Workday Inc
For the period ended Oct 31, 2024. Filed Dec 5, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Oct 31, 2024 · Filed Dec 5, 2024
WDAY$192.90-3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-07-31; filed 2024-08-28.
0001327811-24-000165
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-10-31; filed 2024-12-05.
0001327811-24-000242
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 131 previous paragraphs and 136 current paragraphs.
76 unchanged; 46 reworded; 14 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report
Total revenues were $2.2 billion for the three months ended October 31, 2024, compared to $1.9 billion for the prior year period, an increase of $294 million, or 16%. Subscription services revenues were $2.0 billion for the three months ended October 31, 2024, compared to $1.7 billion for the prior year period, an increase of $268 million, or 16%. Approximately 60% of the increase in subscription services revenues was attributable to expansion within our customers that existed as of the beginning of the comparable prior year period, and the remaining 40% was attributable to customers added after the beginning of the comparable prior year period. Professional services revenues were $201 million for the three months ended October 31, 2024, compared to $175 million for the prior year period, an increase of $27 million, or 15%. The increase in professional services revenues was driven by increased progress on fixed fee projects of $15 million and higher demand for deployment and integration services of $12 million.
Current report
Total revenues were $6.2 billion for the nine months ended October 31, 2024, compared to $5.3 billion for the prior year period, an increase of $898 million, or 17%. Subscription services revenues were $5.7 billion for the nine months ended October 31, 2024, compared to $4.8 billion for the prior year period, an increase of $835 million, or 17%. Approximately 60% of the increase in subscription services revenues was attributable to expansion of our customers that existed as of the beginning of the prior fiscal year, and the remaining 40% was attributable to customers added after the beginning of the prior fiscal year. Professional services revenues were $557 million for the nine months ended October 31, 2024, compared to $494 million for the prior year period, an increase of $63 million, or 13%. The increase in professional services revenues was driven by higher demand for deployment and integration services of $47 million and increased progress on fixed fee projects of $16 million.
Current report
Gross Revenue Retention Rate
Current report
Our growth in subscription services revenues attributable to existing customers is further reflected by our gross revenue retention rate of 98% as of October 31, 2024. Our gross revenue retention rate measures the percentage of recurring revenue retained from existing customers and is calculated by taking total annual recurring revenue (“ARR”) of our customers as of the corresponding prior period-end and comparing that to ARR from that same set of customers as of the current period-end. The metric takes into account recurring revenues lost to product or customer churn but does not account for additional revenue earned from add-ons or net expansions, which include volume and price adjustments. Our high gross revenue retention rate demonstrates our ability to maintain our existing customer base and drive strong overall customer satisfaction.
Current report
Our gross revenue retention rate is based on ARR, which represents the annualized value of active subscription contracts as of the end of each period. Each subscription contract is annualized by dividing the total contract value by the number of days in the contract term and then multiplying by 365. We exclude certain subscription contracts from the calculation, including contracts with terms less than one year that are distinct from our core product offering, such as contracts for tenants which are used for implementation and testing. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, ARR is only adjusted if the customer churns. We calculate ARR on a constant currency basis using exchange rates set at the beginning of each fiscal year. ARR is a non-GAAP financial measure and should be viewed independently of, and not as a substitute for or combined with, revenue and unearned revenue.
Current report
Total costs and expenses were $5.9 billion for the nine months ended October 31, 2024, compared to $5.2 billion for the prior year period, an increase of $662 million, or 13%. The increase in operating expenses included increases of $404 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $63 million in professional services and subcontractor expenses, $48 million in facilities and IT-related expenses, $37 million in data center capacity expenses, $29 million in amortization of deferred sales commissions due to increased sales, and $25 million in depreciation.
Current report
Costs of subscription services were $924 million for the nine months ended October 31, 2024, compared to $759 million for the prior year period, an increase of $165 million, or 22%. The increase in costs of subscription services included increases of $100 million in employee-related expenses primarily due to higher average headcount, $29 million in data center capacity expenses, and $20 million in depreciation.
Current report
Sales and marketing expenses were $620 million for the three months ended October 31, 2024, compared to $538 million for the prior year period, an increase of $82 million, or 15%. The increase in sales and marketing expenses included increases of $57 million in employee-related expenses primarily due to higher average headcount, $10 million related to marketing programs, $9 million in amortization of deferred sales commissions due to increased sales, and $8 million in facilities and IT-related expenses.
Current report
Sales and marketing expenses were $1.8 billion for the nine months ended October 31, 2024, compared to $1.6 billion for the prior year period, an increase of $223 million, or 14%. The increase in sales and marketing expenses included increases of $134 million in employee-related expenses primarily due to higher average headcount, $29 million in amortization of deferred sales commissions due to increased sales, $24 million related to marketing programs, and $20 million in facilities and IT-related expenses.
Current report
Other income, net increased by $20 million for the three months ended October 31, 2024, primarily due to a favorable change of $17 million on our equity investments.
Current report
Cash used in financing activities was $150 million for the three months ended October 31, 2023, which was primarily due to repurchases of common stock of $145 million under our share repurchase programs.
Current report
Free cash flows were $359 million for the three months ended October 31, 2024, compared to $391 million for the prior year period. The decline was primarily the result of increased employee-related payments of $119 million primarily due to higher average headcount and increased supplier payments of $62 million to support our strategic growth objectives, offset by higher cash collections of $158 million due to increased sales and a decrease in capital expenditures of $13 million for data centers.
Current report
Share Repurchase Programs
Removed paragraphs (9)
Previous report
Total revenues were $2.1 billion for the three months ended July 31, 2024, compared to $1.8 billion for the prior year period, an increase of $298 million, or 17%. Subscription services revenues were $1.9 billion for the three months ended July 31, 2024, compared to $1.6 billion for the prior year period, an increase of $279 million, or 17%. The increase in subscription services revenues was attributable to expansion within our existing customer base and sales to new customers. Our growth with existing customers is further reflected in our gross and net revenue retention rates exceeding 95% and 100%, respectively. Professional services revenues were $182 million for the three months ended July 31, 2024, compared to $163 million for the prior year period, an increase of $19 million, or 12%. The increase in professional services revenues was driven by higher demand for our deployment and integration services. This growth occurred even as we continued to expand and leverage our network of service partners.
Previous report
Total revenues were $4.1 billion for the six months ended July 31, 2024, compared to $3.5 billion for the prior year period, an increase of $604 million, or 17%. Subscription services revenues were $3.7 billion for the six months ended July 31, 2024, compared to $3.2 billion for the prior year period, an increase of $567 million, or 18%. The increase in subscription services revenues was attributable to expansion within our existing customer base and sales to new customers. Our growth with existing customers is further reflected in our gross and net revenue retention rates exceeding 95% and 100%, respectively. Professional services revenues were $356 million for the six months ended July 31, 2024, compared to $319 million for the prior year period, an increase of $37 million, or 11%. The increase in professional services revenues was driven by higher demand for our deployment and integration services. This growth occurred even as we continued to expand and leverage our network of service partners.
Previous report
Total costs and expenses were $3.9 billion for the six months ended July 31, 2024, compared to $3.5 billion for the prior year period, an increase of $445 million, or 13%. The increase in operating expenses included increases of $272 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $47 million in professional services and subcontractor expenses, $28 million in facilities and IT-related expenses, and $20 million in amortization of deferred sales commissions due to increased sales.
Previous report
Costs of subscription services were $304 million for the three months ended July 31, 2024, compared to $256 million for the prior year period, an increase of $48 million, or 19%. The increase in costs of subscription services included increases of $32 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, and $9 million in depreciation.
Previous report
Sales and marketing expenses were $611 million for the three months ended July 31, 2024, compared to $524 million for the prior year period, an increase of $87 million, or 17%. The increase in sales and marketing expenses included increases of $42 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $17 million related to marketing programs, and $10 million in amortization of deferred sales commissions due to increased sales.
Previous report
Sales and marketing expenses were $1.2 billion for the six months ended July 31, 2024, compared to $1.0 billion for the prior year period, an increase of $141 million, or 13%. The increase in sales and marketing expenses included increases of $77 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $20 million in amortization of deferred sales commissions due to increased sales, and $14 million related to marketing programs.
Previous report
Cash used in financing activities was $49 million for the three months ended July 31, 2023, which was primarily due to repurchases of common stock of $139 million under our 2022 Share Repurchase Program, offset by $95 million in proceeds from the issuance of common stock from employee equity plans.
Previous report
Free cash flows were $807 million for the six months ended July 31, 2024, compared to $579 million for the prior year period. The improvement was primarily due to increases in sales and the related cash collections and interest received from marketable debt securities, offset by higher cash paid for employee-related expenses primarily due to higher average headcount and higher capital expenditures for data center and office space projects.
Previous report
Share Repurchase Program
Reworded paragraphs (46)
Previous wording
Workday is a leading platform that helps organizations manage their two most important assets - their people and money. We deliver cloud-based applications for financial management, human capital management, planning, spend management, and analytics. Our diverse customer base includes medium-sized and large, global organizations within numerous industry categories, including professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality. With Workday, our customers have a unified platform with AI built into its core that can help them deliver better employee experiences, improve operational efficiencies, and provide insights for faster, data-driven decision-making.
Current wording
Workday is a leading platform that helps organizations manage their most important assets - their people and money. We deliver cloud-based applications for financial management, human capital management, planning, spend management, and analytics. Our diverse customer base includes medium-sized and large, global organizations within numerous industry categories, including professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality. With Workday, our customers have a unified platform with AI built into its core that can help them deliver better employee experiences, improve operational efficiencies, and provide insights for faster, data-driven decision-making.
Previous wording
We are continuing to focus on expanding our operating margin by driving scale and building efficiencies across the business through investments in people, processes, and systems. We expect our product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as we grow our revenues and invest in a disciplined manner to support our long-term growth initiatives.
Current wording
We are continuing to focus on expanding our operating margin by driving scale and building efficiencies across the business through investments in people, processes, and systems. We expect our product development, sales and marketing, and general and administrative expenses as a percentage of total revenues will decrease over the longer term as we grow our revenues and invest in a disciplined manner to support our long-term growth objectives.
Previous wording
Recent macroeconomic events including elevated inflation and fluctuating interest rates, as well as geopolitical factors including the Russia-Ukraine and Israel-Hamas conflicts, have negatively impacted the global economy and created continued 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.
Current wording
Recent macroeconomic events including elevated inflation and fluctuating interest rates, as well as geopolitical factors including the Russia-Ukraine and Israel-Hamas conflicts, 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.
Previous wording
We have experienced, and may continue to experience, a moderation of revenue growth rates due to increased deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, and reduced growth in headcount level commitments upon renewals of existing customers. Further, we have provided, and may continue to provide, certain customers with more flexible payment terms. If the economic uncertainty continues, we may also experience additional negative impacts on customer renewals, customer collections, sales and marketing efforts, customer deployments, product development, or other financial metrics. Any of these factors could harm our business, financial condition, and operating results. For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report.
Current wording
We have experienced, and may continue to experience, a moderation of revenue growth rates due to deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, and reduced growth in headcount level commitments upon renewals of existing customers. Further, we have provided, and may continue to provide, certain customers with more flexible payment terms. If the economic uncertainty continues, we may also experience additional negative impacts on customer renewals, customer collections, sales and marketing efforts, customer deployments, product development, or other financial metrics. Any of these factors could harm our business, financial condition, and operating results. For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see “Risk Factors” included in Part II, Item 1A of this report.
Previous wording
Subscription services revenues accounted for approximately 91% of our total revenues for the three and six months ended July 31, 2024, and represented 96% of our total unearned revenue as of July 31, 2024. Subscription services revenues are driven primarily by the number of customers, the number of workers at each customer, the specific applications subscribed to by each customer, and the price of our applications.
Current wording
Subscription services revenues accounted for approximately 91% of our total revenues for the three and nine months ended October 31, 2024, and represented 96% of our total unearned revenue as of October 31, 2024. Subscription services revenues are driven primarily by the number of customers, the number of workers at each customer, the specific applications subscribed to by each customer, and the price of our applications.
Previous wording
Subscription services revenues are recognized over time as services are delivered and consumed concurrently over the contractual term, beginning on the date our service is made available to the customer. Our subscription contracts typically have a term of three years or longer and are generally noncancelable. We generally invoice our customers annually in advance for subscription services. We may provide certain customers flexible payment terms and the timing of revenue recognition may differ from the timing of invoicing to our customers.
Current wording
Subscription services revenues are recognized over time as services are delivered, beginning on the date our service is made available to the customer. Our subscription contracts typically have a term of three years or longer and are generally noncancelable. We generally invoice our customers annually in advance for subscription services. We may provide certain customers flexible payment terms and the timing of revenue recognition may differ from the timing of invoicing to our customers.
Previous wording
Our professional services consulting engagements are billed on a time and materials basis or a fixed price basis. We generally invoice our customers in arrears for our professional services. For contracts billed on a time and materials basis, revenues are recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenues are recognized over time based on the proportion of the professional services performed. In some cases, we supplement our consulting teams by subcontracting resources from our service partners and deploying them on customer engagements. As the Workday-related consulting practices of our partner firms continue to develop, we expect these partners to increasingly contract directly with our subscription customers for services engagements.
Current wording
Our professional services consulting engagements are billed on a time and materials or fixed price basis. We generally invoice our customers in arrears for our professional services. For contracts billed on a time and materials basis, revenues are recognized over time as the professional services are performed. For contracts billed on a fixed price basis, revenues are recognized over time based on the proportion of the professional services performed. In some cases, we supplement our consulting teams by subcontracting resources from our service partners and deploying them on customer engagements. As the Workday-related consulting practices of our partner firms continue to develop, we expect these partners to increasingly contract directly with our subscription customers for services engagements.
Previous wording
Our subscription revenue backlog, which is also referred to as remaining performance obligations for subscription contracts, represents contracted subscription services revenues that have not yet been recognized and includes billed and unbilled amounts. Subscription revenue backlog may fluctuate from period to period due to a number of factors, including the timing of renewals and overall renewal rates, new business growth, average contract duration, and seasonality.
Current wording
Our subscription revenue backlog, which is also referred to as remaining performance obligations for subscription contracts, represents contracted subscription services revenues that have not yet been recognized and includes billed and unbilled amounts. Subscription revenue backlog may fluctuate from period to period due to a number of factors, including the timing of renewals and overall renewal rates, new business growth, average contract duration, business combinations, and seasonality.
Previous wording
As of July 31, 2024, our total subscription revenue backlog was $21.6 billion, with $6.8 billion expected to be recognized in revenues over the next 12 months. As of July 31, 2023, our total subscription revenue backlog was $17.8 billion, with $5.9 billion expected to be recognized in revenues over the next 12 months. The increase in subscription revenue backlog was primarily driven by expansion within our existing customer base, sales to new customers, timing of renewals for existing customers, and longer duration of customer contracts.
Current wording
As of October 31, 2024, our total subscription revenue backlog was $22.2 billion, with $7.0 billion expected to be recognized in revenues over the next 12 months. As of October 31, 2023, our total subscription revenue backlog was $18.4 billion, with $6.0 billion expected to be recognized in revenues over the next 12 months. The increase in subscription revenue backlog was primarily driven by expansion within our existing customer base, sales to new customers, and timing of renewals for existing customers.
Previous wording
Total costs and expenses were $2.0 billion for the three months ended July 31, 2024, compared to $1.8 billion for the prior year period, an increase of $223 million, or 13%. The increase in operating expenses included increases of $118 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $31 million in professional services and subcontractor expenses, $17 million related to marketing programs, and $17 million in facilities and IT-related expenses.
Current wording
Total costs and expenses were $2.0 billion for the three months ended October 31, 2024, compared to $1.8 billion for the prior year period, an increase of $217 million, or 12%. The increase in operating expenses included increases of $132 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $20 million in facilities and IT-related expenses, $20 million in data center capacity expenses, $16 million in professional services and subcontractor expenses, $9 million in amortization of deferred sales commissions due to increased sales, and $8 million in depreciation.
Previous wording
Costs of subscription services were $594 million for the six months ended July 31, 2024, compared to $495 million for the prior year period, an increase of $100 million, or 20%. The increase in costs of subscription services included increases of $67 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $17 million in depreciation, and $12 million in expenses for data center capacity.
Current wording
Costs of subscription services were $329 million for the three months ended October 31, 2024, compared to $264 million for the prior year period, an increase of $66 million, or 25%. The increase in costs of subscription services included increases of $33 million in employee-related expenses primarily due to higher average headcount, $17 million in data center capacity expenses, and $8 million in depreciation.
Previous wording
Costs of professional services were $207 million for the three months ended July 31, 2024, compared to $192 million for the prior year period, an increase of $15 million, or 8%. The increase in costs of professional services included an increase of $14 million in subcontractor expenses.
Current wording
Costs of professional services were $201 million for the three months ended October 31, 2024, compared to $181 million for the prior year period, an increase of $19 million, or 11%. The increase in costs of professional services included an increase of $16 million in subcontractor expenses.
Previous wording
Costs of professional services were $406 million for the six months ended July 31, 2024, compared to $371 million for the prior year period, an increase of $35 million, or 9%. The increase in costs of professional services included an increase of $25 million in subcontractor expenses.
Current wording
Costs of professional services were $606 million for the nine months ended October 31, 2024, compared to $552 million for the prior year period, an increase of $54 million, or 10%. The increase in costs of professional services included increases of $40 million in subcontractor expenses and $9 million in employee-related expenses.
Previous wording
We expect costs of professional services as a percentage of total revenues to continue to decline as we continue to rely on our service partners to deploy our applications and as our subscription services revenues continue to grow as we expand both our customer base and our footprint within our existing customers.
Current wording
We expect costs of professional services as a percentage of total revenues to continue to decline as we rely on our service partners to deploy our applications and as our subscription services revenues continue to grow as we expand both our customer base and our footprint within our existing customers.
Previous wording
Product development expenses were $649 million for the three months ended July 31, 2024, compared to $610 million for the prior year period, an increase of $39 million, or 6%. The increase in product development expenses included an increase of $29 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount.
Current wording
Product development expenses were $647 million for the three months ended October 31, 2024, compared to $619 million for the prior year period, an increase of $28 million, or 5%. The increase in product development expenses included an increase of $32 million in employee-related expenses primarily due to higher average headcount.
Previous wording
Product development expenses were $1.3 billion for the six months ended July 31, 2024, compared to $1.2 billion for the prior year period, an increase of $95 million, or 8%. The increase in product development expenses included an increase of $79 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount.
Current wording
Product development expenses were $2.0 billion for the nine months ended October 31, 2024, compared to $1.8 billion for the prior year period, an increase of $123 million, or 7%. The increase in product development expenses included an increase of $110 million in employee-related expenses primarily due to higher average headcount.
Previous wording
General and administrative expenses were $203 million for the three months ended July 31, 2024, compared to $169 million for the prior year period, an increase of $34 million, or 20%. The increase in general and administrative expenses included increases of $15 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, and $11 million in professional services and subcontractor expenses.
Current wording
General and administrative expenses were $198 million for the three months ended October 31, 2024, compared to $176 million for the prior year period, an increase of $22 million, or 12%. The increase in general and administrative expenses included increases of $9 million in professional services expenses and $8 million in employee-related expenses primarily due to higher average headcount.
Previous wording
General and administrative expenses were $411 million for the six months ended July 31, 2024, compared to $336 million for the prior year period, an increase of $75 million, or 22%. The increase in general and administrative expenses included increases of $43 million in employee-related expenses, including share-based compensation, primarily due to higher average headcount, $15 million in professional services and subcontractor expenses, and $8 million in realignment costs.
Current wording
General and administrative expenses were $609 million for the nine months ended October 31, 2024, compared to $512 million for the prior year period, an increase of $97 million, or 19%. The increase in general and administrative expenses included increases of $51 million in employee-related expenses primarily due to higher average headcount, $24 million in professional services expenses, and $9 million in realignment costs.
Previous wording
Share-based compensation expenses increased by $18 million for the three months ended July 31, 2024, compared to the prior year period, primarily due to additional grants to new and existing employees.
Current wording
Share-based compensation expenses increased by $19 million for the three months ended October 31, 2024, compared to the prior year period, primarily due to additional grants to new and existing employees.
Previous wording
Share-based compensation expenses increased by $33 million for the six months ended July 31, 2024, compared to the prior year period, primarily due to additional grants to new and existing employees.
Current wording
Share-based compensation expenses increased by $51 million for the nine months ended October 31, 2024, compared to the prior year period, primarily due to additional grants to new and existing employees.
Previous wording
GAAP operating income was $111 million, or 5.3% of revenues, for the three months ended July 31, 2024, compared to the prior year GAAP operating income of $36 million, or 2.0% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses, including share-based compensation.
Current wording
GAAP operating income was $165 million, or 7.6% of revenues, for the three months ended October 31, 2024, compared to the prior year GAAP operating income of $88 million, or 4.7% of revenues. The increase was primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses, including share-based compensation.
Previous wording
GAAP operating income was $175 million, or 4.3% of revenues, for the six months ended July 31, 2024, compared to the prior year GAAP operating income of $16 million, or 0.5% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses, including share-based compensation.
Current wording
GAAP operating income was $340 million, or 5.5% of revenues, for the nine months ended October 31, 2024, compared to the prior year GAAP operating income of $104 million, or 2.0% of revenues. The increase was primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses, including share-based compensation.
Previous wording
Non-GAAP operating income was $518 million, or 24.9% of revenues, for the three months ended July 31, 2024, compared to the prior year non-GAAP operating income of $421 million, or 23.6% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.
Current wording
Non-GAAP operating income was $569 million, or 26.3% of revenues, for the three months ended October 31, 2024, compared to the prior year non-GAAP operating income of $462 million, or 24.8% of revenues. The increase was primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.
Previous wording
Non-GAAP operating income was $1.0 billion, or 25.4% of revenues, for the six months ended July 31, 2024, compared to the prior year non-GAAP operating income of $817 million, or 23.5% of revenues. The increase is primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.
Current wording
Non-GAAP operating income was $1.6 billion, or 25.7% of revenues, for the nine months ended October 31, 2024, compared to the prior year non-GAAP operating income of $1.3 billion, or 24.0% of revenues. The increase was primarily due to our revenue growth outpacing headcount growth and moderation of operating expenses.
Previous wording
Other income (expense), net consisted of the following (in millions):
Current wording
Other income (expense), net was as follows (in millions):
Previous wording
Other income, net increased by $12 million and $44 million for the three and six months ended July 31, 2024, compared to the prior year periods. The increases were primarily driven by additional interest income earned on our marketable debt securities from higher investment balances and increased interest rates.
Current wording
Other income, net increased by $64 million for the nine months ended October 31, 2024, primarily due to increases of $53 million in interest income earned from higher investment balances and increased interest rates and a favorable change of $15 million on our equity investments.
Previous wording
The provision for (benefit from) income taxes consisted of the following (in millions):
Current wording
The provision for (benefit from) income taxes was as follows (in millions):
Previous wording
The income tax provision for the six months ended July 31, 2024, was primarily attributable to earnings in U.S. and profitable foreign jurisdictions, offset by the excess tax benefit from stock-based compensation.
Current wording
The income tax provision for the nine months ended October 31, 2024, was primarily attributable to earnings in the U.S. and profitable foreign jurisdictions, offset by the excess tax benefit from stock-based compensation and increase in research and development credits.
Previous wording
The income tax provision for the six months ended July 31, 2023, was primarily attributable to income tax expenses in profitable foreign jurisdictions and capitalized research and development expenditures in the U.S.
Current wording
The income tax provision for the nine months ended October 31, 2023, was primarily attributable to earnings in profitable foreign jurisdictions and an increase in U.S. taxes due to capitalized research and development expenditures.
Previous wording
As of July 31, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $7.4 billion, which were primarily held for working capital and general corporate purposes. Our cash equivalents and marketable securities are composed of, in order from largest to smallest, corporate bonds, U.S. treasury securities, commercial paper, money market funds, and U.S. agency obligations. We have financed our operations primarily through customer payments, issuance of debt, and sales of our common stock.
Current wording
As of October 31, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $7.2 billion, which were primarily held for working capital and general corporate purposes. Our cash equivalents and marketable securities are composed of, in order from largest to smallest, corporate bonds, U.S. treasury securities, money market funds, U.S. agency obligations, and commercial paper. We have financed our operations primarily through customer payments, issuance of debt, and sales of our common stock.
Previous wording
Cash provided by operating activities was $943 million and $703 million for the six months ended July 31, 2024, and 2023, respectively. The improvement in cash flow provided by operating activities was primarily due to increases in sales and the related cash collections and interest received from marketable debt securities, offset by higher cash paid for employee-related expenses primarily due to higher average headcount.
Current wording
Cash provided by operating activities was $406 million and $451 million for the three months ended October 31, 2024, and 2023, respectively. The decline in cash flow provided by operating activities was primarily the result of increased employee-related payments of $119 million primarily due to higher average headcount and increased supplier payments of $62 million to support our strategic growth objectives, offset by higher cash collections of $158 million due to increased sales.
Previous wording
Cash provided by operating activities was $571 million and $425 million for the three months ended July 31, 2024, and 2023, respectively. The improvement in cash flow provided by operating activities was primarily due to increases in sales and the related cash collections and interest received from marketable debt securities, offset by higher cash paid for employee-related expenses primarily due to higher average headcount.
Current wording
Cash provided by operating activities was $1.3 billion and $1.2 billion for the nine months ended October 31, 2024, and 2023, respectively. The improvement in cash flow provided by operating activities was primarily the result of higher cash collections of $555 million due to increased sales and additional interest income received of $102 million from marketable debt securities, offset by increased employee-related payments of $288 million primarily due to higher average headcount and increased supplier payments of $139 million to support our strategic growth objectives.
Previous wording
Cash used in investing activities for the six months ended July 31, 2024, was $603 million, which primarily related to cash consideration of $522 million for the acquisition of HiredScore, net of cash acquired, and capital expenditures of $136 million for data center and office space projects, offset by proceeds of $57 million related to marketable debt securities activity.
Current wording
Cash used in investing activities for the three months ended October 31, 2024, was $450 million, which primarily resulted from cash consideration of $302 million, net of cash acquired, for the acquisition of Evisort, capital expenditures of $47 million for data center and office space projects, and a net cash outflow of $96 million related to marketable debt securities activity.
Previous wording
Cash used in investing activities for the three months ended July 31, 2023, was $385 million, which primarily resulted from a cash outflow of $345 million from the timing of purchases and maturities of marketable securities and capital expenditures of $65 million for data center and office space projects, offset by proceeds of $25 million from sales of marketable securities.
Current wording
Cash used in investing activities for the three months ended October 31, 2023, was $172 million, which primarily resulted from a cash outflow of $148 million from the timing of purchases and maturities of marketable securities and capital expenditures of $60 million for data center and office space projects, offset by proceeds of $46 million from sales of marketable securities.
Previous wording
Cash used in investing activities for the three months ended July 31, 2024, was $346 million, which primarily resulted from a cash outflow of $279 million related to marketable debt securities activity and capital expenditures of $55 million for data center and office space projects.
Current wording
Cash used in investing activities for the nine months ended October 31, 2024, was $1.1 billion, which primarily resulted from cash consideration, net of cash acquired, of $522 million and $302 million for the acquisitions of HiredScore and Evisort, respectively, capital expenditures of $183 million for data center and office space projects, and a net cash outflow of $39 million related to marketable debt securities activity.
Previous wording
Cash used in investing activities for the six months ended July 31, 2023, was $1.1 billion, which primarily resulted from a cash outflow of $1.0 billion from the timing of purchases and maturities of marketable securities and capital expenditures of $124 million for data center and office space projects, offset by proceeds of $48 million from sales of marketable securities.
Current wording
Cash used in investing activities for the nine months ended October 31, 2023, was $1.3 billion, which primarily resulted from a cash outflow of $1.2 billion from the timing of purchases and maturities of marketable securities and capital expenditures of $183 million for data center and office space projects, offset by proceeds of $93 million from sales of marketable securities.
Previous wording
We expect capital expenditures will be approximately $330 million in fiscal 2025. This includes investments in our data centers, office facilities, and corporate IT infrastructure to support our continued growth.
Current wording
We expect capital expenditures will be approximately $300 million in fiscal 2025. This includes investments in our data centers and office facilities to support our continued growth.
Previous wording
Cash used in financing activities was $347 million for the three months ended July 31, 2024, which was primarily due to repurchases of common stock of $312 million under our February 2024 Share Repurchase Program and taxes paid of $141 million related to net share settlement of equity awards, offset by proceeds of $106 million from the issuance of common stock from employee equity plans.
Current wording
Cash used in financing activities was $282 million for the three months ended October 31, 2024, which was primarily due to repurchases of common stock of $158 million under our share repurchase programs and taxes paid of $124 million related to net share settlement of equity awards.
Previous wording
Cash used in financing activities was $715 million for the six months ended July 31, 2024, which was primarily due to repurchases of common stock of $440 million under our Share Repurchase Programs and taxes paid of $381 million related to net share settlement of equity awards, offset by proceeds of $106 million from the issuance of common stock from employee equity plans.
Current wording
Cash used in financing activities was $996 million for the nine months ended October 31, 2024, which was primarily due to repurchases of common stock of $597 million under our share repurchase programs and taxes paid of $505 million related to net share settlement of equity awards, offset by proceeds of $106 million from the issuance of common stock from employee equity plans.
Previous wording
Cash used in financing activities was $52 million for the six months ended July 31, 2023, which was primarily due to repurchases of common stock of $139 million under our 2022 Share Repurchase Program, offset by proceeds of $95 million from the issuance of common stock from employee equity plans.
Current wording
Cash used in financing activities was $201 million for the nine months ended October 31, 2023, which was primarily due to due to repurchases of common stock of $283 million under our share repurchase programs, offset by proceeds of $95 million from the issuance of common stock from employee equity plans.
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