Business Combinations

6 Months Ended

Jul. 31, 2021

Business Combination and Asset Acquisition [Abstract]

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

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


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

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

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


Acquisition-related intangible assets	$	170,500
Goodwill	542,541
Other assets	34,639
Deferred tax liability	(20,857)
Other liabilities	(25,075)
Total	$	701,748

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


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

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

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