SEC Comment Letter for Workday, Inc. (WDAY) (CIK 0001327811) (WDAY) — Aug 3, 2017
Workday, Inc. (WDAY) (CIK 0001327811)
Date: Aug. 3, 2017 · CIK: 0001327811 · Accession: 0000000000-17-027433
AI Filing Summary & Sentiment
File numbers found in text: 001-35680
Letter
Mail Stop 4561 July 2 6, 2017 Robynne Sisco Chief Financial Officer Workday, Inc. 6230 Stoneridge Mall Road Pleasanton, CA 94588
Re: Workday, Inc. Form 10 -K for the year ended January 31, 2017 Filed March 20, 2017 Form 10 -Q for the quarter ended April 30, 2017 Filed June 2, 2017 Form 8 -K furnished June 1, 2017 File No. 001-35680
Dear Ms. Sisco :
We have reviewed your filing s and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respo nd. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 10 -Q for the quarter ended April 30, 2017
Note 2. Accounting Standards and Significant Accounting Policies
Revenue Recognition, page 10
1. We note that prior to the adoption of ASC 606 , you capitalized direct sales commissions when they could be associated specifically with non -cancelable subscription contracts, and now , you capitalize all incremental sales commissions. Please describe the additional commission fees that you are now capitalizing, and tell us how you determined that these are incremental costs of obtaining a contract. Refer to ASC 340 -40-25-2.
Robynne Sisco Workday, Inc. July 2 6, 2017 Page 2
2. We note you amortize your commission costs over a period of benefit that you have determined to be five years while your subscription contracts are generally three years or longer. Please help us understand how you determined that five years wa s the appropriate period of benefit. In this regard, tell us how you considered renewals. Please clarify whether additional sales commissions are paid upon contract renewal and, if so, whether such amounts are commensurate with the initial commissions. Please also reconcile your considerations to your disclosure on page 46 that your ability to predict renewals is limited. Refer to ASC 340 -40-35-1.
Form 8 -K furnished June 1, 2017
3. Please disclose how you calculated the tax effects of your non -GAAP Net Income (Loss) adjustments and tell us how you determined that such calculations are consistent with the guidance in Question 102.11 of the Non -GAAP C&DIs. In this regard, your tax adjustment should include current and deferred income tax expense commensurate with your non -GAAP measure of profitability.
We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
You may contact Brittany Ebbertt, Staff Accountant , at (202) 551 -3572 or me at (202) 551-3499 with any questions.
Sincerely,
/s/ Kathleen Collins
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Mail Stop 4561 July 2 6, 2017 Robynne Sisco Chief Financial Officer Workday, Inc. 6230 Stoneridge Mall Road Pleasanton, CA 94588 Re: Workday, Inc. Form 10 -K for the year ended January 31, 2017 Filed March 20, 2017 Form 10 -Q for the quarter ended April 30, 2017 Filed June 2, 2017 Form 8 -K furnished June 1, 2017 File No. 001-35680 Dear Ms. Sisco : We have reviewed your filing s and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respo nd. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 10 -Q for the quarter ended April 30, 2017 Note 2. Accounting Standards and Significant Accounting Policies Revenue Recognition, page 10 1. We note that prior to the adoption of ASC 606 , you capitalized direct sales commissions when they could be associated specifically with non -cancelable subscription contracts, and now , you capitalize all incremental sales commissions. Please describe the additional commission fees that you are now capitalizing, and tell us how you determined that these are incremental costs of obtaining a contract. Refer to ASC 340 -40-25-2. Robynne Sisco Workday, Inc. July 2 6, 2017 Page 2 2. We note you amortize your commission costs over a period of benefit that you have determined to be five years while your subscription contracts are generally three years or longer. Please help us understand how you determined that five years wa s the appropriate period of benefit. In this regard, tell us how you considered renewals. Please clarify whether additional sales commissions are paid upon contract renewal and, if so, whether such amounts are commensurate with the initial commissions. Please also reconcile your considerations to your disclosure on page 46 that your ability to predict renewals is limited. Refer to ASC 340 -40-35-1. Form 8 -K furnished June 1, 2017 3. Please disclose how you calculated the tax effects of your non -GAAP Net Income (Loss) adjustments and tell us how you determined that such calculations are consistent with the guidance in Question 102.11 of the Non -GAAP C&DIs. In this regard, your tax adjustment should include current and deferred income tax expense commensurate with your non -GAAP measure of profitability. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. You may contact Brittany Ebbertt, Staff Accountant , at (202) 551 -3572 or me at (202) 551-3499 with any questions. Sincerely, /s/ Kathleen Collins Kathleen Collins Accounting Branch Chief Office of Info rmation Technologies and Services cc: Jim Shaughnessy, Senior Vice President, General Counsel and Secretary Jeffrey Vetter, Legal Counsel, Fenwick & West