Total revenues were $72.6 million, an increase of 99% from the third quarter of fiscal 2012. Subscription revenues were $51.6 million, an increase of 116% from same period last year.

Operating loss for the third quarter was $40.9 million, compared to an operating loss of $19.4 million in the same period last year. Non-GAAP operating loss for the third quarter was $23.5 million, compared to a non-GAAP operating loss of $18.3 million last year.¹

Net loss for the quarter was $41.3 million, compared to a net loss of $19.7 million in the third quarter of fiscal 2012. Non-GAAP net loss for the third quarter was $23.9 million, compared to a non-GAAP net loss of $18.6 million last year.¹

Net loss per basic and diluted share for the third quarter was $0.67, compared to a loss per basic and diluted share of $0.66 in the third quarter of fiscal 2012. The third quarter non-GAAP loss per basic and diluted share was $0.39, compared to a non-GAAP loss per basic and diluted share of $0.63 during the same period last year.¹

Operating cash flows were a negative $9.4 million in the third quarter and a negative $1.4 million for the trailing twelve months. Free cash flows were a negative $23.8 million in the third quarter and a negative $32.2 million for the trailing twelve months.²

In the third quarter, Workday added several significant customers, including DuPont, Johnson Controls, and Yale University, as well as J.B. Hunt for Financial Management.

In August, Workday delivered Workday Time Tracking, a new global time and attendance application that enables enterprises to collect, process, and manage time and labor for their global workforce.

At Workday Rising, the company’s annual customer conference, Workday announced it is building two new applications. Workday Big Data Analytics, expected to be available in the second half of 2013, will enable customers to make more informed business decisions based on a holistic view of workforce and financial information. Workday Recruiting, expected to be available in the first half of 2014, is designed to transform the recruiting process by delivering a complete talent acquisition solution for hiring teams.

Non-GAAP operating results, net loss, and net loss per share for the fiscal third quarters of 2012 and 2013 exclude share-based compensation, and for the fiscal 2013 third quarter, also exclude a one-time charge related to our contribution of 500,000 shares to the Workday Foundation. See the section titled “About Non-GAAP Financial Measures” in the accompanying financial tables for further details.

Free cash flows are defined as operating cash flows minus capital expenditures and property and equipment acquired under capital lease. See the section titled “About Non-GAAP Financial Measures” in the accompanying financial tables for further details.

Assets

Current assets:

Cash and cash equivalents

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $778 at October 31, 2012 and $261 at January 31, 2012

Deferred costs

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Deferred costs, noncurrent

Goodwill and intangible assets, net

Other assets

Total assets

Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

Accrued expenses and other current liabilities

Accrued compensation

Capital leases

Capital leases with related party

Unearned revenue

Total current liabilities

Capital leases, noncurrent

Capital lease with related party, noncurrent

Unearned revenue, noncurrent

Other liabilities

Total liabilities

Commitments and contingencies

Redeemable convertible preferred stock, $0.001 par value; no shares and 31 million shares authorized as of October 31, 2012 and January 31, 2012; no shares and 30 million shares issued and outstanding as of October 31, 2012 and January 31, 2012 with liquidation preference of $174,340 as of January 31, 2012

Stockholder’s equity (deficit):

Convertible preferred stock, $0.001 par value; no shares and 68 million shares authorized as of October 31, 2012 and January 31, 2012; no shares and 68 million shares issued and outstanding as of October 31, 2012 and January 31, 2012 with liquidation preference of $93,716 as of January 31, 2012

Preferred Stock, $0.001 par value; 10 million shares authorized and no shares issued and outstanding as of October 31, 2012

Class A common stock, $0.001 par value; 750 million shares authorized as of October 31, 2012 and 26 million shares issued and outstanding as of October 31, 2012

Class B common stock $0.001 par value; 240 million shares authorized as of October 31, 2012 and 140 million shares issued and outstanding as of October 31, 2012 (including 4 million shares, subject to repurchase, legally issued and outstanding as of October 31, 2012)

Common stock, $0.001 par value; no shares and 200 million shares authorized as of October 31, 2012 and January 31, 2012; no shares and 36 million shares issued and outstanding as of October 31, 2012 and January 31, 2012 (including 3 million shares, subject to repurchase, legally issued and outstanding as of January 31, 2012)

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable preferred stock and stockholders’ equity (deficit)

Revenues

Costs and expenses⁽¹⁾:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Total costs and expenses

Operating loss

Other expense, net

Loss before provision for income taxes

Provision for income taxes

Net loss

Accretion of redeemable convertible preferred stock

Net loss attributable to common stockholders

Net loss per share attributable to Class A and Class B common stockholders, basic and diluted

Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders

(1)    Costs and expenses include share-based compensation as follows:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Cash flows from operating activities

Net loss

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

Share-based compensation

Amortization of deferred costs

Donation of common stock to Workday Foundation

Other

Changes in operating assets and liabilities:

Accounts receivable

Deferred costs

Prepaid expenses and other assets

Accounts payable

Accrued and other liabilities

Unearned revenue

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchases of marketable securities

Maturities of marketable securities

Purchase of cost method investment

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities

Proceeds of initial public offering, net of issuance costs

Proceeds from exercise of stock options

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

Principal payments on capital lease obligations

Principal payments on capital lease obligations with related party

Net cash provided by financing activities

Effect of exchange rate changes

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of period

Cash and cash equivalents at the end of period

Costs and expenses:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Operating loss

Operating margin

Loss before provision for income taxes

Provision for income taxes

Net loss

Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted ⁽¹⁾

Costs and expenses:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Operating loss

Operating margin

Loss before provision for income taxes

Provision for income taxes

Net loss

Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted ⁽¹⁾

Costs and expenses:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Operating loss

Operating margin

Loss before provision for income taxes

Provision for income taxes

Net loss

Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted ⁽¹⁾

Costs and expenses:

Costs of revenues

Research and development

Sales and marketing

General and administrative

Operating loss

Operating margin

Loss before provision for income taxes

Provision for income taxes

Net loss

Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted ⁽¹⁾

Revenues:

Subscription services

Professional services

Total revenues

Revenues:

Subscription services

Professional services

Total revenues

GAAP cash flows from operating activities

Capital expenditures

Property and equipment acquired under capital lease

Free cash flows

GAAP cash flows from operating activities

Capital expenditures

Property and equipment acquired under capital lease

Free cash flows

Share-based compensation. Although share-based compensation is an important aspect of the compensation of Workday’s employees and executives, determining the fair value of certain of the share-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing share-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude share-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies.

Equity Grant to Workday Foundation. During the third quarter of fiscal 2013, Workday granted 500,000 shares of common stock to the Workday Foundation. The Workday Foundation is a non-profit organization established to provide grants, humanitarian relief and employee matching contributions and support volunteerism and social development projects. This grant resulted in a one-time charge of $11.3 million, which was recorded to the General and administrative expenses line of the income statement. Management does not expect to make future grants of shares to the Foundation and therefore considers this charge non-recurring. As such, Management believes it is useful to exclude this one-time charge in order to better understand the ongoing expenses of our core business and to facilitate comparison of our results across periods.