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Business Combinations | 9 Months Ended
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Oct. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations Zimit On September 28, 2021, we acquired all outstanding stock of Zimit, a configure, price, quote (CPQ) solution built for services industries. We believe the acquisition of Zimit will accelerate our ability to deliver a comprehensive quote-to-cash process automation offering that will provide services organizations increased visibility across the entire revenue cycle. We have included the financial results of Zimit in our condensed consolidated financial statements from the date of acquisition. The acquisition-date fair value of the purchase consideration was $76 million, attributable to cash consideration of $62 million and the fair value of a previously held equity interest of $14 million. We recorded developed technology intangible assets of $7 million (to be amortized over an estimated useful life of 4 years), customer relationships intangible assets of $3 million (to be amortized over an estimated useful life of 13 years), and goodwill of $67 million. Goodwill was primarily attributable to the expected synergies from integrating Zimit’s technology into our product portfolio. The goodwill is not deductible for income tax purposes. The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received. The measurement period will end no later than one year from the acquisition date. We invested $2 million in Zimit prior to the acquisition, which was accounted for as a non-marketable equity investment. We recognized a non-cash gain of approximately $12 million as a result of remeasuring our prior equity interest in Zimit held before the business combination. The gain is included in Other income (expense), net on the condensed consolidated statement of operations. Separate operating results and pro forma results of operations for Zimit have not been presented as the effect of this acquisition was not material to our financial results. Peakon 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 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 updated preliminary purchase consideration allocation inclusive of measurement period adjustments was as follows (in thousands):
Acquisition-related intangible assets |  | $ | 170,500 |
Goodwill |  | 542,201 |
Other assets |  | 34,639 |
Deferred tax liability |  | (20,517) |
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.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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