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 – 20.01% × 12,129 = -1,156
The analysis of economic value added indicates a persistent state of economic loss over the six-year period ending January 31, 2026. While operating profitability has shown significant improvement, the scale of invested capital relative to the high cost of capital prevents the company from achieving a positive economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a general upward trajectory, increasing from 84 million in 2021 to 1,270 million in 2026. A significant volatility is noted in 2023, where NOPAT dropped to 102 million, before recovering and growing consistently through 2026.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the observed period, fluctuating within a narrow range between 20.01% and 20.84%. This consistently high hurdle rate places substantial pressure on the company to generate high operating returns to achieve value creation.
- Invested Capital
- A continuous increase in invested capital is observed, growing from 6,061 million in 2021 to 12,129 million by 2026. This steady expansion suggests ongoing investment in the company's infrastructure and operations, which simultaneously increases the total capital charge required to reach a break-even economic profit.
- Economic Profit Performance
- Economic profit remained negative across all reporting periods, indicating that the returns generated were insufficient to cover the cost of the capital employed. The most pronounced economic loss occurred in 2023, reaching negative 1,575 million, coinciding with the decline in NOPAT. Despite the substantial growth in operating profit by 2026, the economic profit remained negative at 1,156 million, as the expansion of the invested capital base effectively neutralized the improvements in operating performance.
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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$12,129 million in 2026. The rate of increase accelerated between 2024 and 2026, suggesting a more aggressive investment strategy or significant acquisitions during that period. The growth in invested capital was most pronounced between 2025 and 2026, driven by the continued increase in debt despite a concurrent decrease in stockholders’ equity.
The composition of invested capital has shifted over the period. While stockholders’ equity initially drove a significant portion of the growth, debt financing became a more prominent contributor in later years. The decline in stockholders’ equity in 2026, coupled with continued debt increases, suggests a potential change in the company’s capital structure and risk profile.
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Cost of Capital
Workday Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 38,817) | 38,817) | ÷ | 42,551) | = | 0.91 | 0.91 | × | 21.64% | = | 19.74% | ||
| Debt3 | 2,900) | 2,900) | ÷ | 42,551) | = | 0.07 | 0.07 | × | 3.80% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 834) | 834) | ÷ | 42,551) | = | 0.02 | 0.02 | × | 4.19% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 42,551) | 1.00 | 20.01% | ||||||||||
Based on: 10-K (reporting date: 2026-01-31).
1 US$ 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 | × | 21.64% | = | 20.62% | ||
| 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 | 20.76% | ||||||||||
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 | × | 21.64% | = | 20.71% | ||
| 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 | 20.84% | ||||||||||
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 | × | 21.64% | = | 20.33% | ||
| 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 | 20.51% | ||||||||||
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 | × | 21.64% | = | 20.61% | ||
| 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 | 20.65% | ||||||||||
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 | × | 21.64% | = | 20.61% | ||
| 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 | 20.72% | ||||||||||
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 | (1,156) | (1,096) | (1,125) | (1,575) | (1,086) | (1,172) | |
| Invested capital2 | 12,129) | 9,420) | 8,631) | 8,178) | 7,706) | 6,061) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -9.53% | -11.63% | -13.04% | -19.26% | -14.09% | -19.34% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | -0.37% | 1.46% | 1.13% | 1.92% | 4.78% | 6.61% | |
| Adobe Inc. | — | 13.11% | 0.83% | 1.00% | 6.49% | 8.87% | |
| AppLovin Corp. | — | 28.42% | 0.70% | -20.45% | -26.69% | -30.02% | |
| Cadence Design Systems Inc. | — | -1.28% | -2.88% | 7.17% | 6.58% | 6.80% | |
| Datadog Inc. | — | -8.84% | -9.53% | -6.05% | -11.80% | -3.98% | |
| International Business Machines Corp. | — | -0.75% | -7.59% | -3.55% | -11.30% | -6.16% | |
| Intuit Inc. | 7.82% | -2.91% | -6.59% | -8.64% | -7.53% | 0.10% | |
| Microsoft Corp. | 8.85% | 5.59% | 7.48% | 10.52% | 18.51% | 27.55% | |
| Oracle Corp. | -3.89% | -8.03% | -7.89% | -8.69% | -7.67% | 0.54% | |
| Palantir Technologies Inc. | — | 41.65% | -12.27% | -8.99% | -32.73% | -40.19% | |
| Palo Alto Networks Inc. | -12.81% | -3.84% | 5.35% | 11.48% | 3.51% | -5.19% | |
| Salesforce Inc. | -7.05% | -12.48% | -14.29% | -17.73% | -14.61% | -12.46% | |
| ServiceNow Inc. | — | 2.67% | 5.94% | 5.24% | 0.73% | 1.95% | |
| Synopsys Inc. | — | -12.42% | -8.17% | -7.47% | -0.87% | -6.90% | |
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 × -1,156 ÷ 12,129 = -9.53%
4 Click competitor name to see calculations.
Analysis of the economic value added components reveals a persistent state of negative economic profit coupled with a consistent expansion of the invested capital base. While the entity has not yet achieved positive economic value creation, a progressive improvement in the economic spread ratio suggests a narrowing gap between the return on capital and the cost of capital.
- Economic Profit Trends
- Economic profit remained negative throughout the analyzed period, oscillating between -1,086 million and -1,575 million. A notable decline occurred in 2023, where economic profit reached its lowest point of -1,575 million, before recovering and stabilizing between -1,096 million and -1,156 million from 2024 through 2026.
- Invested Capital Growth
- Invested capital exhibited a continuous upward trajectory, increasing from 6,061 million in 2021 to 12,129 million by 2026. This growth represents a substantial expansion of the capital base, indicating significant and ongoing investment in the organization's assets and operations.
- Economic Spread Ratio Performance
- The economic spread ratio remained negative over the entire timeframe, confirming that returns were insufficient to cover the cost of capital. However, after reaching a low of -19.26% in 2023, the ratio improved steadily each subsequent year, reaching -9.53% by 2026. This trend demonstrates a consistent improvement in capital efficiency, as the rate of economic loss relative to invested capital has decreased significantly.
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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 | (1,156) | (1,096) | (1,125) | (1,575) | (1,086) | (1,172) | |
| 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 | -11.47% | -12.36% | -14.52% | -23.63% | -19.10% | -25.24% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | -0.26% | 0.94% | 0.64% | 0.99% | 2.30% | 3.39% | |
| Adobe Inc. | — | 11.86% | 0.94% | 1.25% | 7.56% | 11.05% | |
| AppLovin Corp. | — | 29.21% | 0.68% | -27.99% | -49.97% | -60.11% | |
| Cadence Design Systems Inc. | — | -1.92% | -4.41% | 7.14% | 6.57% | 6.90% | |
| Datadog Inc. | — | -5.24% | -8.65% | -3.79% | -8.16% | -3.16% | |
| International Business Machines Corp. | — | -1.33% | -13.42% | -6.31% | -19.56% | -11.71% | |
| Intuit Inc. | 9.55% | -3.77% | -10.13% | -14.15% | -14.49% | 0.13% | |
| Microsoft Corp. | 14.86% | 8.34% | 10.45% | 11.98% | 17.74% | 22.86% | |
| Oracle Corp. | -9.55% | -16.10% | -15.00% | -16.81% | -14.08% | 1.07% | |
| Palantir Technologies Inc. | — | 21.57% | -10.64% | -4.83% | -54.91% | -66.20% | |
| Palo Alto Networks Inc. | -35.61% | -4.55% | 5.68% | 11.39% | 4.09% | -6.98% | |
| Salesforce Inc. | -15.10% | -26.94% | -33.02% | -44.83% | -40.55% | -28.58% | |
| ServiceNow Inc. | — | 2.94% | 4.89% | 4.21% | 0.59% | 1.68% | |
| Synopsys Inc. | — | -72.47% | -13.69% | -10.54% | -1.23% | -10.97% | |
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 × -1,156 ÷ 10,086 = -11.47%
3 Click competitor name to see calculations.
The analysis of the company's economic performance between January 31, 2021, and January 31, 2026, reveals a persistent state of negative economic profit. This indicates that the company's net operating profit after taxes has consistently failed to cover its cost of capital over the observed period. However, a divergence is observable between the absolute economic profit and the economic profit margin, as the latter shows a general trend toward improvement.
- Revenue Trajectory
- Adjusted revenues demonstrate consistent and strong growth throughout the period. Revenues increased from 4,646 million US dollars in 2021 to 10,086 million US dollars by 2026, representing more than a twofold increase in the top line. This steady expansion provides the scale necessary to amortize capital costs over a larger revenue base.
- Economic Profit Trends
- Absolute economic profit has remained negative and relatively volatile, without a clear trajectory toward break-even. The most significant decline occurred in 2023, where economic profit dropped to -1,575 million US dollars. Despite a subsequent recovery, the figure ended the period at -1,156 million US dollars in 2026, remaining close to the -1,172 million US dollars reported in 2021.
- Economic Profit Margin Analysis
- The economic profit margin exhibits a narrowing trend, shifting from -25.24% in 2021 to -11.47% in 2026. While the absolute economic loss has remained somewhat stagnant, the rapid growth in adjusted revenues has effectively diluted the impact of these losses relative to total turnover. This suggests an improvement in economic efficiency and a gradual reduction in the gap between actual returns and the required cost of capital.
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