Workday Inc. (NASDAQ:WDAY)

Goodwill and intangible assets exhibited notable changes over the observed period. Overall, a general trend of increasing values is apparent for most components, particularly in the later years of the period. Goodwill experienced the most substantial growth, while acquisition-related intangible assets, net, showed more volatility.

Goodwill

Goodwill increased significantly from US$1,820 million in 2021 to US$5,229 million in 2026. The most substantial increase occurred between 2024 and 2026, suggesting recent, sizable acquisitions or reassessments of existing goodwill values. Prior to this, growth was more moderate, with a substantial jump from 2021 to 2022, followed by relatively stable values between 2022 and 2024.

Developed Technology

Developed technology showed an increasing trend, rising from US$218 million in 2021 to US$742 million in 2026. Growth was not linear, with a slight decrease observed between 2022 and 2023 before resuming an upward trajectory. The largest increase occurred between 2024 and 2026.

Customer Relationships

Customer relationships also demonstrated an upward trend, increasing from US$223 million in 2021 to US$506 million in 2026. Similar to developed technology, growth was relatively consistent, with a notable acceleration between 2024 and 2026.

Backlog & Trade Name

Backlog and trade name exhibited the slowest rates of growth. Backlog increased modestly from US$11 million to US$17 million over the period. Trade name increased from US$12 million to US$17 million. These assets represent a smaller portion of the overall intangible asset base and experienced comparatively stable values.

Acquisition-Related Intangible Assets

Gross acquisition-related intangible assets increased from US$464 million in 2021 to US$1,282 million in 2026, mirroring the trend in goodwill. However, net acquisition-related intangible assets displayed more fluctuation. Accumulated amortization increased consistently throughout the period, from US$216 million in 2021 to US$601 million in 2026, offsetting some of the growth in gross intangible assets. Net acquisition-related intangible assets peaked in 2022 at US$391 million, declined to US$233 million in 2023, and then increased to US$681 million in 2026.

Combined Goodwill and Intangibles

The combined value of goodwill and acquisition-related intangible assets increased from US$2,068 million in 2021 to US$5,910 million in 2026. This substantial increase indicates a growing reliance on acquired intangible assets and potentially aggressive acquisition strategies. The combined value generally followed the trend of goodwill, with the most significant growth occurring in the later years.

The consistent increase in accumulated amortization suggests ongoing utilization and consumption of the acquired intangible assets. The significant growth in goodwill, particularly in the final years, warrants further investigation to understand the underlying acquisitions and their potential impact on future financial performance.

The information presents a comparison of reported and adjusted financial figures over a six-year period. The adjustments appear to primarily relate to the removal of goodwill and associated intangible assets, significantly impacting both total assets and stockholders’ equity. A consistent difference exists between the reported and adjusted values, indicating a systematic modification of the balance sheet.

Total Assets

Reported total assets demonstrate a consistent upward trend, increasing from US$8,718 million in 2021 to US$18,074 million in 2026. However, adjusted total assets exhibit a more moderate growth pattern. While increasing from US$6,899 million in 2021 to US$14,499 million in 2025, they decrease to US$12,845 million in 2026. The divergence between reported and adjusted total assets widens over time, suggesting an increasing amount of goodwill or intangible assets being removed through the adjustments.

Stockholders’ Equity

Reported stockholders’ equity also shows an increasing trend, rising from US$3,278 million in 2021 to US$9,034 million in 2025, before declining to US$7,805 million in 2026. Adjusted stockholders’ equity displays a similar pattern of growth followed by a decline, but the magnitudes are considerably smaller. Starting at US$1,458 million in 2021, it reaches US$5,556 million in 2025 and then falls to US$2,576 million in 2026. The difference between reported and adjusted stockholders’ equity is substantial and grows over the period, mirroring the trend observed in total assets, and reinforcing the conclusion that adjustments are significantly reducing the reported equity base.

The year 2026 shows a notable decrease in both adjusted total assets and adjusted stockholders’ equity. This suggests a potentially significant event or series of events occurred in that year leading to further reductions in goodwill or intangible assets. The consistent pattern of adjustments indicates that a substantial portion of the reported asset base and equity is attributable to items that are being systematically removed through these adjustments, potentially impacting key financial metrics and the overall financial picture of the entity.

Impact of Adjustments

The adjustments consistently reduce both total assets and stockholders’ equity. In 2021, the adjustments removed approximately US$1,819 million from total assets and US$1,820 million from stockholders’ equity. By 2025, these amounts increased to US$3,478 million and US$3,478 million, respectively. In 2026, the adjustments removed US$5,229 million from total assets and US$5,229 million from stockholders’ equity. This suggests a growing reliance on goodwill and intangible assets in the reported financials, which are then removed in the adjusted figures.

The financial metrics demonstrate a notable divergence between reported and adjusted values following the removal of goodwill and intangible assets from the adjusted calculations. This adjustment significantly impacts asset turnover, financial leverage, and profitability ratios, revealing a different perspective on the company’s performance. Generally, the adjusted ratios suggest a more efficient use of assets and a higher degree of financial leverage than initially indicated by the reported figures.

Total Asset Turnover

Reported total asset turnover experienced a slight decline from 0.50 in 2021 to 0.44 in 2023, followed by a recovery to 0.53 in 2026. However, the adjusted total asset turnover consistently exceeds the reported value, starting at 0.63 in 2021 and reaching 0.74 in 2026. This indicates that excluding goodwill and intangibles reveals a more efficient utilization of operating assets in generating revenue. The adjusted ratio shows a more pronounced increase over the period, suggesting a strengthening of operational efficiency as goodwill is removed from the asset base.

Financial Leverage

Reported financial leverage decreased from 2.66 in 2021 to 2.04 in 2024, before increasing to 2.32 in 2026. Conversely, adjusted financial leverage is substantially higher, beginning at 4.73 in 2021 and fluctuating before reaching 4.99 in 2026. This substantial difference highlights the impact of goodwill on the reported leverage ratio. The adjusted figures suggest a greater reliance on debt financing relative to adjusted assets, indicating a potentially higher risk profile when considering the underlying asset base.

Return on Equity (ROE)

Reported ROE fluctuated significantly, starting at -8.62% in 2021, peaking at 17.09% in 2024, and settling at 8.88% in 2026. The adjusted ROE mirrors this volatility but exhibits larger negative values in earlier years (-19.37% in 2021) and a higher peak in 2024 (26.38%), concluding at 26.90% in 2026. The adjusted ROE consistently outperforms the reported ROE in the later years, suggesting that the removal of goodwill positively impacts returns to equity holders. The initial negative values, however, indicate that the underlying business was not generating sufficient returns relative to equity when goodwill is excluded.

Return on Assets (ROA)

Reported ROA followed a similar pattern to ROE, moving from -3.24% in 2021 to 8.39% in 2024 and 3.83% in 2026. Adjusted ROA also showed initial negative values (-4.09% in 2021) and a peak in 2024 (10.15%), finishing at 5.40% in 2026. The adjusted ROA consistently exceeds the reported ROA in the later periods, indicating improved profitability relative to adjusted assets. The trend suggests that the company’s core operations become more profitable when goodwill is not included in the asset base.

In summary, the adjustments reveal a business with potentially higher leverage and greater operational efficiency than indicated by the reported financial statements. The impact on profitability ratios is significant, with adjusted ROE and ROA demonstrating a more favorable performance trajectory, particularly in the later years of the observed period. However, the initial negative adjusted ROE and ROA values warrant further investigation into the underlying causes of profitability challenges when goodwill is excluded.

An examination of the provided financial information reveals trends in total assets and associated turnover ratios over a six-year period. Reported total assets demonstrate a consistent upward trajectory, increasing from US$8,718 million in 2021 to US$18,074 million in 2026. However, adjusted total assets, which exclude certain items like goodwill and intangible assets, exhibit a more moderate growth pattern, peaking at US$14,499 million in 2025 before decreasing to US$12,845 million in 2026.

Reported Total Asset Turnover

The reported total asset turnover ratio generally declined from 0.50 in 2021 to 0.44 in 2023. A slight recovery to 0.47 was noted in 2024, followed by an increase to 0.53 in 2026. This suggests a fluctuating efficiency in generating revenue from reported assets, with a recent improvement in the final year of the period.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio initially increased from 0.63 in 2021 to 0.67 in 2022, indicating improved efficiency when considering only adjusted assets. A subsequent decrease to 0.58 in 2023 and 0.53 in 2024 was observed. The ratio recovered to 0.58 in 2025, and then increased significantly to 0.74 in 2026. This substantial increase in the final year suggests a notable improvement in the efficiency of asset utilization when goodwill and intangible assets are excluded from the asset base.

The divergence between the reported and adjusted asset turnover ratios highlights the impact of goodwill and intangible assets on overall asset efficiency. The increasing difference between the two ratios over time suggests that these items are growing as a proportion of total assets. The significant jump in adjusted total asset turnover in 2026, while reported total asset turnover only modestly improved, indicates that the core operating assets are becoming more productive relative to the excluded components.

The fluctuations in both ratios warrant further investigation to understand the underlying drivers. Factors such as changes in revenue, asset composition, and accounting policies could all contribute to these observed trends.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over a six-year period. Reported total assets demonstrate consistent growth throughout the period, increasing from US$8,718 million to US$18,074 million. Reported stockholders’ equity also exhibits an upward trajectory, rising from US$3,278 million to US$7,805 million, though with a decrease in the final year. Adjusted total assets and adjusted stockholders’ equity show similar growth patterns initially, but adjusted total assets decline in the final year to US$12,845 million, and adjusted stockholders’ equity experiences a more substantial decrease to US$2,576 million.

Reported Financial Leverage

Reported financial leverage generally decreased from 2.66 to 1.99 between 2021 and 2024, indicating a strengthening equity position relative to assets. However, a slight increase to 2.32 is observed in 2026, suggesting a potential shift in the capital structure or asset base. The overall trend suggests improved solvency based on reported figures.

Adjusted Financial Leverage

Adjusted financial leverage presents a different picture. It begins at a significantly higher level of 4.73 in 2021 and decreases to 2.60 in 2024. This decline indicates that the adjustments made to total assets and stockholders’ equity result in a more conservative leverage position over time. However, a substantial increase to 4.99 is observed in 2026, exceeding the initial value and suggesting a considerable increase in risk when considering the adjusted figures. This reversal warrants further investigation into the nature of the adjustments and their impact on the company’s financial risk profile.

The divergence between reported and adjusted financial leverage highlights the importance of understanding the components of those adjustments. While reported leverage suggests improving financial health through 2024, the adjusted leverage indicates a more volatile situation, with a significant increase in risk by 2026. The decline in both adjusted total assets and adjusted stockholders’ equity in the final year contributes to this increased leverage. Further analysis is needed to determine the specific items being adjusted and the reasons for the changes, particularly the substantial decrease in adjusted equity in 2026.

Trends in Adjustments

The difference between reported and adjusted figures widens over time, particularly in the later years. This suggests that the adjustments are becoming more material to the overall financial picture. The magnitude of the adjustments to both assets and equity should be scrutinized to understand their underlying causes and potential implications for the company’s financial stability.

Analysis reveals significant fluctuations in both reported and adjusted stockholders’ equity, impacting the observed return on equity figures over the examined period. A notable divergence exists between the reported and adjusted ROE, suggesting the impact of specific adjustments to equity on overall profitability metrics.

Reported Stockholders’ Equity

Reported stockholders’ equity demonstrates a generally increasing trend from 2021 to 2024, rising from US$3,278 million to US$8,082 million. However, a decrease is observed in 2026, falling to US$7,805 million. This suggests potential factors influencing equity, such as share repurchases, dividend distributions, or changes in accumulated other comprehensive income.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity exhibits more volatility. It increases from US$1,458 million in 2021 to US$5,556 million in 2025, but then declines substantially to US$2,576 million in 2026. This significant fluctuation indicates the presence of adjustments that materially affect the equity base, potentially related to intangible assets or goodwill. The magnitude of the 2026 decrease warrants further investigation.

Reported Return on Equity (ROE)

Reported ROE is initially negative in 2021 (-8.62%) before becoming positive in 2022 (0.65%). It then turns negative again in 2023 (-6.57%) and experiences a substantial increase in 2024 (17.09%). The ROE subsequently decreases to 5.82% in 2025 and rises again to 8.88% in 2026. This pattern mirrors the fluctuations in reported stockholders’ equity and suggests sensitivity to earnings performance relative to the equity base.

Adjusted Return on Equity (ROE)

Adjusted ROE demonstrates even greater volatility than its reported counterpart. It begins at -19.37% in 2021, increases to 1.73% in 2022, then declines to -13.36% in 2023. A significant surge is observed in 2024, reaching 26.38%, followed by a decrease to 9.47% in 2025 and a further increase to 26.90% in 2026. The substantial differences between adjusted and reported ROE highlight the impact of the equity adjustments, particularly in 2024 and 2026, where the adjusted ROE significantly exceeds the reported ROE. This suggests that the adjustments are positively impacting the perceived profitability of the company.

The considerable divergence between reported and adjusted ROE, coupled with the volatility in adjusted stockholders’ equity, suggests that the adjustments being made are material and warrant detailed scrutiny. The substantial decline in adjusted equity in 2026, and the corresponding increase in adjusted ROE, require further investigation to understand the underlying drivers and their implications for the company’s financial health.

The analysis reveals distinct trends in both reported and adjusted return on assets (ROA) over the observed period. Reported total assets demonstrate a consistent upward trajectory, increasing from US$8,718 million in 2021 to US$18,074 million in 2026. Adjusted total assets also generally increase, though with a decrease observed in the final year of the period. The ROA figures, both reported and adjusted, exhibit more volatility.

Reported ROA

Reported ROA begins at -3.24% in 2021, indicating a loss relative to total assets. A positive value of 0.28% is recorded in 2022, followed by a return to negative territory at -2.72% in 2023. A substantial increase is then observed in 2024, reaching 8.39%, and remains positive through 2026, concluding at 3.83%. This suggests improving profitability relative to reported assets in the latter part of the period.

Adjusted ROA

Adjusted ROA mirrors the general trend of the reported ROA, starting at -4.09% in 2021 and rising to 0.38% in 2022. It then declines to -3.44% in 2023 before experiencing a significant increase to 10.15% in 2024. The adjusted ROA settles at 3.63% in 2025 and further increases to 5.40% in 2026. The adjusted ROA consistently presents a more negative initial result and a higher peak in 2024 compared to the reported ROA.

The divergence between reported and adjusted ROA suggests that the treatment of certain assets, specifically those impacting the adjustment to total assets, significantly influences profitability metrics. The substantial increase in both reported and adjusted ROA in 2024 warrants further investigation to understand the underlying drivers of this improvement. The decrease in adjusted total assets in 2026, coupled with a continued positive adjusted ROA, indicates improved efficiency in utilizing the adjusted asset base.

Asset Trends

The consistent growth in reported total assets contrasts with the fluctuation in adjusted total assets. The decline in adjusted total assets in 2026, while reported assets continue to rise, suggests a potential shift in asset composition or accounting treatment. This shift appears to positively impact the adjusted ROA, indicating a more efficient use of the adjusted asset base.