Introduction
Workday is a leading enterprise platform that helps organizations manage their most important assets – their people and money. Workday provides more than 10,000 organizations with AI-powered cloud solutions to help solve some of today’s most complex business challenges, including supporting and empowering their workforce, managing their finances and spend in an ever-changing environment, and planning for the unexpected.
Workday delivers applications for financial management, spend management, human capital management, planning, and analytics.
Asset structure analysis
Workday’s fiscal year ends on January 31, and references to fiscal 2024 refers to the year ended on January 31, 2024.
Workday’s total assets were $16.45 billion and $13.5 billion in 2024 and 2023 ,respectively.
Workday’s total assets increased by 22% year-on-year in 2024.
Cash and cash equivalents were $2 billion and $1.9 billion in 2024 and 2023 ,respectively.
Marketable securities were $5.8 billion and $4.2 billion in 2024 and 2023, respectively.
In 2024, cash and cash equivalents and marketable securities totaled $7.8 billion, accounting for 47.4% of total assets.
Liquidity and solvency analysis
Workday’s current assets in 2024 were $9.9 billion.
Workday’s current liabilities in 2024 were $5 billion.
Among current liabilities, unearned revenue has reached $4.06 billion. unearned revenue does not need to be repaid, but only needs to provide services to customers. We believe that unearned revenue should be deducted from current liabilities to calculate the current ratio.
Such current ratio is 10.5. In fiscal 2024, current assets covered current liabilities 10.5 times.
Total liabilities were $8.4 billion in fiscal year 2024. This amount is less than the amount of current assets, so the company’s solvency is very strong.
Profitability Analysis
Workday’s revenues were $7.26 billion, $6.2 billion, and $5.1 billion in 2024, 2023, and 2022, respectively.
Revenues in fiscal 2024 increased by 17% year-on-year.
Revenues in fiscal 2023 increased by 21.6% year-on-year.
The company’s operating profit was $180 million, -$220 million, and -$116 million in 2024, 2023, and 2022, respectively.
Over the past three years, Workday’s profitability has been very poor because stock-based compensation was included in the total cost.
In the cash flow statement, Workday’s stock compensation reached $1.4 billion, $1.3 billion, and $1.1 billion in fiscal year 2024, fiscal year 2023, and fiscal year 2022 ,respectively.
Without stock compensation, Workday’s payroll costs would likely be higher, profitability would still be poor, and cash flow would be less.
In addition, stock compensation will reduce earnings per share and harm shareholders.
Cash flow analysis
Net cash provided by operating activities was $2.15 billion, $1.66 billion, and $1.65 billion in 2024, 2023, and 2022, respectively.
Capital expenditures were $230 million, $360 million, and $270 million in 2024, 2023, and 2022, respectively.
Free cash flow was $1.92 billion, $1.4 billion, and $1.38 billion in 2024, 2023, and 2022, respectively.
Summary
Workday’s cash flow is good, but the advantage is offset by annual stock-based compensation.
Stock compensation is a powerful factor when valuing a company.
We estimate that $25 billion is a reasonable price.
Disclaimer: The content is for reference only and does not constitute investment advice.
