Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Workday Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,270 – 19.90% × 12,129 = -1,143
The financial analysis reveals a persistent state of negative economic profit from 2021 through 2026, indicating that the company's operational returns consistently failed to cover the required cost of capital during this period.
- Net Operating Profit After Taxes (NOPAT)
- A general upward trajectory in NOPAT is observed, increasing from US$ 84 million in 2021 to US$ 1,270 million by 2026. Although a significant contraction occurred in 2023, where NOPAT fell to US$ 102 million, the subsequent years demonstrated a strong recovery and accelerated growth in operational earnings.
- Invested Capital and Cost of Capital
- Invested capital exhibited a consistent and significant increase, rising from US$ 6,061 million in 2021 to US$ 12,129 million in 2026. During the same timeframe, the cost of capital remained relatively stable, fluctuating narrowly between 19.90% and 20.73%. A slight decrease in the cost of capital is noted by the end of the period, reaching its lowest point of 19.90% in 2026.
- Economic Profit Dynamics
- Economic profit remained negative throughout the analyzed period, with values ranging from -US$ 1,077 million to -US$ 1,566 million. The most pronounced economic loss occurred in 2023, coinciding with the sharp decline in NOPAT. Despite the substantial growth in operating profit by 2026, the simultaneous expansion of the invested capital base ensured that the capital charge continued to exceed the NOPAT, preventing the achievement of a positive economic value added.
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Net Operating Profit after Taxes (NOPAT)
Workday Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in unearned revenue.
4 Addition of increase (decrease) in restructuring liability.
5 Addition of increase (decrease) in equity equivalents to net income (loss).
6 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 834 × 4.19% = 35
7 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 149 × 21.00% = 31
8 Addition of after taxes interest expense to net income (loss).
9 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 345 × 21.00% = 72
10 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) demonstrates a fluctuating pattern over the observed period. While net income experienced significant volatility, NOPAT presents a generally positive trajectory, albeit with intermediate setbacks.
- Overall Trend
- NOPAT generally increased from 2021 to 2026. Beginning at US$84 million in 2021, it rose substantially to US$506 million in 2022. A subsequent decline was noted in 2023, falling to US$102 million, before recovering and continuing an upward trend through 2026, reaching US$1,270 million.
- Year-over-Year Changes
- The largest year-over-year increase in NOPAT occurred between 2021 and 2022, with an increase of US$422 million. The most significant decrease was observed between 2022 and 2023, representing a reduction of US$404 million. From 2023 to 2024, NOPAT increased by US$571 million, and continued to grow by US$187 million and US$310 million in 2025 and 2026 respectively.
- Relationship to Net Income
- A divergence between NOPAT and net income is apparent. While net income fluctuated significantly, including substantial losses in 2021 and 2023, NOPAT remained positive throughout the period, suggesting that core operating profitability was maintained even during years with large non-operating expenses or losses. The substantial increase in net income from 2023 to 2024 did not mirror a similar magnitude of increase in NOPAT, indicating that factors beyond core operations contributed significantly to the net income improvement.
The observed pattern in NOPAT suggests a business capable of generating operating profits, but subject to variability potentially influenced by factors outside of its primary business activities. The growth in NOPAT from 2024 to 2026 indicates strengthening core operational performance.
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Cash Operating Taxes
Workday Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
The provision for (benefit from) income taxes and cash operating taxes exhibit considerable fluctuation over the observed period. A notable divergence exists between the two metrics, suggesting timing differences related to tax recognition and actual cash outflows.
- Provision for (benefit from) income taxes
- The provision for income taxes began at US$7 million in 2021, decreased significantly to a benefit of US$13 million in 2022, then increased substantially to US$107 million in 2023. A large negative value of negative US$1,025 million was recorded in 2024, followed by a return to a positive provision of US$112 million in 2025, and a further increase to US$316 million in 2026. This pattern indicates significant volatility in taxable income or changes in deferred tax assets and liabilities.
- Cash operating taxes
- Cash operating taxes started at US$20 million in 2021, decreased to US$4 million in 2022, and then rose to US$118 million in 2023. A minimal outflow of US$3 million was observed in 2024, increasing to US$34 million in 2025 and US$67 million in 2026. While also fluctuating, the magnitude of change in cash taxes is less extreme than that of the income tax provision.
- Relationship between Provision and Cash Taxes
- In 2021 and 2023, cash operating taxes were lower than the provision for income taxes, potentially due to timing differences such as prepaid taxes or deferred tax liabilities. However, in 2022, the provision was a benefit while cash taxes were an outflow, and in 2024, the provision was a large expense while cash taxes were minimal. These discrepancies suggest substantial differences between book and tax accounting treatments, potentially related to stock-based compensation, research and development credits, or other non-cash items impacting the income tax provision. The increasing positive difference between the two metrics in 2025 and 2026 may indicate a normalization of tax payments relative to reported income.
The substantial fluctuations in both metrics warrant further investigation to understand the underlying drivers and potential impacts on future cash flows and financial performance. The significant negative provision in 2024, coupled with minimal cash taxes, requires particular scrutiny.
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Invested Capital
Workday Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of unearned revenue.
5 Addition of restructuring liability.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
The invested capital of the company demonstrates a consistent upward trajectory over the observed period. This growth is supported by increases in both total reported debt & leases and stockholders’ equity, though the relative contributions of each component have shifted over time.
- Total Reported Debt & Leases
- Total reported debt & leases experienced a slight decrease from 2021 to 2022, falling from US$2,238 million to US$2,103 million. However, beginning in 2022, a clear upward trend is evident, with values reaching US$3,296 million by 2024 and projected to reach US$3,821 million by 2026. This indicates an increasing reliance on debt financing.
- Stockholders’ Equity
- Stockholders’ equity exhibited substantial growth between 2021 and 2024, increasing from US$3,278 million to US$8,082 million. This growth rate slowed between 2024 and 2025, reaching US$9,034 million, before experiencing a decrease to US$7,805 million in 2026. The 2026 decrease warrants further investigation to determine its underlying causes.
- Invested Capital
- Invested capital, calculated as the sum of total reported debt & leases and stockholders’ equity, increased from US$6,061 million in 2021 to US$12,129 million in 2026. The rate of increase accelerated between 2024 and 2026, suggesting a more aggressive investment strategy or significant acquisitions during that period. The growth in invested capital was most pronounced between 2025 and 2026, driven by the continued increase in debt despite a concurrent decrease in stockholders’ equity.
The composition of invested capital has shifted over the period. While stockholders’ equity initially drove a significant portion of the growth, debt financing became a more prominent contributor in later years. The decline in stockholders’ equity in 2026, coupled with continued debt increases, suggests a potential change in the company’s capital structure and risk profile.
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Cost of Capital
Workday Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 38,817) | 38,817) | ÷ | 42,551) | = | 0.91 | 0.91 | × | 21.52% | = | 19.63% | ||
| Debt3 | 2,900) | 2,900) | ÷ | 42,551) | = | 0.07 | 0.07 | × | 3.80% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 834) | 834) | ÷ | 42,551) | = | 0.02 | 0.02 | × | 4.19% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 42,551) | 1.00 | 19.90% | ||||||||||
Based on: 10-K (reporting date: 2026-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 64,619) | 64,619) | ÷ | 67,797) | = | 0.95 | 0.95 | × | 21.52% | = | 20.51% | ||
| Debt3 | 2,800) | 2,800) | ÷ | 67,797) | = | 0.04 | 0.04 | × | 3.80% × (1 – 21.00%) | = | 0.12% | ||
| Operating lease liability4 | 378) | 378) | ÷ | 67,797) | = | 0.01 | 0.01 | × | 4.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 67,797) | 1.00 | 20.65% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 69,780) | 69,780) | ÷ | 72,896) | = | 0.96 | 0.96 | × | 21.52% | = | 20.60% | ||
| Debt3 | 2,800) | 2,800) | ÷ | 72,896) | = | 0.04 | 0.04 | × | 3.80% × (1 – 21.00%) | = | 0.12% | ||
| Operating lease liability4 | 316) | 316) | ÷ | 72,896) | = | 0.00 | 0.00 | × | 3.95% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 72,896) | 1.00 | 20.73% | ||||||||||
Based on: 10-K (reporting date: 2024-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 47,897) | 47,897) | ÷ | 50,970) | = | 0.94 | 0.94 | × | 21.52% | = | 20.22% | ||
| Debt3 | 2,800) | 2,800) | ÷ | 50,970) | = | 0.05 | 0.05 | × | 3.80% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 273) | 273) | ÷ | 50,970) | = | 0.01 | 0.01 | × | 2.79% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 50,970) | 1.00 | 20.40% | ||||||||||
Based on: 10-K (reporting date: 2023-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 57,492) | 57,492) | ÷ | 60,347) | = | 0.95 | 0.95 | × | 21.52% | = | 20.50% | ||
| Debt3 | 2,592) | 2,592) | ÷ | 60,347) | = | 0.04 | 0.04 | × | 0.86% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 263) | 263) | ÷ | 60,347) | = | 0.00 | 0.00 | × | 2.35% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 60,347) | 1.00 | 20.54% | ||||||||||
Based on: 10-K (reporting date: 2022-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 60,254) | 60,254) | ÷ | 63,265) | = | 0.95 | 0.95 | × | 21.52% | = | 20.49% | ||
| Debt3 | 2,568) | 2,568) | ÷ | 63,265) | = | 0.04 | 0.04 | × | 3.32% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 443) | 443) | ÷ | 63,265) | = | 0.01 | 0.01 | × | 1.73% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 63,265) | 1.00 | 20.61% | ||||||||||
Based on: 10-K (reporting date: 2021-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Workday Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (1,143) | (1,085) | (1,116) | (1,566) | (1,077) | (1,166) | |
| Invested capital2 | 12,129) | 9,420) | 8,631) | 8,178) | 7,706) | 6,061) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -9.43% | -11.52% | -12.93% | -19.15% | -13.98% | -19.23% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | -0.31% | 1.52% | 1.19% | 1.97% | 4.84% | 6.66% | |
| Adobe Inc. | — | 13.20% | 0.92% | 1.09% | 6.58% | 8.97% | |
| AppLovin Corp. | — | 28.93% | 1.21% | -20.00% | -26.37% | -29.58% | |
| Cadence Design Systems Inc. | — | -1.28% | -2.87% | 7.18% | 6.59% | 6.80% | |
| Datadog Inc. | — | -8.74% | -9.43% | -5.95% | -11.70% | -3.88% | |
| International Business Machines Corp. | — | -0.82% | -7.67% | -3.61% | -11.36% | -6.21% | |
| Intuit Inc. | 7.83% | -2.91% | -6.58% | -8.63% | -7.52% | 0.11% | |
| Microsoft Corp. | 8.88% | 5.63% | 7.51% | 10.56% | 18.54% | 27.58% | |
| Oracle Corp. | -3.77% | -7.90% | -7.76% | -8.56% | -7.56% | 0.65% | |
| Palantir Technologies Inc. | — | 41.88% | -12.04% | -8.76% | -32.50% | -39.96% | |
| Palo Alto Networks Inc. | -12.79% | -3.82% | 5.37% | 11.50% | 3.53% | -5.17% | |
| Salesforce Inc. | -6.95% | -12.37% | -14.18% | -17.63% | -14.50% | -12.36% | |
| ServiceNow Inc. | — | 2.66% | 5.94% | 5.23% | 0.73% | 1.94% | |
| Synopsys Inc. | — | -12.39% | -8.14% | -7.44% | -0.84% | -6.86% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,143 ÷ 12,129 = -9.43%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2026 is characterized by a persistent failure to generate positive economic value, although a gradual improvement in the efficiency of capital utilization is evident. Despite significant growth in the capital base, the company has consistently reported negative economic profit, indicating that the returns on invested capital have remained below the cost of capital throughout the analyzed period.
- Invested Capital Trends
- A consistent and substantial upward trend in invested capital is observed, rising from 6,061 million USD in 2021 to 12,129 million USD by 2026. This represents a near doubling of the capital base over the six-year period, reflecting an aggressive expansion of the company's asset base or strategic investments.
- Economic Profit Analysis
- Economic profit remained negative across all reported years, fluctuating between a peak loss of 1,566 million USD in 2023 and a minimum loss of 1,077 million USD in 2022. The lack of a linear recovery in absolute economic profit suggests that the growth in invested capital has not yet translated into sufficient operational returns to offset the associated cost of capital.
- Economic Spread Ratio Performance
- The economic spread ratio exhibits a general trend of convergence toward zero, signifying a reduction in the gap between the return on invested capital and the cost of capital. After a decline to -19.15% in 2023, the ratio improved steadily to -9.43% by 2026. This compression of the negative spread suggests an increasing efficiency in generating returns relative to the expanded capital base, although the company has not yet reached the break-even point where economic value is created.
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Economic Profit Margin
Workday Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (1,143) | (1,085) | (1,116) | (1,566) | (1,077) | (1,166) | |
| Revenues | 9,552) | 8,446) | 7,259) | 6,216) | 5,139) | 4,318) | |
| Add: Increase (decrease) in unearned revenue | 534) | 420) | 493) | 451) | 546) | 328) | |
| Adjusted revenues | 10,086) | 8,866) | 7,752) | 6,667) | 5,685) | 4,646) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -11.34% | -12.24% | -14.39% | -23.49% | -18.95% | -25.09% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | -0.22% | 0.97% | 0.67% | 1.01% | 2.33% | 3.42% | |
| Adobe Inc. | — | 11.94% | 1.04% | 1.37% | 7.67% | 11.17% | |
| AppLovin Corp. | — | 29.73% | 1.17% | -27.38% | -49.38% | -59.23% | |
| Cadence Design Systems Inc. | — | -1.92% | -4.40% | 7.15% | 6.57% | 6.91% | |
| Datadog Inc. | — | -5.18% | -8.56% | -3.72% | -8.10% | -3.08% | |
| International Business Machines Corp. | — | -1.46% | -13.55% | -6.43% | -19.67% | -11.82% | |
| Intuit Inc. | 9.56% | -3.75% | -10.11% | -14.13% | -14.48% | 0.14% | |
| Microsoft Corp. | 14.91% | 8.39% | 10.50% | 12.02% | 17.77% | 22.89% | |
| Oracle Corp. | -9.25% | -15.82% | -14.76% | -16.57% | -13.87% | 1.29% | |
| Palantir Technologies Inc. | — | 21.69% | -10.44% | -4.70% | -54.53% | -65.82% | |
| Palo Alto Networks Inc. | -35.54% | -4.52% | 5.70% | 11.42% | 4.11% | -6.95% | |
| Salesforce Inc. | -14.89% | -26.71% | -32.78% | -44.58% | -40.27% | -28.34% | |
| ServiceNow Inc. | — | 2.94% | 4.88% | 4.21% | 0.58% | 1.68% | |
| Synopsys Inc. | — | -72.30% | -13.64% | -10.49% | -1.18% | -10.92% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -1,143 ÷ 10,086 = -11.34%
3 Click competitor name to see calculations.
The financial analysis reveals a period of significant top-line growth accompanied by a persistent negative economic profit, although efficiency relative to revenue has improved over the analyzed timeframe.
- Adjusted Revenue Trajectory
- A consistent upward trend is observed in adjusted revenues, which expanded from 4,646 million US dollars in 2021 to 10,086 million US dollars by 2026. This indicates a steady and substantial increase in the scale of operations.
- Economic Profit Performance
- Economic profit remained consistently negative throughout the period, fluctuating between a peak loss of 1,566 million US dollars in 2023 and a minimum loss of 1,077 million US dollars in 2022. The inability to reach a positive value suggests that the net operating profit has not yet exceeded the company's cost of capital.
- Economic Profit Margin Dynamics
- Despite the continued negative economic profit, the economic profit margin demonstrates a clear pattern of improvement. The margin moved from -25.09% in 2021 to -11.34% in 2026. This contraction of the negative margin indicates that revenue growth is outpacing the economic loss, thereby reducing the relative cost of capital per unit of revenue generated.
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