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Workday, Inc. revolutionizes how businesses manage their most vital resources—people and finances—through cutting-edge cloud applications that streamline operations and enhance decision-making. As a prominent player in the enterprise software industry, Workday is renowned for its innovative Human Capital Management and financial management solutions that serve diverse sectors worldwide. With a strong market presence and a commitment to continuous innovation, I explore whether Workday’s current fundamentals and growth prospects justify its valuation in today’s competitive landscape.
Table of contents
Business Model & Company Overview
Workday, Inc., founded in 2005 and headquartered in Pleasanton, California, stands as a leading provider in the enterprise cloud applications sector. Its comprehensive ecosystem integrates financial management, human capital management, and analytics solutions, enabling organizations to streamline operations and gain real-time insights across diverse industries such as healthcare, education, and retail. This cohesive platform supports clients worldwide, reflecting Workday’s commitment to simplifying complex business processes.
The company’s revenue engine balances scalable cloud software with recurring service subscriptions, driving steady cash flow from global markets including the Americas, Europe, and Asia. Workday’s ability to embed machine learning and augmented analytics into its offerings enhances operational efficiency for clients. Its robust presence and continuous innovation form a strong economic moat, positioning it as a pivotal force shaping the future of enterprise software.
Financial Performance & Fundamental Metrics
I will analyze Workday, Inc.’s income statement, key financial ratios, and dividend payout policy to provide a clear view of its fundamental strength.
Income Statement
The table below presents Workday, Inc.’s key income statement figures for the last five fiscal years, expressed in USD.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Revenue | 4.32B | 5.14B | 6.22B | 7.26B | 8.45B |
| Cost of Revenue | 1.20B | 1.43B | 1.71B | 1.77B | 2.07B |
| Operating Expenses | 3.37B | 3.83B | 4.73B | 5.31B | 5.96B |
| Gross Profit | 3.12B | 3.71B | 4.51B | 5.49B | 6.38B |
| EBITDA | 87.3M | 377M | 206M | 752M | 1.08B |
| EBIT | -206M | 33.0M | -158M | 470M | 752M |
| Interest Expense | 68.8M | 17.0M | 102M | 114M | 114M |
| Net Income | -282M | 29.0M | -367M | 1.38B | 526M |
| EPS | -1.19 | 0.12 | -1.44 | 5.28 | 1.98 |
| Filing Date | 2021-03-02 | 2022-02-28 | 2023-02-27 | 2024-03-08 | 2025-03-11 |
Income Statement Evolution
From 2021 to 2025, Workday, Inc. exhibited strong revenue growth of 95.6%, reaching $8.45B in 2025. Gross profit also increased favorably by 16.2% year-over-year to $6.38B, maintaining a solid gross margin of 75.5%. Despite a significant 60% rise in EBIT, net margin declined by 67.26% in the last year, reflecting some margin pressure despite overall margin improvements during the period.
Is the Income Statement Favorable?
The fiscal year 2025 shows a mixed income statement with $8.45B revenue and $526M net income, resulting in a 6.23% net margin rated as favorable. Interest expense remains well-controlled at 1.35% of revenue, supporting a neutral EBIT margin of 8.9%. While EPS dropped by 62.57% year-over-year, the overall fundamentals remain generally favorable, with 78.57% of key metrics indicating positive performance.
Financial Ratios
The table below presents key financial ratios for Workday, Inc. (WDAY) over the last five fiscal years, illustrating profitability, valuation, liquidity, leverage, and efficiency metrics:
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | -6.5% | 0.6% | -5.9% | 19.0% | 6.2% |
| ROE | -8.6% | 0.6% | -6.6% | 17.1% | 5.8% |
| ROIC | -4.4% | -1.7% | -2.5% | 1.6% | 2.7% |
| P/E | -199 | 2157 | -126 | 55 | 132 |
| P/B | 17.1 | 13.8 | 8.3 | 9.4 | 7.7 |
| Current Ratio | 1.1 | 1.0 | 1.7 | 1.9 | 1.9 |
| Quick Ratio | 1.1 | 1.0 | 1.7 | 1.9 | 1.9 |
| D/E | 0.68 | 0.46 | 0.58 | 0.41 | 0.37 |
| Debt-to-Assets | 26% | 20% | 24% | 20% | 19% |
| Interest Coverage | -3.6 | -6.8 | -2.2 | 1.6 | 3.6 |
| Asset Turnover | 0.50 | 0.49 | 0.46 | 0.44 | 0.47 |
| Fixed Asset Turnover | 3.1 | 3.7 | 4.3 | 4.8 | 5.4 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Evolution of Financial Ratios
Over the period, Workday, Inc.’s Return on Equity (ROE) showed a recovery from negative values in earlier years to 5.82% in 2025, though still considered unfavorable. The Current Ratio improved from near 1.0 in 2022 to about 1.85 in 2025, indicating better liquidity. Meanwhile, the Debt-to-Equity Ratio steadily decreased from 0.68 in 2021 to 0.37 in 2025, reflecting reduced leverage and enhanced financial stability.
Are the Financial Ratios Favorable?
In 2025, Workday’s profitability ratios such as net margin (6.23%) were neutral, while ROE (5.82%) and return on invested capital (2.73%) were unfavorable, suggesting modest profitability. Liquidity ratios, including current and quick ratios at 1.85, are favorable, indicating solid short-term financial health. Leverage metrics, with debt-to-equity at 0.37 and debt-to-assets at 18.7%, are also favorable, complemented by a strong interest coverage ratio of 6.6. However, valuation multiples like price-to-earnings (132.15) and price-to-book (7.69) are unfavorable, and asset turnover of 0.47 is weak. Overall, the ratio assessment is neutral with balanced favorable and unfavorable indicators.
Shareholder Return Policy
Workday, Inc. does not pay dividends, reflecting a focus on reinvestment and growth rather than immediate shareholder payouts. The company has maintained a zero dividend payout ratio and yield consistently, aligning with its strategy to prioritize operational expansion and innovation.
While no dividends are distributed, Workday engages in share buybacks, supporting shareholder value through capital return mechanisms other than dividends. This approach appears consistent with sustaining long-term value creation, balancing growth investments and shareholder returns prudently.
Score analysis
The following radar chart presents an overview of Workday, Inc.’s key financial scores assessing valuation and performance metrics:
Workday shows a favorable discounted cash flow score of 4, indicating reasonable valuation based on future cash flows. Return on equity and assets scores are moderate at 3 each, reflecting average profitability efficiency. However, debt to equity is moderate at 2, while price-to-earnings and price-to-book scores are very unfavorable at 1, suggesting valuation concerns compared to peers.
Analysis of the company’s bankruptcy risk
Workday’s Altman Z-Score places it firmly in the safe zone, indicating a low risk of bankruptcy and solid financial stability:
Is the company in good financial health?
The Piotroski diagram below illustrates Workday’s financial strength based on nine fundamental criteria:
With a Piotroski score of 6, Workday is classified as having average financial health, showing reasonable strength but with room for improvement in its financial fundamentals.
Competitive Landscape & Sector Positioning
This sector analysis will examine Workday, Inc.’s strategic positioning, revenue breakdown, key products, main competitors, and competitive advantages. I will assess whether Workday holds a competitive advantage within the software application industry.
Strategic Positioning
Workday, Inc. maintains a concentrated product portfolio focused on cloud-based enterprise applications, primarily subscription services generating $7.7B in FY2025, complemented by $728M from professional services. Geographically, it is predominantly US-centered with $6.3B revenue, while also expanding internationally with $2.1B non-US revenue in FY2025.
Revenue by Segment
This pie chart illustrates Workday, Inc.’s revenue distribution by segment for the fiscal year 2025, highlighting the contribution of subscription and professional services.
Subscription Services dominate Workday’s revenue with $7.7B in 2025, showing a strong and steady growth trend from $1.3B in 2016. Professional Services, while much smaller at $728M in 2025, have also grown steadily over the years. The company’s business increasingly concentrates on subscription services, reflecting a scalable recurring revenue model and signaling robust demand for its cloud offerings.
Key Products & Brands
The table below summarizes Workday, Inc.’s key products and brands with their descriptions:
| Product | Description |
|---|---|
| Subscription Services | Enterprise cloud applications including financial management, human capital management (HCM), planning, analytics, and reporting solutions delivered via subscription. |
| Professional Services | Services supporting implementation, integration, and optimization of Workday’s cloud applications to enhance customer experience and solution effectiveness. |
Workday’s business is primarily driven by subscription services offering cloud-based enterprise applications, complemented by professional services that support client adoption and usage. Subscription services represent the majority of revenue, reflecting strong recurring income.
Main Competitors
There are 33 competitors in total, with the table below listing the top 10 leaders by market capitalization:
| Competitor | Market Cap. |
|---|---|
| Salesforce, Inc. | 242.5B |
| Shopify Inc. | 209.6B |
| AppLovin Corporation | 209.0B |
| Intuit Inc. | 175.2B |
| Uber Technologies, Inc. | 172.2B |
| ServiceNow, Inc. | 153.0B |
| Cadence Design Systems, Inc. | 84.5B |
| Snowflake Inc. | 73.4B |
| Autodesk, Inc. | 61.2B |
| Workday, Inc. | 54.9B |
Workday, Inc. ranks 10th among its 33 competitors, holding about 21% of the market cap of the sector leader, Salesforce, Inc. The company’s market cap is below the average of the top 10 competitors (143.6B) but remains above the sector median (18.8B). There is a 21.14% gap between Workday and the next larger competitor, Autodesk, highlighting a moderate distance to the next competitor above.
Comparisons with competitors
Check out how we compare the company to its competitors:
Does WDAY have a competitive advantage?
Workday, Inc. currently does not present a strong competitive advantage as its ROIC is below its WACC, indicating value destruction despite a growing ROIC trend. The overall moat status is slightly unfavorable, reflecting challenges in consistently generating excess returns above its cost of capital.
Looking ahead, Workday’s future outlook includes opportunities from expanding its enterprise cloud applications, particularly in financial management, human capital management, and augmented analytics across diverse industries and international markets. Continued innovation and geographic expansion may support improved profitability and competitive positioning.
SWOT Analysis
This SWOT analysis highlights key internal and external factors influencing Workday, Inc.’s strategic positioning and growth prospects.
Strengths
- Strong 75.5% gross margin
- Robust 16.35% revenue growth in 2025
- Leading cloud enterprise applications provider
Weaknesses
- High PE ratio at 132.15 indicating expensive valuation
- Moderate ROE at 5.82% below industry standards
- Negative recent EPS growth -62.57%
Opportunities
- Expanding international revenue stream
- Growing demand for AI and augmented analytics in enterprise software
- Potential to increase market share in financial and HR management
Threats
- Intense competition in cloud software sector
- Economic uncertainty impacting IT budgets
- Risk of value destruction as ROIC is below WACC
Overall, Workday demonstrates strong revenue growth and market leadership but faces challenges in profitability ratios and valuation. Its strategy should focus on improving operational efficiency and capitalizing on global expansion and technology trends while mitigating competitive and economic risks.
Stock Price Action Analysis
The weekly stock chart for Workday, Inc. (WDAY) over the past 12 months illustrates significant price fluctuations and a clear directional movement:
Trend Analysis
Over the past year, WDAY’s stock price decreased by 35.17%, indicating a bearish trend with deceleration in the decline. The price moved from a high of 291.92 to a low of 186.86, showing considerable volatility with a standard deviation of 19.87. Recent months show continued bearish momentum at a slope of -3.39.
Volume Analysis
Trading volume has been increasing overall, with 1.42B shares traded in total. Seller volume (753M) slightly exceeds buyer volume (659M), representing 46.44% buyer participation. In the recent period, seller dominance intensified to 59.78%, suggesting cautious or negative investor sentiment amid rising market activity.
Target Prices
The consensus target prices for Workday, Inc. (WDAY) indicate a positive outlook from analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 320 | 235 | 274.47 |
Analysts expect Workday’s stock to trade between 235 and 320, with an average consensus price of approximately 274. This reflects moderate confidence in the company’s growth potential.
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Analyst & Consumer Opinions
This section examines the latest analyst ratings and consumer feedback to provide insight into Workday, Inc.’s market perception.
Stock Grades
Here is the latest table presenting Workday, Inc.’s stock grades from recognized financial institutions:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Maintain | Overweight | 2026-01-12 |
| RBC Capital | Maintain | Outperform | 2026-01-05 |
| Guggenheim | Maintain | Buy | 2025-11-26 |
| Keybanc | Maintain | Overweight | 2025-11-26 |
| Morgan Stanley | Maintain | Equal Weight | 2025-11-26 |
| Needham | Maintain | Buy | 2025-11-26 |
| UBS | Maintain | Neutral | 2025-11-26 |
| Wells Fargo | Maintain | Overweight | 2025-11-26 |
| Citigroup | Maintain | Neutral | 2025-11-26 |
| DA Davidson | Maintain | Neutral | 2025-11-26 |
The overall trend shows a predominance of positive assessments such as Buy and Overweight, with several Neutral and Equal Weight grades reflecting a cautious balance among analysts. No rating changes were made in the most recent updates.
Consumer Opinions
Workday, Inc. enjoys a generally favorable reputation among its users, with many praising its robust capabilities and customer service.
| Positive Reviews | Negative Reviews |
|---|---|
| Intuitive interface and seamless integration | Occasional system slowdowns during peak use |
| Excellent customer support and training | High pricing not accessible for smaller firms |
| Comprehensive HR and finance features | Steep learning curve for new users |
| Regular updates improving functionality | Limited customization in some modules |
Overall, consumers appreciate Workday’s comprehensive solutions and strong support but express concerns about cost and complexity, which may challenge smaller businesses or new users.
Risk Analysis
Below is a table summarizing key risks associated with Workday, Inc., highlighting their probability and potential impact:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Valuation Risk | Elevated PE ratio (132.15) and PB ratio (7.69) suggest stock might be overvalued. | High | High |
| Profitability Risk | Low ROE (5.82%) and ROIC (2.73%) indicate weak profitability and returns. | Medium | Medium |
| Market Volatility | Beta of 1.142 shows exposure to market fluctuations, influencing stock price variability. | Medium | Medium |
| Competitive Risk | Operating in a highly competitive software industry with constant innovation requirements. | Medium | High |
| Liquidity Risk | Favorable current and quick ratios (1.85) mitigate short-term liquidity concerns. | Low | Low |
| Dividend Risk | No dividend payments reduce income generation for investors seeking yield. | High | Low |
Workday’s high valuation multiples combined with moderate profitability metrics pose the most significant risks. Despite a strong liquidity position and safe bankruptcy risk (Altman Z-Score 4.34), investors should be cautious about overpaying amid competitive pressures and market volatility.
Should You Buy Workday, Inc.?
Workday, Inc. appears to be improving its operational efficiency with growing profitability, though its competitive moat could be seen as slightly unfavorable due to value destruction. Despite a manageable leverage profile, the overall rating suggests a moderate investment case with a B- classification.
Strength & Efficiency Pillars
Workday, Inc. exhibits solid financial health with an Altman Z-Score of 4.34, comfortably placing it in the safe zone, suggesting low bankruptcy risk. Its Piotroski score of 6 indicates an average but stable financial strength. The company maintains a favorable gross margin of 75.5% and a positive net margin of 6.23%, reflecting decent profitability. While the return on equity (5.82%) and return on invested capital (2.73%) lag behind its weighted average cost of capital (8.89%), signaling it is not currently a value creator, Workday shows healthy liquidity with a current ratio of 1.85 and low leverage (debt-to-equity of 0.37), reinforcing its financial stability.
Weaknesses and Drawbacks
Valuation metrics present significant concerns for potential investors. Workday’s price-to-earnings ratio stands at an elevated 132.15, and price-to-book ratio at 7.69, both flagged as very unfavorable, indicating the stock trades at a substantial premium that may imply overvaluation risk. Additionally, its return metrics falling below WACC suggest value destruction, which could weigh on investor returns. Despite low debt levels, the bearish stock trend with a 35.17% overall price decline and recent seller dominance (only 40.22% buyer volume) signals market pressure and short-term headwinds that may challenge upside momentum.
Our Verdict about Workday, Inc.
Workday’s long-term fundamental profile appears mixed but leans toward unfavorable due to its valuation and returns below cost of capital. Despite the company’s solid financial health and profitability stability, the bearish technical trend combined with recent seller dominance suggests caution. Investors might consider a wait-and-see approach for a more attractive entry point, as the stock could face continued short-term volatility despite its operational strengths.
Disclaimer: This content is for informational purposes only and does not constitute financial, investment, or other professional advice. Investing in financial markets involves a significant risk of loss, and past performance is not indicative of future results.
Additional Resources
- Workday, Inc. (WDAY): A Bull Case Theory – Yahoo Finance (Jan 20, 2026)
- What you need to know ahead of Workday’s earnings release – MSN (Jan 24, 2026)
- Workday (WDAY) Valuation Check As C$1b Canada Expansion Plan Targets AI And Long Term Growth – Sahm (Jan 23, 2026)
- Workday, Inc. (WDAY): Investor Outlook On A 48.86% Potential Upside – DirectorsTalk Interviews (Jan 22, 2026)
- Workday to Invest CAD $1 Billion in Canada Over Five Years (2026-01-20) – Seeking Alpha (Jan 20, 2026)
For more information about Workday, Inc., please visit the official website: workday.com
