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Derivative Instruments | 6 Months Ended
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Jul. 31, 2025
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 July 31, 2025, we estimate that $6 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 July 31, 2025, and January 31, 2025, the notional values of the cash flow hedges that we held to buy U.S. dollars in exchange for other currencies were $3.0 billion and $2.8 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 $428 million and $420 million, respectively. All contracts had maturities of less than 55 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. Cash flows from the settlement of these forward contracts are classified as operating activities on the Condensed Consolidated Statements of Cash Flows. As of July 31, 2025, and January 31, 2025, the notional values of the non-designated hedges that we held to buy U.S. dollars in exchange for other currencies were $212 million and $242 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 $538 million and $91 million, respectively. The fair values of outstanding derivative instruments were as follows (in millions):
| Condensed Consolidated Balance Sheets Location |  | July 31, 2025 |  | January 31, 2025
Derivative assets: |  |  |  |  |
Cash flow hedges | Prepaid expenses and other current assets |  | $ | 19 |  |  | $ | 59 |
Cash flow hedges | Other assets |  | 6 |  |  | 52 |
Non-designated hedges | Prepaid expenses and other current assets |  | 5 |  |  | 1 |
Total derivative assets |  |  | $ | 30 |  |  | $ | 112 |
Derivative liabilities: |  |  |  |  |
Cash flow hedges | Accrued expenses and other current liabilities |  | $ | 48 |  |  | $ | 22 |
Cash flow hedges | Other liabilities |  | 58 |  |  | 3 |
Non-designated hedges | Accrued expenses and other current liabilities |  | 14 |  |  | 1 |
Non-designated hedges | Other liabilities |  | 1 |  |  | 0 |
Total derivative liabilities |  |  | $ | 121 |  |  | $ | 26 |
The effect of cash flow hedges on the Condensed Consolidated Statements of Operations was as follows (in millions):
|  | Three Months Ended July 31,
Condensed Consolidated Statements of Operations Location |  | 2025 |  | 2024
|  | Total |  | Gains (losses) related to cash flow hedges |  | Total |  | Gains (losses) related to cash flow hedges
Revenues |  | $ | 2,348 |  |  | $ | 8 |  |  | $ | 2,085 |  |  | $ | 8 |
Costs and expenses |  | 2,100 |  |  | 6 |  |  | 1,974 |  |  | (3) |
|  | Six Months Ended July 31,
Condensed Consolidated Statements of Operations Location |  | 2025 |  | 2024
|  | Total |  | Gains (losses) related to cash flow hedges |  | Total |  | Gains (losses) related to cash flow hedges
Revenues |  | $ | 4,588 |  |  | $ | 16 |  |  | $ | 4,075 |  |  | $ | 16 |
Costs and expenses |  | 4,301 |  |  | 0 |  |  | 3,900 |  |  | (4) |
Pre-tax gains (losses) associated with cash flow hedges were as follows (in millions):
| Condensed Consolidated Statements of Operations and Statements of Comprehensive Income Locations |  | Three Months Ended July 31, |  | Six Months Ended July 31,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Gains (losses) recognized in OCI | Net change in unrealized gains (losses) on cash flow hedges |  | $ | (2) |  |  | $ | (20) |  |  | $ | (164) |  |  | $ | 11 |
Gains (losses) reclassified from AOCI into income (effective portion) | Revenues |  | 8 |  |  | 8 |  |  | 16 |  |  | 16 |
Gains (losses) reclassified from AOCI into income (effective portion) | Costs and expenses |  | 6 |  |  | (3) |  |  | 0 |  |  | (4) |
Gains (losses) associated with non-designated hedges were as follows (in millions):
| Condensed Consolidated Statements of Operations Location |  | Three Months Ended July 31, |  | Six Months Ended July 31,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Gains (losses) related to non-designated hedges | Other income, net |  | $ | (12) |  |  | $ | (3) |  |  | $ | (12) |  |  | $ | (1) |
We manage our exposure to counterparty risk by entering into foreign currency forward contracts with a diversified group of eight 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 $1 million and a liability position of $92 million as of July 31, 2025, and an asset position of $86 million as of January 31, 2025. 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.

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