Workday Inc. (NASDAQ:WDAY)

The financial data reveals several notable trends in the company's performance over the examined years.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a significant improvement from a negative value of -113 million US$ in early 2020 to a positive 84 million US$ by early 2021. This positive trajectory continued sharply in 2022 with a peak of 506 million US$. However, in early 2023, NOPAT declined substantially to 102 million US$, before rebounding again in subsequent years to 673 million US$ in 2024 and further increasing to 860 million US$ in 2025. Overall, while fluctuations are present, there is a clear trend towards increasing profitability.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating minimally between 16.86% and 17.13%. This stability suggests consistent financing conditions and risk assessment.

Invested Capital

Invested capital increased steadily from 5,129 million US$ in 2020 to 9,420 million US$ in 2025. This consistent growth indicates ongoing investment and expansion in capital assets or operations over the years.

Economic Profit

Economic profit was consistently negative for all periods, ranging from -981 million US$ in 2020 to -748 million US$ in 2025. Though the losses decreased somewhat over the timeframe, the company did not generate positive economic profit, suggesting that the returns did not exceed the cost of capital during these years.

In summary, the company demonstrated improved operating profitability as indicated by rising NOPAT, paired with stable capital costs and increased invested capital. However, the persistent negative economic profit indicates challenges in creating value beyond the cost of capital, highlighting potential areas for strategic focus to enhance overall economic returns.

The financial data reveals notable fluctuations in both net income and net operating profit after taxes (NOPAT) over the six-year period under review.

Net Income (Loss)

The net income figures exhibit significant volatility. In the initial two years, there are substantial losses of US$481 million and US$282 million, respectively. This trend reverses in the third year with a modest net income of US$29 million, followed by another loss of US$367 million in the fourth year. The final two years show a marked improvement, with net income surging to US$1,381 million in the fifth year before moderating to US$526 million in the sixth year. This pattern indicates a recovery trajectory with considerable ups and downs, culminating in positive and substantially higher profitability compared to the initial years.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a consistent upward trend overall despite a minor dip in the fourth year. Starting from a significant negative value of US$113 million in the first year, NOPAT shifts to positive territory at US$84 million in the second year and climbs further to US$506 million in the third year. Although it declines to US$102 million in the fourth year, the metric rebounds strongly to US$673 million and US$860 million in the final two years. This trend corresponds with improving operational efficiency and profitability before tax considerations, underscoring enhanced operating performance over time.

In summary, the data reflects a company experiencing initial financial challenges with losses and negative operating profits that progressively improve, culminating in positive net income and solid operational profitability in the most recent years. The fluctuations observed in net income suggest episodic impacts beyond operational capabilities, while the upward trend in NOPAT demonstrates strengthening core business performance.

Provision for (benefit from) income taxes

The provision for income taxes demonstrates considerable volatility over the analyzed periods. It begins with a negative value of -2 million USD in early 2020, indicating a tax benefit or credit. This shifts to a modest positive provision of 7 million USD in 2021, before returning to a larger benefit of -13 million USD in 2022. A significant increase to 107 million USD is observed in 2023, followed by a sharp reversal to a substantial tax benefit of -1025 million USD in 2024. The latest figure in 2025 reflects a positive provision again at 112 million USD. These fluctuations suggest an irregular tax expense pattern, possibly influenced by varying taxable income, deferred tax adjustments, or extraordinary items across the years.

Cash operating taxes

Cash operating taxes show a generally increasing trend with notable irregularities. Starting at 13 million USD in 2020, this figure rises to 20 million USD in 2021, then unexpectedly falls to a negative value of -4 million USD in 2022, indicating a refund or credit situation. The amount then spikes sharply to 118 million USD in 2023. However, similar to previous volatility, it drops again to -3 million USD in 2024 before rising to 34 million USD in 2025. This pattern points to inconsistent cash tax payments possibly due to timing differences, utilization of tax credits, or adjustments in prior year tax liabilities.

Total reported debt & leases

The total reported debt and leases value exhibited an overall upward trend over the observed periods. Starting at 1,570 million USD in early 2020, the figure increased to 2,238 million USD by early 2021, followed by a slight decrease to 2,103 million USD in early 2022. Subsequent years saw a marked increase with values reaching 3,249 million USD in early 2023, then increasing gradually to 3,296 million USD in early 2024 and 3,362 million USD in early 2025. This pattern indicates a growing reliance on debt and lease obligations, particularly notable from 2022 onward.

Stockholders’ equity

Stockholders’ equity displayed a consistent and substantial growth trend throughout the periods analyzed. Beginning at 2,487 million USD in early 2020, it rose steadily each year: 3,278 million USD (2021), 4,535 million USD (2022), 5,586 million USD (2023), culminating at 8,082 million USD in early 2024 and 9,034 million USD by early 2025. The continuous increase in equity suggests positive retained earnings, additional capital contributions, or asset revaluations, strengthening the company’s net worth.

Invested capital

The invested capital increased at a diminishing yet overall positive rate across the reported years. Starting at 5,129 million USD in early 2020, it grew to 6,061 million USD by early 2021, then to 7,706 million USD in early 2022. Growth continued more slowly in subsequent years, reaching 8,178 million USD (2023), 8,631 million USD (2024), and 9,420 million USD (2025). This upward trend reflects increased resources committed to the business, likely in both equity and debt financing.

Summary of financial position trends

The increasing stockholders’ equity alongside a rising total debt and leases balance indicates that the company has been expanding its capital structure with a mixture of equity and debt. The growth in invested capital parallels these changes, showing an overall expansion in resource deployment. Notably, debt growth accelerated in later years, emphasizing a possible strategic leveraging to support business growth. The consistent equity increase suggests a solid financial foundation and potential profitability or capital inflows contributing to retained earnings and equity balance. These patterns demonstrate steady financial growth, with a balanced but gradually increasing leverage position.

Economic Profit Trends

The economic profit has consistently remained negative throughout the observed periods, indicating that the company has not generated returns above its cost of capital. Starting at -981 million US dollars in early 2020, the loss decreased slightly to -948 million in 2021 and further improved to -801 million by 2022. However, the economic profit worsened significantly in 2023 to -1277 million, before improving again to -805 million in 2024 and -748 million in 2025. This pattern reflects a challenging environment with fluctuations in profit performance, but with some recovery seen towards the end of the analyzed timeframe.

Invested Capital Growth

The invested capital has shown a steady and continuous increase over the six-year span. Beginning at 5129 million US dollars in 2020, it rose progressively each year, reaching 6061 million in 2021, 7706 million in 2022, and continuing upwards to 8178 million in 2023, 8631 million in 2024, and 9420 million in 2025. This consistent expansion suggests ongoing investment in assets or resources, signaling a growth-oriented approach to capital deployment by the company.

Economic Spread Ratio Developments

The economic spread ratio, indicative of the premium of return over the cost of capital, has remained negative throughout the period. Initially recorded at -19.13% in 2020, it improved incrementally to -15.65% in 2021 and -10.39% in 2022. There was a setback in 2023, where the ratio declined to -15.62%, followed by improvements to -9.32% in 2024 and -7.94% in 2025. The overall trend suggests a reduction in the magnitude of negative spread, which aligns with partial mitigation of losses relative to capital cost but still indicates performance below desired economic returns.

The data reveals several key trends in the financial performance over the examined periods. Adjusted revenues show a consistent upward trajectory, increasing steadily from approximately 3,987 million US dollars in early 2020 to 8,866 million US dollars by early 2025. This growth suggests a strong expansion in the company's top-line performance.

Despite the rising revenues, economic profit remains negative throughout all the periods. There is some fluctuation observed, with the economic loss starting at -981 million US dollars in 2020 and slightly improving to -748 million US dollars by 2025. However, the loss widened significantly in the 2023 period, reaching -1,277 million US dollars before improving again over the subsequent years. This pattern indicates ongoing challenges in converting revenue growth into positive economic profit.

The economic profit margin follows a similar trend to economic profit. It starts at a negative 24.61% in 2020 and generally demonstrates improvement over the later periods, dropping in magnitude to -8.43% by 2025. The margin also shows a marked deterioration in 2023, aligning with the spike in economic losses during that period, but recovers in the following years.

Overall, while revenue growth is robust and continuous, the company experiences consistent economic losses. The improving economic profit margin suggests enhanced operational efficiency or cost management over time, but economic profit remains negative, indicating that the firm has yet to achieve positive returns after accounting for all costs over these years. The temporary setback in 2023 highlights potential volatility or one-time impacts affecting profitability during that period.