Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Workday, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 11.6% to 10.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 88, DPO 21, DIO 60). At a 8.8% WACC with mid-year discounting, the terminal value (199% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 28.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $2.44 per share, suggesting WDAY is overvalued by 98.1% at the current price of $127.71.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2027 | 2028 | 2029 | 2030 | 2031 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | -205 | -228 | -252 | -282 | -312 | -320 |
| (−) Net Interest | 130 | 144 | 160 | 179 | 197 | 202 |
| (+) D&A | 261 | 289 | 308 | 362 | 421 | 431 |
| EBITDA | 186 | 205 | 216 | 258 | 306 | 314 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 411 | 458 | 506 | 567 | 626 | — |
| (−) ΔWC | 672 | 324 | 335 | 423 | 412 | — |
| Free Cash Flow (FCF) | -898 | -577 | -625 | -732 | -731 | — |
| Peers' EBITDA Multiple | 28.6x | |||||
| Terminal Value | 8,969 | |||||
| WACC / Discount Rate | 8.81% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -861 | -508 | -506 | -544 | -500 | 5,881 |
| Enterprise Value | 2,961 | |||||
| Projection Period | -2,919 | -98.6% | ||||
| Terminal Value | 5,881 | 198.6% | ||||
| (−) Current Net Debt | 2,320 | |||||
| Equity Value | 641 | |||||
| (÷) Outstanding Shares | 263M | |||||
| Fair Price | $2 | -98.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 24.6x | 26.6x | 28.6x | 30.6x | 32.6x |
|---|---|---|---|---|---|
| 6.8% | $1 | $2 | $4 | $6 | $8 |
| 7.8% | $0 | $2 | $3 | $5 | $7 |
| 8.8% | $0 | $1 | $2 | $4 | $6 |
| 9.8% | $0 | $0 | $2 | $3 | $5 |
| 10.8% | $0 | $0 | $1 | $2 | $4 |
Current price: $127.71. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.