Company Quick10K Filing
⚲
Workday
Financials
Price174.44 EPS-2
Shares228 P/E-87
MCap39,853 P/FCF70
Net Debt-917 EBIT-407
TEV38,936 TEV/EBIT-96
TTM 2019-10-31, in MM, except price, ratios
Filings
10-Q 2020-10-31 Filed 2020-11-20
10-Q 2020-07-31 Filed 2020-08-28
10-Q 2020-04-30 Filed 2020-05-28
10-K 2020-01-31 Filed 2020-03-03
10-Q 2019-10-31 Filed 2019-12-04
10-Q 2019-07-31 Filed 2019-08-30
10-Q 2019-04-30 Filed 2019-05-30
10-K 2019-01-31 Filed 2019-03-18
10-Q 2018-10-31 Filed 2018-12-03
10-Q 2018-07-31 Filed 2018-09-05
10-Q 2018-04-30 Filed 2018-06-01
10-K 2018-01-31 Filed 2018-03-14
10-Q 2017-10-31 Filed 2017-11-30
10-Q 2017-07-31 Filed 2017-08-31
10-Q 2017-04-30 Filed 2017-06-02
10-K 2017-01-31 Filed 2017-03-20
10-Q 2016-10-31 Filed 2016-12-02
10-Q 2016-07-31 Filed 2016-09-02
10-Q 2016-04-30 Filed 2016-06-01
10-K 2016-01-31 Filed 2016-03-22
10-Q 2015-10-31 Filed 2015-12-04
10-Q 2015-07-31 Filed 2015-09-04
10-Q 2015-04-30 Filed 2015-06-05
10-K 2015-01-31 Filed 2015-03-25
10-Q 2014-10-31 Filed 2014-12-05
10-Q 2014-07-31 Filed 2014-09-02
10-Q 2014-04-30 Filed 2014-06-06
10-K 2014-01-31 Filed 2014-03-31
10-Q 2013-10-31 Filed 2013-12-02
10-Q 2013-04-30 Filed 2013-06-05
10-K 2013-01-31 Filed 2013-03-22
10-Q 2012-10-31 Filed 2012-12-07
Reports
8-K 2020-11-19
8-K 2020-08-27
8-K 2020-08-26
8-K 2020-06-09
8-K 2020-05-27
8-K 2020-04-02
8-K 2020-03-14
8-K 2020-02-27
8-K 2019-12-04
8-K 2019-12-03
8-K 2019-11-04
8-K 2019-08-29
8-K 2019-06-18
8-K 2019-05-28
8-K 2019-03-30
8-K 2019-02-28
8-K 2018-11-29
8-K 2018-09-04
8-K 2018-08-01
8-K 2018-06-20
8-K 2018-06-11
8-K 2018-05-31
8-K 2018-02-27
8-K 2018-02-14
8-K 2018-02-01
8-K 2018-01-02

WDAY 10Q Quarterly Report

Content
Part I. Financial Information
Item 1. Financial Statements
Note 1. Overview and Basis of Presentation
Note 2. Accounting Standards
Note 3. Investments
Note 4. Fair Value Measurements
Note 5. Deferred Costs
Note 6. Property and Equipment, Net
Note 7. Acquisition - Related Intangible Assets, Net
Note 8. Other Assets
Note 9. Derivative Instruments
Note 10. Debt
Note 11. Leases
Note 12. Commitments and Contingencies
Note 13. Stockholders' Equity
Note 14. Unearned Revenue and Performance Obligations
Note 15. Other Income (Expense), Net
Note 16. Income Taxes
Note 17. Net Loss per Share
Note 18. Geographic Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
Exhibits
EX-10.1 wday-10312020xex101.htm
EX-31.1 wday-10312020xex311.htm
EX-31.2 wday-10312020xex312.htm
EX-31.3 wday-10312020xex313.htm
EX-32.1 wday-10312020xex321.htm
EX-32.2 wday-10312020xex322.htm
EX-32.3 wday-10312020xex323.htm

Workday Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
 1.00.80.50.30.0-0.22012201420172020
Rev, G Profit, Net Income
 1.10.60.1-0.3-0.8-1.32012201420172020
Ops, Inv, Fin
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended October 31, 2020
OR
☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For transition period from                     to                     
Commission File Number: 001-35680
WORKDAY, INC.
(Exact name of registrant as specified in its charter) 
Delaware20-2480422
(State or other jurisdiction of
incorporation or organization)		 (I.R.S Employer
Identification No.)
6110 Stoneridge Mall Road
Pleasanton, California 94588
(Address of principal executive offices)
(925) 951-9000
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001WDAYThe Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes  ☒ No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No  ☒
As of November 18, 2020, there were approximately 180 million shares of the registrant’s Class A common stock, net of treasury stock, and 60 million shares of the registrant's Class B common stock outstanding.

Table of Contents
Workday, Inc.
  Page No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Workday, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
October 31, 2020January 31, 2020
Assets
Current assets:
Cash and cash equivalents$1,067,038 $731,141 
Marketable securities1,880,772 1,213,432 
Trade and other receivables, net742,744 877,578 
Deferred costs110,024 100,459 
Prepaid expenses and other current assets157,664 172,012 
Total current assets3,958,242 3,094,622 
Property and equipment, net976,610 936,179 
Operating lease right-of-use assets415,547 290,902 
Deferred costs, noncurrent232,413 222,395 
Acquisition-related intangible assets, net262,603 308,401 
Goodwill1,819,625 1,819,261 
Other assets179,987 144,605 
Total assets$7,845,027 $6,816,365 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$54,949 $57,556 
Accrued expenses and other current liabilities129,794 130,050 
Accrued compensation264,443 248,154 
Unearned revenue2,000,417 2,223,178 
Operating lease liabilities84,552 66,147 
Debt, current1,091,050 244,319 
Total current liabilities3,625,205 2,969,404 
Debt, noncurrent701,178 1,017,967 
Unearned revenue, noncurrent68,874 86,025 
Operating lease liabilities, noncurrent352,900 241,425 
Other liabilities18,816 14,993 
Total liabilities4,766,973 4,329,814 
Stockholders’ equity:
Common stock240 231 
Additional paid-in capital6,184,070 5,090,187 
Treasury stock(269,083)— 
Accumulated other comprehensive income (loss)1,110 23,492 
Accumulated deficit(2,838,283)(2,627,359)
Total stockholders’ equity3,078,054 2,486,551 
Total liabilities and stockholders’ equity$7,845,027 $6,816,365 
See Notes to Condensed Consolidated Financial Statements
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Workday, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Revenues:
Subscription services$968,547 $798,516 $2,782,201 $2,256,695 
Professional services137,413 139,584 404,111 394,212 
Total revenues1,105,960 938,100 3,186,312 2,650,907 
Costs and expenses (1):
Costs of subscription services152,396 122,305 442,666 355,935 
Costs of professional services142,785 148,625 442,422 424,548 
Product development419,962 401,742 1,282,127 1,127,695 
Sales and marketing302,870 286,794 897,924 839,930 
General and administrative102,024 88,884 296,461 258,932 
Total costs and expenses1,120,037 1,048,350 3,361,600 3,007,040 
Operating income (loss)(14,077)(110,250)(175,288)(356,133)
Other income (expense), net(8,846)(4,136)(31,272)2,899 
Loss before provision for (benefit from) income taxes(22,923)(114,386)(206,560)(353,234)
Provision for (benefit from) income taxes1,417 1,343 4,164 (518)
Net loss$(24,340)$(115,729)$(210,724)$(352,716)
Net loss per share, basic and diluted$(0.10)$(0.51)$(0.89)$(1.56)
Weighted-average shares used to compute net loss per share, basic and diluted238,059 228,461 235,685 226,071 
(1) Costs and expenses include share-based compensation expenses as follows:
Costs of subscription services$16,767 $13,634 $45,484 $36,050 
Costs of professional services27,349 22,249 74,467 57,390 
Product development128,423 118,215 378,950 315,210 
Sales and marketing54,077 47,142 150,881 128,686 
General and administrative33,216 29,762 97,958 88,122 
See Notes to Condensed Consolidated Financial Statements
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Workday, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Net loss$(24,340)$(115,729)$(210,724)$(352,716)
Other comprehensive (loss) income, net of tax:
Net change in foreign currency translation adjustment(2)173 435 (420)
Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision of $0, $444, $0, and $875, respectively
(2,578)1,194 (332)2,786 
Net change in market value of effective foreign currency forward exchange contracts, net of tax provision of $0, $(1,315), $0, and $3,295, respectively
3,044 (9,206)(22,485)23,062 
Other comprehensive (loss) income, net of tax464 (7,839)(22,382)25,428 
Comprehensive loss$(23,876)$(123,568)$(233,106)$(327,288)
See Notes to Condensed Consolidated Financial Statements
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Workday, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
(unaudited)
Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Common stock:
Balance, beginning of period$238 $227 $231 $221 
Issuance of common stock under employee equity plans2 2 7 8 
Settlement of convertible senior notes— — 2 — 
Balance, end of period240 229 240 229 
Additional paid-in capital:
Balance, beginning of period5,954,738 4,561,272 5,090,187 4,105,334 
Issuance of common stock under employee equity plans3,648 1,778 78,160 63,312 
Share-based compensation259,802 230,682 746,643 624,705 
Settlement of warrants(34,118)— (34,118)— 
Exercise of convertible senior notes hedges— — 303,202 — 
Settlement of convertible senior notes— — (4)— 
Cumulative-effect of accounting changes— — — 381 
Balance, end of period6,184,070 4,793,732 6,184,070 4,793,732 
Treasury stock:
Balance, beginning of period(303,201)— — — 
Exercise of convertible senior notes hedges— — (303,201)— 
Settlement of warrants34,118 — 34,118 — 
Balance, end of period(269,083)— (269,083)— 
Accumulated other comprehensive income (loss):
Balance, beginning of period646 32,458 23,492 (809)
Other comprehensive (loss) income464 (7,839)(22,382)25,428 
Balance, end of period1,110 24,619 1,110 24,619 
Accumulated deficit:
Balance, beginning of period(2,813,943)(2,383,672)(2,627,359)(2,146,304)
Net loss(24,340)(115,729)(210,724)(352,716)
Cumulative-effect of accounting changes— — (200)(381)
Balance, end of period(2,838,283)(2,499,401)(2,838,283)(2,499,401)
Total stockholders’ equity$3,078,054 $2,319,179 $3,078,054 $2,319,179 

Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Common stock (in shares):
Balance, beginning of period237,160,715 227,607,594 231,708,391 222,052,063 
Issuance of common stock under employee equity plans1,935,725 1,931,916 7,388,498 7,487,250 
Settlement of warrants(186,202)— (186,202)— 
Settlement of convertible senior notes— 20 1,654,308 217 
Purchase of treasury stock from the exercise of convertible senior notes hedges— — (1,654,757)— 
Balance, end of period238,910,238 229,539,530 238,910,238 229,539,530 
See Notes to Condensed Consolidated Financial Statements
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Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Cash flows from operating activities:
Net loss$(24,340)$(115,729)$(210,724)$(352,716)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization73,864 72,233 218,556 201,152 
Share-based compensation expenses259,832 231,002 747,740 625,149 
Amortization of deferred costs28,732 23,015 82,141 65,897 
Amortization of debt discount and issuance costs12,098 13,512 41,466 39,400 
Non-cash lease expense22,141 17,081 60,389 49,155 
Other(8,760)2,744 8,040 (8,953)
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net(53,923)2,197 127,663 86,139 
Deferred costs(41,823)(34,415)(101,724)(81,107)
Prepaid expenses and other assets25,898 7,463 36,738 677 
Accounts payable3,762 1,938 (9,313)4,488 
Accrued expenses and other liabilities(5,037)41,716 (46,378)6,595 
Unearned revenue1,358 (4,755)(239,899)(68,392)
Net cash provided by (used in) operating activities293,802 258,002 714,695 567,484 
Cash flows from investing activities:
Purchases of marketable securities(806,713)(375,144)(1,963,244)(1,429,046)
Maturities of marketable securities427,910 494,023 1,282,324 1,339,830 
Sales of marketable securities— — 5,279 55,499 
Owned real estate projects(1,072)(21,832)(5,323)(95,615)
Capital expenditures, excluding owned real estate projects(78,197)(55,163)(204,692)(196,274)
Business combinations, net of cash acquired— — — (12,885)
Purchases of non-marketable equity and other investments(4,618)(9,577)(63,218)(17,293)
Sales and maturities of non-marketable equity and other investments24 252 6,223 252 
Other— — — (9)
Net cash provided by (used in) investing activities(462,666)32,559 (942,651)(355,541)
Cash flows from financing activities:
Proceeds from borrowings on term loan, net— — 747,795 — 
Payments on convertible senior notes— (3)(249,946)(30)
Payments on term loan(9,375)— (9,375)— 
Proceeds from issuance of common stock from employee equity plans3,650 1,780 78,167 63,320 
Other(181)(175)(2,436)(375)
Net cash provided by (used in) financing activities(5,906)1,602 564,205 62,915 
Effect of exchange rate changes40 48 546 (204)
Net increase (decrease) in cash, cash equivalents, and restricted cash(174,730)292,211 336,795 274,654 
Cash, cash equivalents, and restricted cash at the beginning of period1,246,246 624,646 734,721 642,203 
Cash, cash equivalents, and restricted cash at the end of period$1,071,516 $916,857 $1,071,516 $916,857 
See Notes to Condensed Consolidated Financial Statements
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Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Supplemental cash flow data:
Cash paid for interest, net of amounts capitalized$5,309 $959 $11,686 $1,431 
Cash paid for income taxes2,598 1,415 7,239 7,418 
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid49,098 33,155 49,098 33,155 

As of October 31,
20202019
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents$1,067,038 $912,748 
Restricted cash included in Prepaid expenses and other current assets4,351 3,984 
Restricted cash included in Other assets127 125 
Total cash, cash equivalents, and restricted cash$1,071,516 $916,857 
See Notes to Condensed Consolidated Financial Statements
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Workday, Inc.
Notes to Condensed Consolidated Financial Statements
Note 1. Overview and Basis of Presentation
Company and Background
Workday delivers financial management, human resources, planning, spend management, and analytics applications designed for the world’s largest companies, educational institutions, and government agencies. We offer innovative and adaptable technology focused on the consumer internet experience and cloud delivery model. Our applications are designed for global enterprises to manage complex and dynamic operating environments. We provide our customers highly adaptable, accessible, and reliable applications to manage critical business functions that help enable them to optimize their financial and human resources. We were originally incorporated in March 2005 in Nevada, and in June 2012, we reincorporated in Delaware. As used in this report, the terms “Workday,” “registrant,” “we,” “us,” and “our” mean Workday, Inc. and its subsidiaries unless the context indicates otherwise.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Workday, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of our management, the information contained herein reflects all adjustments necessary for a fair presentation of Workday’s financial position, results of operations, stockholders’ equity, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the quarter ended October 31, 2020, shown in this report are not necessarily indicative of the results to be expected for the full year ending January 31, 2021. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020, filed with the SEC on March 3, 2020.
There have been no material changes in our significant accounting policies as described in our Annual Report on Form 10-K for the year ended January 31, 2020, other than the adoption of accounting pronouncements as described in Note 2, Accounting Standards. Certain prior period amounts reported in our condensed consolidated financial statements have been reclassified to conform to current period presentation.
Use of Estimates    
The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. These estimates, judgments, and assumptions include, but are not limited to the fair value of assets acquired and liabilities assumed through business combinations, the determination of the period of benefit for deferred commissions, certain assumptions used in the valuation of equity awards, and assumptions used in the valuation of non-marketable equity investments. Actual results could differ from those estimates and such differences could be material to our condensed consolidated financial statements.
Segment Information
We operate in one operating segment, cloud applications. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by chief operating decision makers, who are our co-chief executive officers, in deciding how to allocate resources and assessing performance. Our chief operating decision makers allocate resources and assess performance based upon discrete financial information at the consolidated level.
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Note 2. Accounting Standards
Recently Adopted Accounting Pronouncements
ASU No. 2016-13
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. We adopted this standard effective February 1, 2020, using a modified retrospective approach, which resulted in a cumulative-effect adjustment of $0.2 million to Accumulated deficit.
Under the new standard, we assess our allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as our historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses on our condensed consolidated statements of operations.
With respect to available-for-sale debt securities, when the fair value of the security is below its amortized cost, the amortized cost should be written down to its fair value if i) it is more likely than not that management is required to sell the impaired security before recovery of its amortized basis or ii) management has the intention to sell the security. If neither of the conditions are met, we must determine whether the impairment is due to credit losses. To determine the amount of credit losses, we compare the present value of the expected cash flows of the security, derived by taking into account the issuers’ credit ratings and remaining payment terms, with its amortized cost basis. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the security. An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in Other income (expense), net on our condensed consolidated statements of operations. Non-credit related impairment losses are recorded in Other comprehensive income (loss) (“OCI”).
ASU No. 2018-15
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements.
We adopted this standard effective February 1, 2020, using a prospective approach. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements. Subsequent impact on our condensed consolidated financial statements will depend on the magnitude of implementation costs to be incurred. Implementation costs capitalized subsequent to adoption will be recognized in operating expenses on our condensed consolidated statements of operations over the noncancelable period of the hosting arrangement plus any renewal periods reasonably certain to be taken.
ASU No. 2019-12
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies accounting guidance for certain tax matters including franchise taxes, certain transactions that result in a step-up in tax basis of goodwill, and enacted changes in tax laws in interim periods. In addition, it eliminates a company’s need to evaluate certain exceptions relating to the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses.
We adopted this standard effective February 1, 2020. We adopted the amendments in this update on a retrospective basis for the provision related to franchise taxes and prospectively for all other applicable amendments. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.
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Recently Issued Accounting Pronouncements
ASU No. 2020-04
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. We may elect to apply the amendments prospectively through December 31, 2022. The impact on our condensed consolidated financial statements from the adoption of this standard is expected to be immaterial.
ASU No. 2020-06
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. This new standard is effective for our interim and annual periods beginning February 1, 2022, and earlier adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements.
Note 3. Investments
Debt Securities
As of October 31, 2020, debt securities consisted of the following (in thousands):
Amortized CostUnrealized GainsUnrealized LossesAggregate Fair Value
U.S. treasury securities$930,774 $274 $(26)$931,022 
U.S. agency obligations542,942 144 (136)542,950 
Corporate bonds355,847 2,442 (12)358,277 
Commercial paper367,413 — — 367,413 
$2,196,976 $2,860 $(174)$2,199,662 
Included in Cash and cash equivalents$329,586 $1 $(1)$329,586 
Included in Marketable securities$1,867,390 $2,859 $(173)$1,870,076 
As of January 31, 2020, debt securities consisted of the following (in thousands):
Amortized CostUnrealized GainsUnrealized LossesAggregate Fair Value
U.S. treasury securities$312,183 $492 $(5)$312,670 
U.S. agency obligations169,613 99 (44)169,668 
Corporate bonds504,434 2,476 — 506,910 
Commercial paper364,701 — — 364,701 
$1,350,931 $3,067 $(49)$1,353,949 
Included in Cash and cash equivalents$140,517 $— $— $140,517 
Included in Marketable securities$1,210,414 $3,067 $(49)$1,213,432 
We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the condensed consolidated balance sheets. Debt securities included in Marketable securities on the condensed consolidated balance sheets consist of securities with original maturities at the time of purchase greater than three months, and the remainder of the securities is included in Cash and cash equivalents.
The unrealized losses associated with our debt securities were immaterial as of October 31, 2020, and January 31, 2020, and we did not recognize any credit losses related to our debt securities during the three and nine months ended October 31, 2020.
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There were no sales of debt securities during the three months ended October 31, 2020, and 2019. We sold $5 million of debt securities during the nine months ended October 31, 2020, and 2019. The realized gains and losses from the sales were immaterial.
Equity Investments
Equity investments consisted of the following (in thousands):
Condensed Consolidated Balance Sheets LocationOctober 31, 2020January 31, 2020
Money market funds (1)
Cash and cash equivalents$517,031 $386,909 
Marketable equity investments (1)
Marketable securities10,696 — 
Equity investments accounted for under the equity methodOther assets48,181 — 
Non-marketable equity investments measured using the measurement alternative (2)
Other assets62,741 59,026 
$638,649 $445,935 
(1)Investments with readily determinable fair values.
(2)Investments in privately held companies without readily determinable fair values.
Total realized and unrealized gains and losses associated with our equity investments consisted of the following (in thousands):
Three Months Ended October 31, Nine Months Ended October 31,
2020201920202019
Net realized gains (losses) recognized on equity investments sold$— $102 $1,591 $6,946 
Net unrealized gains (losses) recognized on equity investments held3,830 — 1,643 2,169 
Total net gains (losses) recognized in Other income (expense), net$3,830 $102 $3,234 $9,115 
We determine at the inception of each arrangement whether an investment or other interest is considered a variable interest entity (“VIE”). If the investment or other interest is determined to be a VIE, we must evaluate whether we are considered the primary beneficiary. For investments in VIEs in which we are considered the primary beneficiary, the assets, liabilities, and results of operations of the VIE are consolidated in our condensed consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to direct the activities that most significantly impact the VIE’s economic performance; and (2) has the obligation to absorb losses or the right to receive benefits from the VIE. As of October 31, 2020, there were no VIEs for which we were the primary beneficiary.
Equity Investments Accounted for Under the Equity Method
Investments in VIEs for which we are not the primary beneficiary or do not own a controlling interest but can exercise significant influence over the investee are accounted for under the equity method of accounting. These investments are measured at cost, less any impairment, plus or minus our share of earnings and losses and are included in Other assets on the condensed consolidated balance sheets. Our share of earnings and losses are recorded in Other income (expense), net, on the condensed consolidated statements of operations.
During the first quarter of fiscal 2021, we made an equity investment of $50 million in a limited partnership, which represents an ownership in