Workday Inc. (NASDAQ:WDAY)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values demonstrate a significant overall improvement from a negative figure of -113 million USD in early 2020 to a positive peak of 860 million USD projected in early 2025. There was a notable transition from negative to positive territory between 2020 and 2021, reaching 84 million USD in 2021. Subsequent years show fluctuations, with a notable dip to 102 million USD in 2023 after peaking at 506 million USD in 2022, before rising again to 673 million USD in 2024 and 860 million USD in 2025. This indicates a general trend of operational profitability gaining momentum despite some volatility.

Cost of Capital

The cost of capital remains relatively stable throughout the period, hovering around the 17% mark. Slight variations are observed, with the lowest at 16.81% in 2023 and the highest at 17.07% in 2024. This consistency suggests a steady risk and capital expense environment at the company over the observed years.

Invested Capital

Invested capital shows a continuous upward trend, increasing from 5,129 million USD in 2020 to an estimated 9,420 million USD by 2025. The growth appears steady and consistent year over year, reflecting ongoing capital deployment in the business, which may support future expansion or operational activities.

Economic Profit

Economic profit remains negative throughout the entire period, indicating that the returns generated after covering the cost of capital have not yet reached a positive threshold. Despite some fluctuations, where losses decrease from -979 million USD in 2020 to a slightly improved -743 million USD in 2025, the metric points to continued economic value destruction. The best economic profit performance occurs in 2022 and 2024, with the least negative values at -797 million USD and -800 million USD respectively, while a pronounced dip is observed in 2023 with economic profit falling to -1,273 million USD.

Summary

Overall, the data reveals a company that has substantially improved its net operating profits over the five-year horizon, though it still faces challenges in generating positive economic profit. The stability in cost of capital and consistent increase in invested capital indicate a potentially deliberate strategy to enhance operational capacity or market footprint. However, the continued negative economic profit suggests that the investments have not yet yielded returns exceeding capital costs, highlighting a need to scrutinize operational efficiency and investment returns closely going forward.

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

The economic profit shows a consistently negative value throughout the years, indicating ongoing economic losses. The losses were most pronounced in the year ending January 31, 2023, at -1,273 million US dollars. After this peak loss, the negative economic profit improved somewhat, declining to -800 million in 2024 and further to -743 million in 2025, suggesting a reduction in losses over the last two years.

Invested Capital

There is a clear upward trend in invested capital over the observed period. Starting from 5,129 million US dollars in 2020, it increased steadily each year, reaching 9,420 million by 2025. This pattern indicates continued investment and expansion of the capital base over time.

Economic Spread Ratio

The economic spread ratio, which measures the return spread over capital cost, remains negative across all years, suggesting returns are below the cost of capital. The ratio improves slightly from -19.08% in 2020 to -7.88% in 2025. This indicates a gradual reduction in the negative spread but still reflects unprofitable economic returns up to 2025.

The financial data reveals several notable trends over the analyzed periods. First, adjusted revenues show a consistent and significant upward trajectory. From January 31, 2020 to January 31, 2025, adjusted revenues increase steadily each year, rising from approximately $3.99 billion to $8.87 billion. This indicates strong top-line growth and suggests effective revenue generation and market expansion over the timeframe.

Despite the robust growth in revenues, economic profit remains negative throughout all periods, indicating that the company has not achieved positive economic profitability during these years. The economic profit values fluctuate but do not display a clear improving or deteriorating trend. Specifically, after a slight decrease from -$979 million in 2020 to -$797 million in 2022, economic profit significantly worsened to -$1,273 million in 2023 before improving again in subsequent years, reaching -$743 million by January 31, 2025. This pattern suggests variability in cost management or other factors impacting economic profits, with some recovery evident in the latter years.

Regarding the economic profit margin, a similar pattern emerges. The margin is consistently negative but shows an improving trend over time. Starting at -24.54% in 2020, the margin gradually becomes less negative, reaching -8.38% in 2025. Although still negative, this trend indicates that the company is progressively narrowing the gap between revenues and economic costs, improving capital efficiency or operational effectiveness over the years.

Adjusted Revenues

Steady year-over-year growth with an increase of over 120% from 2020 to 2025.

Economic Profit

Persistently negative values with notable variation; a trough in 2023 followed by partial recovery.

Economic Profit Margin

Consistently negative but improving trend, moving from -24.54% in 2020 to -8.38% in 2025, indicating enhanced profitability relative to revenue.

In summary, the company demonstrates strong revenue growth alongside ongoing challenges in achieving positive economic profit. Nevertheless, the improving economic profit margin suggests progress in operational performance or cost control, potentially pointing toward better profitability in future periods if the trends continue.