Workday, Inc. (WDAY) DCF Valuation & Fundamental Primer
Workday, Inc. (WDAY) currently trades at $188.58 with an enterprise value of $53.05B. Our proprietary institutional model rates Workday, Inc. at 67/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 15.8% vs. historical growth of 16.6% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Workday, Inc. (WDAY) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Workday, Inc. (WDAY) 3-Scenario DCF Valuation Range
Institutional Software Quality Scorecard (67/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Elevated equity dilution; SBC consumes substantial operating cash flow
High-quality software margins with healthy balanced growth and profitability
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 730% of EBIT driven by upfront annual collections
- Healthy unit economics: 75.0% gross margin
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 19.0% of revenue ($1.52B)
Reverse-DCF Solver: What Growth is Priced Into WDAY?
Market implies 15.8% annual revenue growth over next 5 years, in line with company run-rate.
Workday, Inc. (WDAY) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $8.00B | $8.00B | $9.33B | $10.87B | $12.67B | $14.77B | $17.22B |
| Gross Profit | $6.00B | $6.00B | $6.99B | $8.15B | $9.50B | $11.08B | $12.91B |
| Operating Income (EBIT) | $300.0M | $300.0M | $349.7M | $407.7M | $475.2M | $553.9M | $645.7M |
| Stock-Based Compensation (SBC) | $1.52B | $1.52B | $1.77B | $2.06B | $2.41B | $2.81B | $3.27B |
| Unlevered Free Cash Flow (FCF) | $2.19B | $2.19B | $2.55B | $2.97B | $3.47B | $4.04B | $4.71B |
| SBC-Adjusted True Cash Flow | $670.0M | $669.6M | $780.6M | $909.9M | $1.06B | $1.24B | $1.44B |
Core Enterprise SaaS & ERP Peer Comparables Matrix
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| ServiceNow, Inc. | NOW | $192.40B | $10.98B | 79.5% | 31.5% | 54.0% | 15.8% | 17.2× |
| Oracle Corporation | ORCL | $13.08B | $957.1M | 71.9% | 20.4% | 48.0% | 18.2% | 13.4× |
| SAP SE | SAP | $10.73B | $803.6M | 71.7% | 24.9% | 49.5% | 19.6% | 13.0× |
| Intuit Inc. | INTU | $20.52B | $1.98B | 79.4% | 29.9% | 58.2% | 20.5% | 10.0× |
| Adobe Inc. | ADBE | $218.79B | $21.51B | 88.6% | 37.5% | 49.0% | 8.6% | 10.1× |
| Atlassian Corporation | TEAM | $10.00B | $774.5M | 77.7% | 22.6% | 41.7% | 13.1% | 12.3× |
| Peer Cohort Median Benchmark (N=6) | 78.5% | 27.4% | 49.3% | 17.0% | 12.7× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 6.4× | $51.53B | $50.35B | $188.58 | 0.0% |
| -20% Multiple Compression | 5.2× | $41.23B | $40.04B | $149.98 | -20.0% |
| -35% Multiple Compression | 4.2× | $33.50B | $32.31B | $121.02 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $40.00B | $38.82B | $145.38 | -22.4% |
Frequently Asked Questions: Workday, Inc. (WDAY) Valuation
What is Workday, Inc. (WDAY)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Workday, Inc. (WDAY) has a Base Case implied value of $194.25 per share (with a Bear Case of $87.17 and a Bull Case of $336.33), compared to its current price of $188.58. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Workday, Inc. (WDAY)'s Rule of 40 score and Free Cash Flow margin?
Workday, Inc. achieves a Rule of 40 score of 43.9%, combining a 16.6% revenue growth run-rate with a 27.4% TTM free cash flow margin on $8.00B in trailing twelve-month revenue. In the Core Enterprise SaaS & ERP peer cohort, the median Rule of 40 benchmark is 49.3%.
What revenue growth rate is priced into WDAY stock according to Reverse-DCF analysis?
At $188.58 per share (Enterprise Value of $51.53B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 15.8%, compared to Workday, Inc.'s historical CAGR of 16.6%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Workday, Inc. compare to Core Enterprise SaaS & ERP software peers?
Workday, Inc. (WDAY) earns an institutional Software Quality Score of 67/100 (Grade B+ — Quality Software Operator). Across its Core Enterprise SaaS & ERP peer group (NOW, ORCL, SAP, INTU, ADBE), the cohort trades at a median EV/TTM Revenue multiple of 12.7× and a median gross margin of 78.5%.
How does Stock-Based Compensation (SBC) impact Workday, Inc. (WDAY)'s valuation?
Workday, Inc. recorded $1.52B in TTM stock-based compensation (19.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Workday, Inc.'s SBC-adjusted free cash flow yield is 1.3%, scoring 10/25 on our Shareholder Dilution Friction pillar.