Sentences and paragraphs of WDAY's Risk Factors and MD&A, 10-K 2026-03-06 against 10-K 2025-03-11.
Each links to the text at sec.gov.
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AddedRisk Factors
Our contracts with federal, state, local, and foreign government entities are subject to various procurement regulations and other requirements relating to their formation, award, administration, and performance, which present certain risks and challenges not present in private commercial agreements. These risks and challenges include varying governmental budgeting processes and appropriations, contracting policies and requirements, changes in governmental administrations and policies, fluctuations due to government spending cuts and shutdowns, pressure to reduce deficits through spending reductions, highly competitive and lengthy bidding processes, and adherence to complex regulatory requirements and executive orders, and may impact government spending or result in termination of government contracts or delays in contract awards, which could adversely affect our business and operating results. Further, we have experienced and may in the future experience challenges by third parties to contracts awarded with government entities, and our contracting with certain government entities may result in negative publicity or reputational harm.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedRisk Factors
•actions instituted by activist shareholders or others, and our response to such actions;
Read it in 10-K 2026-03-06 at sec.gov ↗
RemovedRisk Factors
In February 2025, we announced the Fiscal 2026 Restructuring Plan, which is intended to prioritize our investments and advance our growth and is currently expected to result in the reduction of approximately 8% of our workforce. We expect this plan to be substantially complete by the second quarter of fiscal 2026, subject to local law and consultation requirements. The Fiscal 2026 Restructuring Plan could negatively impact our ability to attract, retain, and motivate employees.
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
Our ability to achieve any ESG objective is subject to numerous risks, many of which are outside of our control. Examples of such risks include:
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
•our ability to recruit, develop, and retain diverse talent in our global labor markets;
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
•the availability and cost of high-quality verified emissions reductions and renewable energy credits; and
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
•the ability to renew existing or execute on new virtual power purchase agreements.
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
Standards for tracking and reporting ESG matters continue to evolve. In addition, our processes and controls may not always comply with evolving standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC or other regulatory bodies, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. It is likely that increasing regulatory requirements and regulatory scrutiny related to ESG matters will continue to expand globally and result in higher associated compliance costs. Further, we may rely on data and calculations provided by third parties to measure and report our ESG metrics and if the data input or calculations are incorrect or incomplete, our brand, reputation, and financial performance may be adversely affected.
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
We have a history of cumulative losses, and we may not sustain profitability on a GAAP basis in the future.
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedRisk Factors
Until recently, we had incurred significant net losses on a GAAP basis since our inception in 2005 and our quarterly operating results may fluctuate in the future. We expect our operating expenses to increase in the future due to substantial investments we have made and continue to make to acquire new customers and develop our applications, anticipated increases in sales and marketing expenses, product development expenses, operations costs, and general and administrative costs. If our revenue growth does not meet estimates, we may not be able to adjust our spending quickly enough to avoid an adverse impact on our financial results, and therefore we may incur losses on a GAAP basis in the future. Furthermore, to the extent we are successful in increasing our customer base, we may incur net losses in the acquisition period because some costs associated with acquiring customers are incurred up front, while subscription services revenues are generally recognized ratably over the terms of the agreements, which are typically three years or longer. You should not consider any prior period GAAP-profitability and growth in revenues as indicative of our future performance. We cannot ensure that we will continue to achieve or sustain GAAP profitability in the future.
Read it in 10-K 2025-03-11 at sec.gov ↗
RewordedRisk Factors
If our competitors’ products, services, or technologies 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.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
Moreover, we may be unable to complete proposed transactions timely or at all due to for a variety of reasons, such as our failure to obtain any necessary funding to complete an acquisition in a timely manner or on favorable terms, funding, the failure to obtain required regulatory or other approvals, litigation, or the impact of litigation or other disputes, which may obligate us to pay a termination fee. disputes.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
Taken together, the costs of compliance with and other obligations imposed by data protection laws and regulations have and may continue to require modification of our services, services and operations, limit use and or adoption of our services, reduce overall demand for our services, lead to significant fines, penalties, or liabilities for noncompliance, or slow the pace at which we close sales transactions, or otherwise cause us to modify our operations, any of which could harm adversely affect our business.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
To the extent that our the products and technologies we develop and deploy rely on the use of large language models generative or agentic capabilities provided by third parties, we may face additional uncertainties and liabilities. liabilities, especially where such third-party capabilities may be insufficient, biased, inaccurate, or of poor quality.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
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, and we We believe that we must continue to dedicate a significant amount of resources to our development efforts to maintain our competitive position.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
If we fail to successfully promote and maintain positive awareness of our brand, or we fail to expand positive awareness of our newer solutions or products, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread positive brand awareness that is critical for broad customer adoption of our applications and for the end user experience. investments.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
The data protection laws set forth These requirements impacting may impact how personal data must be stored, accessed, and deleted within the products. products and services and impose certain limitations on how it may be used or shared.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
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, and we believe that we must continue to dedicate a significant amount of resources to our development efforts to maintain our competitive position. increases.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
Our corporate headquarters are located in Pleasanton, California, and we have host our applications in data centers and partner with public cloud service providers operated by third parties located in the United States U.S., Europe, Canada, and Europe. the Asia-Pacific region.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
Until As legal challenges to the DPF make their way through the court system, remain unresolved, uncertainty may continue about regarding the legal requirements for transferring customer personal data to and from Europe, an integral process aspect of our business that remains governed by, and subject to, GDPR General Data Protection Regulation (“GDPR”) requirements.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
For example, AI is propelling advancements in technology, but if we fail to innovate and keep up with advancements in AI technology, if Workday Illuminate solutions 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.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedRisk Factors
Key Examples of key cybersecurity risks range from include viruses, worms, ransomware, and other malicious software programs, to phishing along with social engineering attacks, to fraud, to credential theft or abuse, to exploitation of software bugs or other defects, to targeted attacks against cloud services and other hosted software, to and exploitation of unmanaged software or systems, any of which can result in a compromise of our applications or systems and the data we store or process, and can result in disclosure of Workday confidential information and intellectual property, production downtimes, reputational harm, and an increase in costs to the business.
Read it in 10-K 2026-03-06 at sec.gov ↗
Quiet changesRisk Factors
Future Any cyber-attacks and other security events may have a significant or material impact on our business and operating results.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
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.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
•Business combinations: In September 2025, we acquired Paradox, a candidate experience agent that uses conversational AI to simplify every step of the job application journey, for purchase consideration of $1.1 billion, and in November 2025, we acquired Sana, a leading AI company building the next generation of enterprise knowledge tools, for purchase consideration of $1.1 billion.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
•Share repurchases: During fiscal 2026, we repurchased approximately 12.8 million shares of our Class A common stock for $2.9 billion as part of our share repurchase programs.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
•Restructuring activities: 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. The plan resulted in the reduction of approximately 7.5% of our workforce and the exit of certain owned office space. In February 2026, we announced an additional restructuring plan (“Fiscal 2027 Restructuring Plan”) intended to better align our people and resources to our highest priorities in fiscal 2027. The plan is expected to result in the reduction of approximately 2% of our workforce, and in the impairment of certain office space and long-lived assets. For fiscal 2026, we incurred approximately $303 million in costs related to these restructuring activities.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
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.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
On July 4, 2025, the One Big Beautiful Bill Act (“The 2025 Tax Act”) was signed into law. The 2025 Tax Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and modifications to the international tax framework. The 2025 Tax Act did not have a material impact on our annual effective tax rate and reduced our domestic cash tax outflows for fiscal 2026. The 2025 Tax Act includes multiple effective dates, with certain provisions effective in fiscal 2026 and others phased in through fiscal 2028. We continue to evaluate the impact of the 2025 Tax Act’s provisions that take effect in future periods.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
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.
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
Share repurchase programs authorized by our Board of Directors that were active during fiscal 2026 and 2025 were as follows (in millions):
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
Authorization Date Amount Authorized Authorization Completion Date February 2024 500 Q3 fiscal 2025 November 2022 $ 500 Q1 fiscal 2025 August 2024 1,000 Q3 fiscal 2026 May 2025 1,000 Q4 fiscal 2026 September 2025 4,000
Read it in 10-K 2026-03-06 at sec.gov ↗
AddedMD&A
As of January 31, 2026, we were authorized to repurchase a remaining $2.9 billion of our outstanding shares of Class A common stock under our share repurchase programs.
Read it in 10-K 2026-03-06 at sec.gov ↗
RemovedMD&A
Recent macroeconomic events including increased tariffs, elevated inflation, and fluctuating interest rates and foreign currency exchange rates, as well as geopolitical instability, continue to impact the global economy and create uncertainty, volatility, and disruption of financial markets. Despite this, we are confident in the long-term overall health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers on their human capital and finance digital transformation journeys. Demand for our products remains strong, we continue to achieve solid new subscription bookings, and our near-term revenues are relatively predictable as a result of our subscription-based business model.
Read it in 10-K 2025-03-11 at sec.gov ↗
RemovedMD&A
Effective beginning fiscal 2025, we exclude certain acquisition-related costs and restructuring costs from our non-GAAP results as they may vary from period-to-period independent of the operating performance of our business. Prior period amounts have been recast to conform to this presentation.
Read it in 10-K 2025-03-11 at sec.gov ↗
RewordedMD&A
In fiscal 2025, the The improvement in cash flow provided by operating activities was primarily the result of higher cash collections of $868 million $1.2 billion mainly due to increased sales and additional interest income received of $112 million from marketable debt securities, sales, partially offset by increased employee-related payments of $465 million primarily due to higher average headcount and increased supplier payments of $171 $335 million to support our continued growth. growth and increased employee-related payments of $272 million, which include payments made under the Fiscal 2026 Restructuring Plan.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
The improvement was primarily the result of higher cash collections of $868 million $1.2 billion mainly due to increased sales and additional interest income received decreased capital expenditures of $112 million from marketable debt securities, $107 million, partially offset by increased employee-related payments of $465 million primarily due to higher average headcount, increased supplier payments of $171 $335 million to support our continued growth, growth and increased capital expenditures employee-related payments of $37 million. $272 million, which include payments made under the Fiscal 2026 Restructuring Plan.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
As of and for the Years Ended January 31, 2026 2025 2024 Change Total revenues $9,552 $8,446 $7,259 16% 13% Subscription services revenues $8,833 $7,718 $6,603 17% 14% GAAP operating income $721 $415 $183 127% 74% Non-GAAP operating income (1) $2,824 $2,186 $1,741 26% 29% GAAP operating margin 7.5% 4.9% 2.5% 239 263 bps Non-GAAP operating margin (1) 29.6% 25.9% 24.0% 190 368 bps Operating cash flows $2,939 $2,461 $2,149 15% 19% Free cash flows (1) $2,777 $2,192 $1,917 14% 27% Total subscription revenue backlog $28,101 $25,056 $20,924 20% 12% 12-month subscription revenue backlog $8,833 $7,631 $6,623 15% 16% Cash, cash equivalents, and marketable securities $5,443 $8,017 $7,813 (32)% Headcount 21,070 20,482 3% Headcount 20,482 18,824 9%
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
Year Ended January 31, 2026 2025 2024 2023 Operating income (loss) $ 721 $ 415 $ 183 $ (222) Share-based compensation expense (1) 1,570 1,511 1,416 1,290 Employer payroll tax-related items on employee stock transactions 62 76 66 50 Amortization of acquisition-related intangible assets 106 79 75 86 Acquisition-related costs 62 21 1 3 Restructuring costs 303 84 0 40 Non-GAAP operating income $ 2,824 $ 2,186 $ 1,741 $ 1,247 Operating margin 7.5 % 4.9 % 2.5 % (3.6) % Share-based compensation expense (1) 16.4 % 17.9 % 19.5 % 20.8 % Employer payroll tax-related items on employee stock transactions 0.7 % 0.9 % 0.9 % 0.8 % Amortization of acquisition-related intangible assets 1.1 % 0.9 % 1.1 % 1.5 % Acquisition-related costs 0.6 % 0.2 % 0.0 % 0.0 % Restructuring costs 3.3 % 1.1 % 0.0 % 0.6 % Non-GAAP operating margin 29.6 % 25.9 % 24.0 % 20.1 %
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
The increase in costs of subscription services included increases of $132 $139 million in third-party hosted infrastructure expenses, $74 million in employee-related expenses, including share-based compensation, expenses primarily due to higher average headcount, $44 delivering our enhanced customer support services, net of restructuring-related cost savings, $29 million in data center capacity facilities and IT-related expenses, and $39 $19 million in depreciation. amortization of acquisition-related intangible assets.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
We recorded Restructuring expenses were $84 million for fiscal 2025, of which approximately $65 million for related to employee transition, severance payments, employee benefits, and share-based compensation under the Fiscal 2026 Restructuring Plan compensation, and exit charges of $19 million related to impairment charges associated with office space reductions under a separate restructuring plan. space.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
The increase in sales and marketing expenses included increases of $180 $76 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $37 net of restructuring-related cost savings, $41 million in amortization of deferred sales commissions due to increased sales, $30 commissions, $19 million related to marketing programs, $17 million related to professional services, and $25 $17 million in facilities and IT-related expenses.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
Central to this effort is investing in strategic growth areas including leveraging the power of our platform to drive increased adoption of our full suite of applications, expanding internationally, developing innovative AI solutions, expanding internationally, growing our partner ecosystem, deepening our presence in industry verticals, verticals and the emerging and medium enterprise market, and exploring strategic acquisitions to complement our organic innovation.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
Costs of subscription services revenues consist primarily of expenses associated with hosting our applications and providing delivering standard and enhanced customer support, including employee-related expenses, expenses related to data center capacity and computing infrastructure operated by third parties, and depreciation of our data center equipment. support services.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
We expect costs of professional services as a percentage of total revenues to continue to decline as we rely on expand and leverage our service partners to deploy our applications and as focus on growing our subscription services revenues continue to grow as we expand both our customer base and our footprint within our existing customers. revenues.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
We allocate the purchase consideration of acquired companies to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at on the acquisition date, with the excess recorded to goodwill. exception of contract assets and unearned revenue which are measured and recognized on the acquisition date in accordance with our revenue recognition policy.
Read it in 10-K 2026-03-06 at sec.gov ↗
RewordedMD&A
The increase decrease in professional services revenues was driven by higher demand for our variation in project size and mix of deployment and integration services. services provided as we continue to expand and leverage our service partners.
Read it in 10-K 2026-03-06 at sec.gov ↗