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Derivative Instruments

9 Months Ended

Oct. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

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 or 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 October 31, 2024, we estimate that $18 million of net gains recorded in AOCI related to our cash flow hedges will be reclassified into income within the next 12 months.

As of October 31, 2024, and January 31, 2024, the notional values of the cash flow hedges that we held to buy U.S. dollars in exchange for other currencies were $2.8 billion and $2.5 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 $412 million and $399 million, respectively. All contracts had maturities of less than 60 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 (expense), net on the Condensed Consolidated Statements of Operations. Cash flows from the settlement of these forward contracts are classified as operating activities on the Condensed Consolidated Statements of Cash Flows.

As of October 31, 2024, and January 31, 2024, the notional values of the non-designated hedges that we held to buy U.S. dollars in exchange for other currencies were $120 million and $237 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 $54 million and $11 million, respectively.

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

			Condensed Consolidated Balance Sheets Location						October 31, 2024						January 31, 2024
Derivative assets:
Cash flow hedges			Prepaid expenses and other current assets						$	30					$	30
Cash flow hedges			Other assets						13						14
Non-designated hedges			Prepaid expenses and other current assets						3						2
Total derivative assets									$	46					$	46
Derivative liabilities:
Cash flow hedges			Accrued expenses and other current liabilities						$	12					$	14
Cash flow hedges			Other liabilities						12						12
Non-designated hedges			Accrued expenses and other current liabilities						1						1
Total derivative liabilities									$	25					$	27

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

			Three Months Ended October 31,
Condensed Consolidated Statements of Operations Location			2024												2023
			Total						Gains (losses) related to cash flow hedges						Total						Gains (losses) related to cash flow hedges
Revenues			$	2,160					$	7					$	1,866					$	16
Costs and expenses			1,995						3						1,778						1

			Nine Months Ended October 31,
Condensed Consolidated Statements of Operations Location			2024												2023
			Total						Gains (losses) related to cash flow hedges						Total						Gains (losses) related to cash flow hedges
Revenues			$	6,235					$	23					$	5,337					$	49
Costs and expenses			5,895						(2)						5,233						2

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 October 31,												Nine Months Ended October 31,
						2024						2023						2024						2023
Gains (losses) recognized in OCI			Net change in unrealized gains (losses) on cash flow hedges			$	0					$	67					$	11					$	54
Gains (losses) reclassified from AOCI into income (effective portion)			Revenues			7						16						23						49
Gains (losses) reclassified from AOCI into income (effective portion)			Costs and expenses			3						1						(2)						2

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

			Condensed Consolidated Statements of Operations Location			Three Months Ended October 31,												Nine Months Ended October 31,
						2024						2023						2024						2023
Gains (losses) related to non-designated hedges			Other income (expense), net			$	0					$	6					$	(2)					$	8

We are subject to netting agreements with all of the counterparties of the foreign exchange contracts, 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. 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. We manage our exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

As of October 31, 2024, information related to these offsetting arrangements was as follows (in millions):

			Gross Amounts of Recognized Assets						Gross Amounts Offset on the Condensed Consolidated Balance Sheets						Net Amounts of Assets Presented on the Condensed Consolidated Balance Sheets						Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets												Net Assets Exposed
																					Financial Instruments						Cash Collateral Received
Derivative assets:
Counterparty A			$	13					$	0					$	13					$	(4)					$	0					$	9
Counterparty B			9						0						9						(6)						0						3
Counterparty C			3						0						3						(1)						0						2
Counterparty D			17						0						17						(13)						0						4
Counterparty E			1						0						1						0						0						1
Counterparty F			2						0						2						(1)						0						1
Counterparty G			1						0						1						0						0						1
Total			$	46					$	0					$	46					$	(25)					$	0					$	21

			Gross Amounts of Recognized Liabilities						Gross Amounts Offset on the Condensed Consolidated Balance Sheets						Net Amounts of Liabilities Presented on the Condensed Consolidated Balance Sheets						Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets												Net Liabilities Exposed
																					Financial Instruments						Cash Collateral Pledged
Derivative liabilities:
Counterparty A			$	4					$	0					$	4					$	(4)					$	0					$	0
Counterparty B			6						0						6						(6)						0						0
Counterparty C			1						0						1						(1)						0						0
Counterparty D			13						0						13						(13)						0						0
Counterparty F			1						0						1						(1)						0						0
Total			$	25					$	0					$	25					$	(25)					$	0					$	0

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- References

No definition available.

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- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480237/815-40-50-5

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 815
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/815/tableOfContent

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