Workday (WDAY) AI Stock Analysis

• Market Cap: $63.14B
• Dividend Yield: N/A
• Average Volume (3M): 3.81M
• Price to Earnings (P/E): 109.4
• Beta (1Y): 1.11
• Revenue Growth: 14.21%
• EPS Growth: -62.56%
• Country: US
• Employees: 20,482
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.21
• Shares Outstanding: 217,000,000
• 10 Day Avg. Volume: 3,318,692
• 30 Day Avg. Volume: 3,814,158
• PEG Ratio: -2.11
• Price to Book (P/B): 7.69
• Price to Sales (P/S): 8.26
• P/FCF Ratio: 31.76
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 6.44
• Enterprise Value/Gross Profit: 8.27
• Enterprise Value/Ebitda: 47.73
• 1Y Price Target: $281.42
• Price Target Upside: 19.00% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 29

• Rating: 71 Outperform
• Price Target: $260.00 ▲(9.95% Upside)

Workday's overall stock score reflects its strong financial performance and positive earnings call, which highlight robust growth and strategic initiatives. However, the high P/E ratio and mixed technical indicators suggest caution. The company's stable financial position and strategic focus on AI and market expansion are significant strengths, but valuation concerns and segment-specific challenges temper the outlook.

Positive Factors

Revenue Growth

Consistent revenue growth reflects strong demand for Workday's solutions, indicating a solid market position and potential for continued expansion.

AI Integration

AI integration enhances Workday's product offerings, driving innovation and competitive advantage, crucial for long-term growth in the tech industry.

Market Expansion

Expansion in international markets strengthens Workday's global footprint, diversifying revenue streams and reducing reliance on domestic markets.

Negative Factors

State and Local Government Challenges

Challenges in the state and local government sector may limit growth potential in this segment, impacting overall revenue diversification efforts.

Higher Education Pressure

Funding pressures in higher education could hinder Workday's growth in this sector, affecting its ability to expand its client base and revenue.

Profitability Concerns

Low net profit margins indicate challenges in converting revenue to profit, which could affect long-term financial sustainability and investment capacity.

Workday Business Overview & Revenue Model

Company Description

Workday, Inc. provides enterprise cloud applications in the United States and internationally. The company's applications help its customers to plan, execute, analyze, and extend to other applications and environments, and to manage their business and operations. It offers a suite of financial management applications, which enable chief financial officers to maintain accounting information in the general ledger; manage financial processes; identify real-time financial, operational, and management insights; enhance financial consolidation; reduce time-to-close; promote internal control and auditability; and achieve consistency across finance operations. The company also provides cloud spend management solutions that helps organizations to streamline supplier selection and contracts, manage indirect spend, and build and execute sourcing events, such as requests for proposals; Human Capital Management (HCM) solution, a suite of human capital management applications that allows organizations to manage the entire employee lifecycle from recruitment to retirement, and enables HR teams to hire, onboard, pay, develop, reskill, and provide employee experiences; Workday applications for planning; and applications for analytics and reporting, including augmented analytics to surface insights to the line of business in simple-to-understand stories, machine learning to drive efficiency and automation, and benchmarks to compare performance against other companies. It serves professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality industries. The company was formerly known as North Tahoe Power Tools, Inc. and changed its name to Workday, Inc. in July 2005. Workday, Inc. was incorporated in 2005 and is headquartered in Pleasanton, California.

How the Company Makes Money

Workday generates revenue primarily through subscription fees for its cloud-based software solutions. Customers typically pay on a recurring basis for access to Workday's applications, which can be customized according to their specific needs. The company also earns revenue from professional services, including implementation, training, and support services that help clients maximize the value of their Workday solutions. Additionally, Workday has established strategic partnerships with various organizations, enhancing its market reach and contributing to its earnings through integrated solutions and co-marketing efforts. The combination of a strong subscription model and professional services creates a steady stream of recurring revenue, which is critical to Workday's financial stability and growth.

Workday Financial Statement Overview

Summary

Workday demonstrates strong financial health with consistent revenue growth and efficient cost management. The balance sheet is solid with low leverage, and cash flows are positive with room for further optimization. While profitability metrics show potential for improvement, the company's financial position is stable and well-positioned for future growth.

Income Statement

Workday's income statement shows a solid performance with a consistent revenue growth rate, reaching 3.13% in the TTM period. The gross profit margin is strong at 77.88%, indicating efficient cost management. However, the net profit margin is relatively low at 6.52%, suggesting room for improvement in profitability. The EBIT and EBITDA margins have improved over time, reflecting better operational efficiency.

Balance Sheet

The balance sheet is robust with a low debt-to-equity ratio of 0.086 in the TTM period, indicating low financial leverage and a strong equity position. The return on equity is modest at 6.52%, but the equity ratio is healthy, showing a solid capital structure. The company has effectively reduced its debt over time, enhancing financial stability.

Cash Flow

Cash flow analysis reveals a positive trajectory with a free cash flow growth rate of 3.10% in the TTM period. The operating cash flow to net income ratio is 0.52, indicating good cash generation relative to net income. The free cash flow to net income ratio is high at 0.92, reflecting strong cash conversion. However, there is potential to further improve cash flow efficiency.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.94B	8.42B	7.20B	6.20B	5.15B	4.30B
Gross Profit	6.96B	6.35B	5.43B	4.48B	3.72B	3.11B
EBITDA	1.21B	1.08B	752.00M	206.76M	376.51M	87.33M
Net Income	583.00M	526.00M	1.38B	-366.75M	29.00M	-282.43M
Balance Sheet
Total Assets	17.96B	17.98B	16.45B	13.49B	10.50B	8.72B
Cash, Cash Equivalents and Short-Term Investments	8.19B	8.02B	7.81B	6.12B	3.64B	3.54B
Total Debt	3.78B	3.36B	3.30B	3.25B	2.10B	2.24B
Total Liabilities	8.79B	8.94B	8.37B	7.90B	5.96B	5.44B
Stockholders Equity	9.17B	9.03B	8.08B	5.59B	4.54B	3.28B
Cash Flow
Free Cash Flow	2.39B	2.19B	1.91B	1.30B	1.38B	1.01B
Operating Cash Flow	2.59B	2.46B	2.15B	1.66B	1.65B	1.27B
Investing Cash Flow	-1.69B	-1.78B	-1.75B	-2.51B	-1.61B	-1.24B
Financing Cash Flow	-1.29B	-1.15B	-268.00M	1.20B	110.25M	625.05M

Workday Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 236.48
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDAY, the sentiment is Neutral. The current price of 236.48 is above the 20-day moving average (MA) of 234.30, above the 50-day MA of 230.28, and below the 200-day MA of 244.35, indicating a neutral trend. The MACD of 2.42 indicates Positive momentum. The RSI at 52.24 is Neutral, neither overbought nor oversold. The STOCH value of 14.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WDAY.

Workday Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	77 Outperform	$11.53B	26.95	25.76%	0.74%	10.21%	-10.56%
WDAY	71 Outperform	$63.14B	109.37	6.66%	―	14.21%	-62.56%
DDOG	68 Neutral	$52.95B	438.66	4.45%	―	26.00%	-25.64%
SNOW	68 Neutral	$81.49B	―	-42.45%	―	28.37%	-35.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BL	61 Neutral	$3.19B	41.52	23.79%	―	7.99%	-28.47%
TEAM	58 Neutral	$39.48B	―	-21.58%	―	19.66%	15.17%