used in financing activities was $1.7 billion for the three months ended April 30, 2026, which primarily resulted from repurchases of common stock of $1.6 billion under our share repurchase programs and taxes paid of $146 million related to net share settlement of equity awards. Cash used in financing activities was $501 million for the three months ended April 30, 2025, which primarily resulted from repurchases of common stock of $290 million under our share repurchase programs and taxes paid of $211 million related to net share settlement of equity awards. 32 Table of Cont ents Free Cash Flows In evaluating our performance internally, we focus on long-term, sustainable growth in free cash flows. We define free cash flows, a non-GAAP financial measure, as net cash provided by operating activities minus capital expenditures. See “Non-GAAP Financial Measures” below for further information. Free cash flows were $616 million for the three months ended April 30, 2026, compared to $421 million for the prior year period. The improvement was primarily driven by higher cash collections of $463 million mainly due to increased sales, partially offset by increased employee-related payments of $90 million, increased supplier payments of $66 million to support our continued growth, increased capital expenditures of $44 million, and decreased interest income of $30 million. Reconciliation of our GAAP net cash provided by operating activities to non-GAAP free cash flows is as follows (in millions): Three Months Ended April 30, 2026 2025 Net cash provided by operating activities $ 696 $ 457 Less: Capital expenditures (80) (36) Free cash flows $ 616 $ 421 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 active 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 As of April 30, 2026, we were authorized to repurchase a remaining $1.3 billion of our outstanding shares of Class A common stock under our share repurchase programs. For further information, see Note 13, Stockholders’ Equity , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report. Contractual Obligations Our contractual obligations primarily consist of borrowings under our Senior Notes, agreements for third-party hosted infrastructure platforms for business operations, leases for office space and co-location facilities for data center capacity, and other purchase obligations entered into in the ordinary course of business. There have been no material changes outside the ordinary course of business to our contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. Non-GAAP Financial Measures Regulation S-K Item 10(e), “Use of non-GAAP financial measures in Commission filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP operating income, non-GAAP operating margin, and free cash flows meet the definition of non-GAAP financial measures. 33 Table of Cont ents Non-GAAP Operating Income and Non-GAAP Operating Margin We use the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate our financial performance. We believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. Our non-GAAP operating income and non-GAAP operating margin exclude the components listed below. For the reasons set forth below, we believe that excluding these components provides useful information to investors and others in understanding and evaluating our operating results and prospects in the same manner as management, in comparing financial results across accounting periods and to those of peer companies, and to better understand the long-term performance of our core business. • Share-based compensation expense. Share-based compensation primarily consists of non-cash expenses for employee restricted stock units (“RSUs”) and our employee stock purchase plan (“ESPP”). Although share-based compensation is an important aspect of the compensation of our employees and executives, this expense is determined using a number of factors, including our stock price, volatility, and forfeiture rates, that are beyond our control and generally unrelated to operational decisions and performance in any particular period. Further, share-based compensation expense is not reflective of the value ultimately received by the grant recipients. • Employer payroll tax-related items on employee stock transactions. We exclude the employer payroll tax-related items on employee stock transactions in order to show the full effect that excluding share-based compensation expense has on our operating results. Similar to share-based compensation expense, this tax expense is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business. • Amortization of acquisition-related intangible assets. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of the related amortization can vary significantly and are unique to each acquisition and thus we do not believe this activity is reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangible assets from these non-GAAP financial measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. • Acquisition-related costs. Acquisition-related costs include direct transaction costs, such as due diligence and advisory fees, and certain compensation and integration-related expenses. We exclude the effects of acquisition-related costs as we believe these transaction-specific expenses are inconsistent in amount and frequency and do not correlate to the operation of our business. • Restructuring costs. 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. We exclude these expenses because they are not reflective of ongoing business and operating results. Free Cash Flows We define free cash flows as net cash provided by operating activities minus capital expenditures. We use free cash flows as a measure of financial progress in our business, as it balances operating results, cash management, and capital efficiency. We believe information regarding free cash flows provides investors and others with an enhanced view of cash flow generation from the ongoing operations of our business. Limitations on the Use of Non-GAAP Financial Measures A limitation of our non-GAAP financial measures of non-GAAP operating income, non-GAAP operating margin, and free cash flows is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Further, these non-GAAP financial measures have certain limitations as they do not reflect all items of expense or cash that affect our operations and are reflected in the corresponding GAAP financial measures. In the case of share-based compensation, if we did not pay out a portion of compensation in the form of share-based compensation, the cash salary expense included in operating expenses would be higher, which would affect our cash position. 34 Table of Cont ents We compensate for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures. See “Results of Operations—Operating Income and Operating Margin” for reconciliations from the most directly comparable GAAP financial measures of GAAP operating income and GAAP operating margin, to the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin, for the three months ended April 30, 2026, and 2025. See “Liquidity and Capital Resources—Free Cash Flows” for a reconciliation from the most comparable GAAP financial measure, net cash provided by operating activities, to the non-GAAP financial measure, free cash flows, for the three months ended April 30, 2026, and 2025. Critical Accounting Estimates Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgments, and assumptions. Our actual results may differ from these estimates under different assumptions or conditions. We believe that the following accounting policies include specific estimates that involve a high degree of judgment and complexity, and are the most critical to aid in fully understanding and evaluating our financial condition and operating results: • Revenue recognition • Deferred commissions • Income taxes • Business combinations, goodwill, and acquisition-related intangible assets For a further discussion of our critical accounting estimates, refer to our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. During the three months ended April 30, 2026, there were no significant changes to our critical accounting estimates. 35 Table of Cont ents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Recent macroeconomic events have resulted in negative impacts on global economies and financial markets, which may increase our foreign currency exchange risk and interest rate risk. For further discussion of the potential impacts of these events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report. Foreign Currency Exchange Risk We transact business globally in multiple currencies. As a result, our operating results and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. As of April 30, 2026, our most significant currency exposures were the euro, British pound, Canadian dollar, and Australian dollar. Due to our exposure to market risks that may result from changes in foreign currency exchange rates, we enter into foreign currency derivative hedging transactions to mitigate these risks. For further information, see Note 9, Derivative Instruments , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report. Interest Rate Risk on our Investments We had cash, cash equivalents, and marketable securities totaling $4.4 billion and $5.4 billion as of April 30, 2026, and January 31, 2026, respectively. Cash equivalents and marketable securities were invested primarily in U.S. treasury securities, U.S. agency obligations, corporate bonds, commercial paper, money market funds, asset-backed securities, and supranational securities. The cash, cash equivalents, and marketable securities are held primarily for working capital and general corporate purposes. Our investment portfolios are managed to preserve capital and meet liquidity needs. We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio of debt securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we sell securities that decline in market value due to changes in interest rates. Further, since our debt securities are classified as “available-for-sale,” if the fair value of the security declines below its amortized cost basis, then any portion of that decline attributable to credit losses is recognized on the Condensed Consolidated Statements of Operations. A hypothetical increase or decrease of 100 basis points in interest rates would have resulted in an approximately $54 million market value reduction or increase in our investment portfolio as of April 30, 2026. A hypothetical increase or decrease of 100 basis points in interest rates would have resulted in an approximately $59 million market value reduction or increase in our investment portfolio as of January 31, 2026. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Interest Rate Risk on our Debt The Senior Notes have fixed annual interest rates, and therefore we do not have economic interest rate exposure on these debt obligations. However, the fair values of the Senior Notes are exposed to interest rate risk. Generally, the fair values of the Senior Notes will increase as interest rates fall and decrease as interest rates rise. Borrowings under our 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. Because the interest rates applicable to borrowings under the 2022 Credit Agreement are variable, we are exposed to market risk from changes in the underlying index rates, which affect our cost of borrowing. For further information, see Note 10, Debt , of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. 36 Table of Cont ents In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. (b) Changes in Internal Control Over Financial Reporting Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 37 Table of Cont ents PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are regularly involved with claims, suits, purported class or representative actions, and may be involved in regulatory and government investigations and other proceedings, involving competition, intellectual property, data security and privacy, bankruptcy, tax and related compliance, labor and employment, commercial disputes, and other matters. Such claims, suits, actions, regulatory and government investigations, and other proceedings can impose a significant burden on management and employees, could prevent us from offering one or more of our applications, services, or features to others, could require us to change our technology or business practices, or could result in monetary damages, fines, civil or criminal penalties, reputational harm, or other adverse consequences. These claims, suits, actions, regulatory and government investigations, and other proceedings may include speculative, substantial, or indeterminate monetary amounts. We record a liability when we believe that it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both the likelihood of there being a liability and the estimated amount of a liability related to such matters. With respect to our outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible liability will not, either individually or in aggregate, have a material adverse effect on our business, financial condition, operating results, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. 38 Table of Cont ents ITEM 1A. RISK FACTORS Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this report, including the condensed consolidated financial statements and the related notes included elsewhere in this report, before making an investment decision. The risks and uncertainties described below reflect our beliefs and opinions as to the factors and events that could materially and adversely affect our business or the market price of our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not any of the risks, events, or uncertainties described below have occurred in the past. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that materially and adversely affect our business. If any of the following risks actually occurs, our business operations, financial condition, operating results, and prospects could be materially and adversely affected. The market price of our securities could decline due to the materialization of these or any other risks, and you could lose part or all of your investment. Summary of Risk Factors The following summary provides an overview of the material risks we are exposed to in the normal course of our business activities. This risk factor summary does not contain all of the information that may be important to you, and you should read these together with the more detailed discussion of risks set forth following this section, as well as elsewhere in this report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional risks beyond those summarized below, or discussed elsewhere in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may apply to our activities or operations as currently conducted or as we may conduct them in the future, or to the markets in which we currently operate or may in the future operate. Consistent with the foregoing, we are exposed to a variety of risks, including those associated with the following: • any compromise of our information technology systems or security measures (including of our critical suppliers and service partners), or the unauthorized access of customer or user data; • any slowdown or failure of our technical operations infrastructure, including data centers operated by third parties, or the impact of service outages or delays in the deployment of our applications, or the failure of our applications to perform properly; • our ability to compete effectively in the intensely competitive markets in which we participate, including against non-specialist AI-native solutions; • privacy concerns and evolving domestic or foreign laws and regulations; • any loss of key employees or the inability to attract, develop, and retain highly skilled employees; • our reliance on our network of partners to drive additional growth of our revenues; • our ability to realize a return on our current development efforts or offer new features, such as those involving AI, enhancements, and modifications to our products and services, and our ability to realize a return on the investments we have made toward entering new markets and new lines of business; • exposure to risks inherent to international expansion and sales to customers outside the U.S. or with international operations; • our ability to realize the expected business or financial benefits of company, employee, or technology acquisitions; • government contracts and related procurement regulations; • any dissatisfaction of our users with the deployment, training, and support services provided by us and our partners; • delays in the reflection of downturns or upturns in new sales in our operating results associated with long sales cycles and our subscription model; • our ability to predict the rate of customer subscription renewals or adoptions; • the technical, legal, and regulatory environment in connection with our use of new and evolving technologies in our offerings, such as AI; • any adverse litigation results; • our ability to successfully integrate our applications with third-party technologies; • any failure to protect our intellectual property rights or any lawsuits against us for alleged infringement of third-party proprietary rights; • the impact of continuing global economic and geopolitical volatility and conflicts; • the fluctuation of our quarterly results; • our existing and future debt obligations; and • the limited ability of third parties to influence corporate matters due to our dual class structure and to seek a merger, tender offer, or proxy contest due to Delaware law and provisions in our organizational documents. 39 Table of Cont ents Risks Related to Our Business and Industry Any slowdown or failure in our technical operations infrastructure or applications may subject us to liabilities and adversely affect our reputation and operating results. We have experienced significant growth in the number of users, transactions, and data that our operations infrastructure supports. If we do not accurately predict our infrastructure requirements or fail to adapt and scale, we may see an increase in service outages or delays, or significant increases in operating costs, which may adversely affect our business and operating results. We have experienced, and may in the future experience, defects, system disruptions, outages, and other performance problems, including the failure of our applications to perform properly. These problems may be caused by a variety of factors, including infrastructure and software or code changes, vendor issues, software and system defects, human error, viruses, worms, security attacks (internal and external), fraud, spikes in customer usage, and denial of service issues. For example, in July 2025, we identified and subsequently remediated an issue impacting reporting from high-volume data sources in the tenants of certain customers that may have yielded incomplete queries without displaying an error message. In addition, we may also encounter difficulties integrating acquired technologies, which may result in the failure of our applications to perform properly. All of these issues may result in increased operational costs, delays in new feature rollouts, customer loss, reputational damage, and legal or regulatory liability, including liability under customer contracts. Such issues have, and may in the future, result in certain parties having unauthorized access to data, which could increase the scope of our liability. Because of the large amount of data that we collect and process in our systems, and the sensitive nature of such data, it is possible that these issues could result in significant disruption, data loss or corruption, or cause the data to be incomplete or contain inaccuracies that our customers and other users regard as significant. Furthermore, our applications are essential to many of the business processes for our customers. For example, our financial management application is essential to our and our customers’ financial planning, reporting, and compliance programs. Any interruption in our service may affect the availability, accuracy, or timeliness of such programs and as a result could damage our reputation, cause our customers to terminate their use of our applications, require us to issue refunds for prepaid and unused subscription services, require us to compensate our customers for certain losses, and prevent us from gaining additional business from current or future customers. In addition, because we use Workday’s financial management application, any problems that we experience with financial reporting and compliance could be negatively perceived by prospective or current customers and negatively impact demand for our applications. Our insurance policies, including our errors and omissions insurance, may be inadequate or may not be available in the future on acceptable terms, or at all, to protect against claims and other legal actions arising from breaches of our contracts, disruptions in our service, including those caused by cybersecurity incidents, failures or disruptions to our infrastructure, catastrophic events and disasters, or otherwise. In addition, our policy may not cover all claims made against us and defending a suit, regardless of its merit, could be costly. We depend on data centers and other infrastructure operated by third parties, as well as internet availability, and any disruption in these operations could adversely affect our business and operating results. We host our applications and serve our customers and users globally from data centers operated by third parties and rely upon third-party vendors to operate certain aspects of our services. We control our applications and data, but we do not control the facilities, operations, and physical security of these locations. Disruption of or interference at these locations has and could in the future impact our operations and our business could be adversely impacted. For example, we have experienced disruptions at certain of our co-location data centers in the U.S. due to high temperatures and power outages that resulted in a brief temporary outage of our services for a subset of our customers. These facilities may also be subject to cybersecurity breaches, capacity constraints, financial difficulties, break-ins, sabotage, intentional acts of vandalism and similar misconduct, natural catastrophic events, as well as local administrative actions, changes to legal or permitting requirements, and litigation to stop, limit, or delay operations, and our disaster recovery planning may not account for all eventualities. Furthermore, our customers and other users access our applications through their internet service providers. If a service provider fails to provide sufficient capacity to support our applications or otherwise experiences service outages, such failure could interrupt our customers’ and other users’ access to our applications, which could adversely affect their perception of our applications’ reliability and our revenues. In addition, certain countries have implemented or may implement legislative and technological actions that either do or can effectively regulate access to the internet, including the ability of internet service providers to limit access to specific websites or content. 40 Table of Cont ents Any changes in service levels with our infrastructure providers, or any errors, defects, disruptions, or other performance problems with our applications or the infrastructure on which they run, including internet infrastructure, could adversely affect our reputation and may damage our customers’ or other users’ data or result in lengthy interruptions in our services. Interruptions in our services might adversely affect our reputation and operating results, cause us to issue refunds or service credits to customers, subject us to potential liabilities, result in contract terminations, or adversely affect our renewal rates. The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be adversely affected. The markets for enterprise cloud applications, including AI-powered solutions, are highly competitive, with relatively low barriers to entry for some applications or services. Some of our competitors are larger and have greater name recognition, significantly longer operating histories, access to larger customer bases, larger marketing budgets, and significantly greater resources to devote to the research, development, promotion, and sale of their products and services than we do. This may allow our competitors to respond more effectively than us to new or emerging technologies and changes in market conditions. Our primary competitors are Oracle and SAP, well-established providers of financial management and HCM applications, which have long-standing relationships with customers and partners. Some customers may be hesitant to switch vendors or to adopt cloud applications such as ours and may prefer to maintain their existing relationships with competitors. We also face competition from other enterprise software vendors, from regional competitors that only operate in certain geographic markets, and from vendors of specific applications that address only one or a portion of our applications, some of which offer cloud-based or AI-powered solutions. These vendors include, without limitation: Anaplan, Inc., ADP, Coupa Software Inc., Dayforce, Inc., Microsoft, ServiceNow, Inc., and UKG Inc. We may also face greater competition from non-specialist solutions relying on generic large language models (“LLMs”), generative AI, and general-purpose agents to address a broad range of business needs. In order to take advantage of customer demand for cloud and AI-powered applications, legacy vendors are expanding their cloud or AI-powered applications through acquisitions, strategic alliances, and organic development. In addition, other cloud or AI platform companies that provide services in different target markets or industries may develop applications or acquire companies that operate in our target markets or industries, and some potential customers may elect to develop their own internal applications. As the market evolves and as existing and new market participants introduce new types of technologies, such as generative and agentic AI, and different approaches that enable organizations to address their HCM and financial needs, our ability to maintain market differentiation may affect our competitive position. Furthermore, our current or potential competitors may be acquired by, or merge with, third parties with greater available resources and the ability to initiate or withstand substantial price competition. Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their offerings, integrations, or resources. Many of our competitors also have major distribution agreements with consultants, system integrators, and resellers and such partners may prefer to maintain their existing relationships with competitors. With the introduction of new technologies, such as generative AI, we expect competition to intensify in the future. As we attempt to sell our products and solutions to potential and current customers, we must demonstrate that our products and solutions are superior to other solutions available to their organizations, including generic LLMs, software created using natural language prompts and generative AI (referred to as vibe coding) and other emerging technologies. If our competitors’ products, services, or technologies, including generative and agentic AI capabilities, become more accepted than our products, if their customer support efforts are preferred by customers, if they are successful in bringing their products or services to market earlier than ours, if they scale at a faster rate, or if their products or services are more technologically capable or resonate more with the market than ours, including having more or easier to use integrations for software solutions used and preferred by our customers, then our revenues could be adversely affected. In addition, our competitors may offer their products and services at a lower price, or may offer price concessions, delayed payment terms, financing terms, or other terms and conditions that are more enticing to potential customers. Due to the complex nature of implementing financial management solutions, the lifecycle of the contracts for such solutions tends to be long. Therefore, if we lose a current customer to a competitor or fail to secure a prospective customer for financial management solutions, there is a long duration before we will be able to approach that customer again with our sales efforts for such solutions. Pricing pressures and increased competition could result in reduced sales, reduced margins, losses, or a failure to maintain or improve our competitive market position, any of which could adversely affect our business and operating results. 41 Table of Cont ents We may lose key employees or be unable to attract, enable, and retain highly skilled employees. Our success and future growth depend largely upon the continued services of our executive officers, other members of senior management, and other key employees. We do not have employment agreements with our executive officers or other key employees that require them to continue to work for us for any specified period, and they could terminate their employment with us at any time. In February 2026, Aneel Bhusri, formerly Executive Chair, assumed the role of CEO and Carl Eschenbach ceased to serve as CEO. Key employee and executive leadership changes have the potential to disrupt our business, impact our ability to preserve our culture, negatively affect our ability to attract and retain talent, or otherwise have a serious adverse effect on our business and operating results. We have and may continue to execute our growth plan through strategic investments to attract and retain executive officers, senior management, or other key employees that may not be offset by increased performance or revenues. To execute our growth plan, we must attract, enable, develop, and retain highly qualified talent. Our ability to compete and succeed in a highly competitive environment is directly correlated to our ability to recruit and retain highly skilled and experienced employees, especially in the areas of product development, cybersecurity, senior sales executives, and engineers with significant experience in designing and developing software and internet-related services, especially in AI and emerging technologies. The expansion of our sales infrastructure, both domestically and internationally, is necessary to grow our customer base and business. Our business may be adversely affected if our efforts to attract and enable new members of our direct sales force do not generate a corresponding increase in revenues. We have experienced, and we expect to continue to experience, significant competition in hiring and retaining employees with appropriate qualifications. We must also continue to retain, develop, and motivate existing employees through our compensation practices, company culture, and career development opportunities. The compensation and incentives we have available to attract, retain, and motivate employees may not meet the expectations of current and prospective employees as the competition for talent intensifies. For example, our equity awards may become less effective if our stock price decreases or increases at a slower rate than our talent competitors. Further, our current and future office environments and hybrid work policy may not meet the expectations of our employees or prospective employees, and may amplify challenges in recruiting and retention. We believe that a critical component of our success has been our corporate culture and core values. As we continue to grow and change, we may find it difficult to maintain our corporate culture among a larger number of employees who are dispersed throughout various geographic regions, including difficulties due to managing the complexities of communicating with all employees. Efforts to restructure our workforce may be disruptive and adversely impact employee morale or our corporate culture. Failure to maintain or adapt our culture could negatively affect our ability to attract new employees or to retain our current employees and our business and future growth prospects could be adversely affected. We rely on our network of partners to drive additional growth of our revenues, and if these partners fail to perform, our ability to sell and distribute our products may be impacted, and our operating results and growth rate may be harmed. Our strategy for additional growth depends, in part, on sales generated through our network of partners and professional services provided by our partners. If the operations of these partners are disrupted, including as a direct or indirect result of recent macroeconomic conditions, our own operations may suffer, which could adversely impact our operating results. Identifying partners, negotiating and documenting relationships with them, and marketing and promoting partnerships requires significant time and resources, and we cannot ensure that these partnerships will result in increased customer adoption or usage of our applications or increased revenue. We may be at a disadvantage if our competitors are effective in providing incentives to our current or potential partners to favor their products or services or to prevent or reduce subscriptions to our services, or in negotiating better rates or terms with such partners, particularly in international markets where our potential partners may have existing relationships with our competitors. In addition, acquisitions of our partners by our competitors could end our strategic relationship with such acquired partner and result in a decrease in the number of our current and potential customers. 42 Table of Cont ents Our partner training and educational programs may not be effective or utilized consistently by partners. New partners may require extensive training and/or may require significant time and resources to achieve productivity, and such requirements may deter potential partners due to the significant time and financial investment required. Changes to our direct go-to-market models and expanded product and service offerings may cause friction with our partners, require increased time and financial investment, and may increase the risk in our partner ecosystem. The actions of our partners may subject us to lawsuits, potential liability, and reputational harm if, for example, any of our partners misrepresent the functionality of our products to prospective or current customers, fail to perform services to our customers’ expectations, or violate laws or our corporate policies, such as laws and policies around privacy, cybersecurity, and responsible AI. In addition, we resell certain products and services offered by our partners and could incur potential liability and reputational harm if our partners fail to provide such products and services as represented to customers. Our partners may utilize our platform to develop products and services that could potentially compete with products and services that we offer currently or in the future. Concerns over competitive matters or intellectual property ownership could constrain these partnerships. If we fail to effectively manage and grow our network of partners, maintain good relationships with our partners, or properly monitor the quality and efficacy of their service delivery, or if our partners do not effectively market and sell our subscription services, use greater efforts to market and sell their own products or services or those of our competitors, or fail to meet the needs or expectations of our customers, our ability to sell our products and efficiently provide our services may be impacted, and our operating results and growth rate may be harmed. If we are not able to realize a return on our current development efforts or offer new features, enhancements, and modifications to our products and services that are desired by current or potential customers, our business and operating results could be adversely affected. Developing software applications and related enhancements, features, and modifications, including those involving AI, including generative and agentic AI or other emerging technologies, is expensive, and the investment in product development often involves a long return on investment cycle. We believe that we must continue to dedicate a significant amount of resources to our development efforts to maintain our competitive position. Accelerated application introductions and short application life cycles require high levels of expenditures that could adversely affect our operating results if not offset by revenue increases. However, we may not receive significant revenues from these investments for several years, if at all. If we are unable to provide new features, enhancements to user experience, and modifications in a timely and cost-effective manner that achieve market acceptance, align with customer expectations, and that keep pace with rapid technological developments and changing regulatory landscapes, it may negatively impact our customer renewal rates, limit the market for our solutions, or impair our ability to attract new customers and our business and operating results could be adversely affected. For example, AI is propelling advancements in technology, but if we fail to innovate and keep up with advancements in AI technology, if Workday’s AI-powered solutions, including our current and planned agentic AI solutions, fail to be delivered as planned or at all, fail to operate as expected or to meet customer expectations, if we fail to successfully monetize our AI-powered solutions, or if we do not have sufficient access to development resources and the technologies required to build and improve our applications, our business and reputation may be harmed. If we are not able to realize a return on the investments we have made toward entering new markets and new lines of business, our business and operating results could be adversely affected. We continue to seek opportunities to enter into new markets and/or new lines of business, some of which we may have very limited or no experience in. For example, we have and continue to make significant targeted investments in entering the medium-enterprise and U.S. federal government markets and see our success in these markets as key contributors to our future growth. Additionally, we have made and continue to make significant investments in platform offerings and AI, including generative AI and agentic capabilities. As an entrant to new markets and new lines of business, we may not be effective in convincing prospective customers that our solutions will address their needs, and we may not accurately estimate our infrastructure needs, human resource requirements, or operating expenses with regard to these new markets and new lines of business. We may also fail to accurately anticipate adoption rates of these new lines of business or their underlying technology. Also, we may not be able to properly price our solutions in these new markets, which could negatively affect our ability to sell to customers. The markets and monetization strategies for certain of our offerings, including our agentic AI solutions and Workday Data Cloud, remain relatively new and uncertain and as a result, our expansion into such offerings, and related investments, may present additional risks and challenges. For example, we offer certain AI and platform capabilities through a subscription-based flexible pricing model and may increase the number of products through which we do so. We have limited experience with determining optimal pricing under this model and expect a continued need for additional customer education within the sales cycle. Consequently, we may have lower levels of adoption of our AI solutions than we expect, which could negatively impact our business and operating results. Furthermore, customers in these new markets or of the new lines of business may demand more or different features and professional services, which may require us to devote even greater research and development, sales, support, and professional services resources to such customers. If we fail to generate adequate revenues from these new markets and lines of business, or if we fail to do so within the envisioned timeframe, it could have an adverse effect on our business, financial condition, and operating results. 43 Table of Cont ents Our international presence, continued expansion, and sales to customers outside the U.S. or with international operations expose us to risks inherent in global operations. The growth of our business and future prospects depends on our ability to further expand our operations and increase our sales outside of the U.S. as a percentage of our total revenues. Operating globally requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the U.S. Our investments and efforts to further expand internationally may not be successful in creating additional demand for our applications outside of the U.S. or in effectively selling subscriptions to our applications in all of the markets we enter. Risks associated with doing business on a global scale that could adversely affect our business, include: • the need to develop, localize, and adapt our applications and customer support for specific countries; • the need to successfully develop and execute on a localized go-to-market strategy; • the need to adhere to local laws and regulations, including those related to data localization, privacy, and anti-corruption, which may make it more difficult to penetrate certain international market segments with highly specialized compliance, contracting, and data sovereignty requirements; • difficulties in appropriately staffing and managing foreign operations and providing appropriate compensation and benefits for local markets; • difficulties in leveraging executive presence, maintaining company culture globally, and conforming with local cultural contexts and customs; • increased travel, real estate, infrastructure, and legal and regulatory compliance costs associated with international operations; • different pricing environments, longer sales cycles, and longer trade receivables payment cycles, and collections issues; • new and different sources of competition; • potentially weaker protection for intellectual property and other legal rights than in the U.S. and practical difficulties in enforcing intellectual property and other rights; • laws, contracting approaches, customs, and business practices favoring local vendors over U.S.-based companies, which may be increased by geopolitical tensions; • restrictive governmental actions focused on cross-border trade, such as import and export restrictions, duties, quotas, potential or imposed tariffs, trade disputes, and barriers or sanctions, as well as any retaliatory actions, that may prevent us from offering certain portions of our products or services to a particular market, may increase our operating costs, or may subject us to monetary fines or penalties; • compliance challenges related to the complexity of multiple, conflicting, and changing governmental laws and regulations, including employment, tax, privacy, intellectual property, financial services, AI, and data protection laws and regulations, as well as challenges with differing legal, alternative dispute, and regulatory systems; • increased compliance costs related to government regulatory reviews or audits, including those related to international cybersecurity and sustainability requirements; • increased financial accounting and reporting burdens and complexities; • the effects of currency fluctuations on our revenues and expenses and customer demand for our services; • restrictions on the transfer of funds; • adverse tax consequences and tax rulings; and • unstable economic and political conditions. Certain of the above factors have and may continue to negatively impact our ability to sell our applications and offer services globally, reduce our competitive position in foreign markets, increase our costs of global operations, reduce demand for our applications and services from global customers, or subject us to legal or regulatory liability. Additionally, the majority of our international costs are denominated in local currencies and we anticipate that over time an increasing portion of our sales contracts may be outside the U.S. and will therefore be denominated in local currencies. Fluctuations in the value of foreign currencies, which may be amplified by macroeconomic events, may impact our operating results when translated into U.S. dollars. Such fluctuations may also impact our ability to predict our future results accurately. If we are not able to successfully hedge against the risks associated with foreign currency fluctuations, our financial condition and operating results could be adversely affected. We have acquired, and may in the future acquire, other companies, employee teams, or technologies, which could divert our management’s attention, result in additional indebtedness or dilution to our stockholders, and otherwise disrupt our operations and adversely affect our operating results. We have acquired, and may in the future acquire, other companies, employee teams, or technologies to complement or expand our applications, enhance our technical capabilities, obtain personnel, or otherwise offer growth opportunities. The pursuit of acquisitions may divert the attention of management, disrupt ongoing business, and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. 44 Table of Cont ents These impacts may continue through integration activities. Moreover, we may be unable to complete proposed transactions timely or at all for a variety of reasons, such as our failure to obtain any necessary funding, the failure to obtain required regulatory or other approvals, or the impact of litigation or other disputes. We also may not achieve the anticipated benefits from an acquisition due to a number of factors, including: • inability or difficulty integrating the intellectual property, technology infrastructure, and operations of the acquired business, including difficulty in addressing potential identified or unknown security risks or vulnerabilities of the acquired business or product; • inability to retain key personnel or challenges in integrating the workforce from the acquired company, including the inability to maintain our culture and values; • acquisition-related costs, liabilities, or tax impacts, some of which may be unanticipated; • the impact on stockholder dilution and our operating results from the additional stock-based compensation issued in connection with the acquisition; • difficulty in leveraging the data of the acquired business if it includes personal data; • a failure to maintain the information systems of an acquired business, including difficulties in increasing or maintaining the security standards for acquired technology, which could increase the risk of a security breach of such system; • a failure to implement, restore, or maintain controls, procedures, or policies at the acquired company and an increased risk of non-compliance; • multiple product lines or service offerings as a result of our acquisitions that are offered, priced, and supported differently, as well as the potential for such acquired product lines and service offerings to impact the profitability of existing products; • the opportunity cost of diverting management and financial resources away from other products, services, and strategic initiatives; • difficulties and additional expenses associated with synchronizing product offerings, customer relationships, and contract portfolio terms and conditions between Workday and the acquired business; • known and unknown liabilities or risks associated with the acquired businesses, including those arising from existing contractual obligations or litigation matters; • adverse effects on our brand, reputation, or existing business relationships with business partners and customers as a result of the acquisition, including integrating acquired technologies and a delay in market acceptance of and difficulty in transitioning new and existing customers to acquired product lines or services; • risks and challenges presented by the use of innovative technologies that we acquire, such as AI; • potential write-offs of acquired assets and potential financial and credit risks associated with acquired customers; • inability to maintain relationships with key customers, suppliers, and partners of the acquired business; • difficulty in predicting and controlling the effect of integrating multiple acquisitions concurrently; • lack of experience in new markets, products, or technologies; • difficulty in integrating operations and assets of an acquired foreign entity with differences in language, culture, or country-specific currency and regulatory risks; • the inability to obtain (or a material delay in obtaining) regulatory approvals necessary to complete transactions or to integrate operations, or potential remedies imposed by regulatory authorities as a condition to or following the completion of a transaction, which may include divestitures, ownership or operational restrictions or other structural or behavioral remedies; and • the failure of strategic acquisitions to perform as expected or to meet financial projections, which may be heightened due to recent macroeconomic events and market volatility. In addition, a significant portion of the purchase price of companies we acquire has been and may in the future be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our operating results. Acquisitions could also result in use of substantial portions of our available cash, which may limit other potential uses of cash, and dilutive issuances of equity securities or the issuance of debt, which could adversely affect our operating results. If we finance acquisitions by issuing debt, we could face constraints related to the terms of and repayment obligation related to the incurrence of such indebtedness. In addition, if an acquired business fails to meet our expectations, our business, financial condition, and operating results may suffer. 45 Table of Cont ents Our business could be adversely affected if our users are not satisfied with the deployment, training, and support services provided by us and our partners. Implementation of our applications may be technically complicated because they are designed to enable complex and varied business processes across large organizations, integrate data from a broad and complex range of workflows and systems, and manage, develop, and build AI-powered solutions and agents, and may involve deployment in a variety of environments. Incorrect or improper implementation or use of our applications, including generative and agentic AI capabilities, could result in customer and user dissatisfaction and harm our business and operating results. In order for our customers to successfully implement our applications, they need access to highly skilled and trained service professionals. Third parties provide a majority of deployment services for our customers, but professional services may also be performed by our own staff or by a combination of the two. If customers are not satisfied with the quality, timing, and cost of work performed by us or a third party or with the type of professional services or applications delivered, or if we or a third party have not delivered on commitments made to our customers, then we could incur additional costs to address the situation, the revenue recognition of the contract could be impacted, and the dissatisfaction with our services could damage our ability to expand the applications subscribed to by our customers. Negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers both domestic and abroad. Customers and other users also depend on our support organization to provision the environments used by our customers and to resolve technical issues relating to our applications. Increased demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. Failure to maintain high-quality technical support and training, or a market perception that we do not maintain high-quality support or training, could adversely affect our reputation, our ability to offer and sell our applications, our renewal rates, and our business and operating results. Our future success depends on the rate of customer subscription renewals, and our revenues or operating results could be adversely impacted if we do not achieve renewals at expected rates or on anticipated terms. Our customers have no obligation to renew their subscriptions for our applications after the expiration of either the initial or renewed subscription period and it is difficult to predict attrition rates given our varied customer base and the number of multi-year subscription contracts. Our customers’ renewal rates fluctuate as a result of a number of factors, including our mix of customer base and their level of satisfaction with our offerings and pricing, their awareness and adoption of the benefits and features of our applications, their ability to continue their operations and spending levels, reductions in their headcount, the evolution of their business, and the macroeconomic environment. Acquisitions of our customers by other companies have led, and could continue to lead, to cancellation of our contracts with those customers, thereby reducing the number of our existing and potential customers. If our customers do not renew their subscriptions for our applications on similar pricing terms or renew for fewer elements of our offerings or for a lower headcount, our revenues may decline, and we may not be able to meet our revenue projections, which could negatively impact our business and the market price of our Class A common stock. Our future success also depends, in part, on our ability to sell additional products to our current customers, and the success rate of such endeavors is difficult to predict, especially with regard to any new lines of business that we may introduce from time to time. This has and may continue to require increasingly costly marketing and sales efforts that are targeted at senior management, and if these efforts are not successful, our business and operating results may suffer. Similarly, the rate at which our customers purchase new or enhanced services, including certain of our AI and platform capabilities that we offer through a subscription-based flexible pricing model, depends on a number of factors, including general economic conditions and customer receptiveness to any price changes related to these additional features and services. 46 Table of Cont ents The use of new and evolving technologies in our offerings at Workday, including generative and agentic AI capabilities, may result in reputational harm and increased litigation, and adversely affect our operating results. We are increasingly building and integrating AI into the Workday product suite, including generative and agentic AI, and we are increasingly using AI products and technologies in the course of running our business at Workday. As with many cutting-edge innovations, these technologies can present new risks and challenges. A quickly evolving technical, legal, and regulatory environment may cause us to incur increased research and development costs, or divert resources from other development efforts, to address ethical, legal, operational, or compliance requirements or other issues related to AI. For example, the European Union’s (“EU”) AI Act (“EU AI Act”) puts new requirements on providers and deployers of AI technologies and we are currently working to ensure compliance with corresponding deadlines. Additionally, existing laws and regulations apply to the development and deployment of AI in new ways, the nature and extent of which are difficult to predict and subject to change over time. The risks and challenges presented by these technologies could undermine public confidence in AI and could increase costs and burdens to us and our customers, which could slow its adoption and affect our business. Many of our products are powered by AI, some of which include the use of generative and agentic AI, for use cases that could potentially impact human, civil, privacy, or employment rights and dignities. To the extent that the products and technologies we develop and deploy rely on the use of generative or agentic capabilities provided by third parties, we face additional uncertainties and liabilities, especially where such third-party capabilities may be insufficient, biased, inaccurate, or of poor quality. Any failure to accurately identify and address our responsibilities and liabilities in this uncertain environment, including with respect to third-party capabilities, and to adequately address relevant ethical and social issues that may arise with such technologies and use cases, as well as failure by others in our industry or actions taken by our customers, employees, suppliers, or end users (including misuse of these technologies), could negatively affect the adoption of our offerings and subject us to reputational harm, regulatory action, or litigation, which may harm our financial condition and operating results. We are currently defending against a lawsuit alleging that certain of our AI-related products and services enable discrimination, and although we believe that such claims lack merit, and the majority of the claims have been dismissed, legal proceedings can be lengthy, expensive, and disruptive to our operations and customers (particularly where, as in the present litigation, the plaintiff may seek to also litigate against certain of Workday’s customers). We may be subject to other litigation and regulatory actions that may cause financial, competitive, and developmental impacts, and could lead to legal liability. Regardless of outcome, these types of claims have and could continue to cause reputational harm to our brand, including our ability to sell newly acquired products that use AI. Our employees, customers, or customers’ employees who are dissatisfied with our public statements, policies, practices, or solutions related to the development and use of AI may express opinions that could introduce reputational or business harm, or cease their relationship with us.