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Workday (WDAY)
NASDAQ:WDAY
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Workday
(NASDAQ:WDAY)
79Outperform
Positive Factors
AI Innovations
Workday is expected to benefit from an improved cost structure and the ramp of new AI innovations.
Product Offerings
Workday unveiled the Workday Agent System of Record and new role-based AI agents, enhancing its product offerings.
Negative Factors
Competition
Competition is fierce and the macro environment is treacherous.
HCM Bookings
Mixed signals on the HCM bookings environment from public company peers and conversations with some partners, while end-market demand in some verticals has greater near-term uncertainty.
Workday (WDAY) vs. S&P 500 (SPY)
Market Cap
$73.08B
Dividend YieldN/A
Average Volume (3M)2.03M
Price to Earnings (P/E)139.6
Beta (1Y)1.09
Revenue Growth16.94%
EPS Growth-62.24%
CountryUS
Employees20,482
SectorTechnology
Sector Strength76
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.92
Shares Outstanding216,635,330
10 Day Avg. Volume1,474,802
30 Day Avg. Volume2,030,049
Financial Highlights & Ratios
PEG Ratio-1.93
Price to Book (P/B)7.63
Price to Sales (P/S)0.00
P/FCF Ratio31.64
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue2.23
Enterprise Value/Gross Profit10.51
Enterprise Value/Ebitda28.10
Forecast
1Y Price Target
$305.41Price Target Upside11.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering32
Workday Business Overview & Revenue Model
Company DescriptionWorkday, Inc. is a leading provider of enterprise cloud applications for finance and human resources. Founded in 2005 and headquartered in Pleasanton, California, Workday delivers financial management, human capital management, and analytics applications designed for the world's largest companies, educational institutions, and government agencies. Its solutions are designed to help organizations adapt quickly to change, optimize their workforce, and manage financial operations more effectively.
How the Company Makes MoneyWorkday generates revenue primarily through a subscription-based model, where customers pay for access to its cloud-based applications. The company's key revenue streams include subscription fees for its human capital management (HCM) and financial management applications, which are typically contracted on a multi-year basis. Additionally, Workday offers professional services such as consulting, deployment, and training, which contribute to its revenue. Strategic partnerships with technology providers and system integrators also play a role in expanding Workday's reach and enhancing its offerings, further driving its subscription and service revenues.
Workday Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue streams from different business units, highlighting which segments are driving growth and which may need strategic adjustments.
Analyzes revenue streams from different business units, highlighting which segments are driving growth and which may need strategic adjustments.
Data provided by:
Main Street Data
Main Street DataWorkday Financial Statement Overview
Summary
Workday exhibits strong financial health with impressive revenue growth and efficient cash flow management. However, the decline in net profit margin and return on equity suggests potential areas for improvement in profitability and operational efficiency. The company maintains a conservative balance sheet with low leverage, which provides stability and reduces financial risk.Income Statement
Workday demonstrated strong revenue growth with a 16.2% increase in Total Revenue over the TTM period. Gross Profit Margin is high at 80.2%, indicating effective cost management. However, the Net Profit Margin dropped to 6.2% from a higher 19.0% the previous year, suggesting increased expenses or reduced profitability. EBIT and EBITDA margins are relatively low at 4.8% and 5.0%, respectively, indicating room for improvement in operating efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is solid, with a low Debt-to-Equity Ratio of 0.04, showing minimal reliance on debt financing. Return on Equity is healthy at 5.8%, but has decreased from the previous year, reflecting reduced net income. The Equity Ratio is robust at 50.3%, indicating a strong equity base relative to total assets.78
Positive
Cash Flow
Cash flow is a strong point for Workday, with a significant Free Cash Flow Growth Rate of 14.7%. The Operating Cash Flow to Net Income Ratio is high at 4.68, highlighting efficient cash generation from operations. Free Cash Flow to Net Income Ratio is also strong at 4.17, indicating robust cash flow relative to net earnings.90
Very Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.45B | 7.26B | 6.22B | 5.14B | 4.32B | Gross Profit |
| 7.18B | 5.49B | 4.50B | 3.71B | 3.12B | EBIT |
| 415.00M | 183.00M | -222.20M | -116.45M | -248.60M | EBITDA |
| 1.08B | 465.00M | 206.00M | 227.27M | 87.33M | Net Income Common Stockholders |
| 526.00M | 1.38B | -366.75M | 29.00M | -282.43M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 8.02B | 7.81B | 6.12B | 3.64B | 3.54B | Total Assets |
| 17.98B | 16.45B | 13.49B | 10.50B | 8.72B | Total Debt |
| 3.36B | 3.30B | 3.25B | 2.10B | 2.24B | Net Debt |
| 1.82B | 1.28B | 1.36B | 568.48M | 853.88M | Total Liabilities |
| 8.94B | 8.37B | 7.90B | 5.96B | 5.44B | Stockholders Equity |
| 9.03B | 8.08B | 5.59B | 4.54B | 3.28B |
| Cash Flow | Free Cash Flow | |||
| 2.19B | 1.91B | 1.30B | 1.38B | 1.01B | Operating Cash Flow |
| 2.46B | 2.15B | 1.66B | 1.65B | 1.27B | Investing Cash Flow |
| -1.78B | -1.75B | -2.51B | -1.61B | -1.24B | Financing Cash Flow |
| -1.15B | -268.00M | 1.20B | 110.25M | 625.05M |
Workday Technical Analysis
Positive
273.05
Price Trends
242.08
Positive
250.94
Positive
249.59
Positive
Market Momentum
9.67
Negative
73.19
Negative
94.69
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDAY, the sentiment is Positive. The current price of 273.05 is above the 20-day moving average (MA) of 248.96, above the 50-day MA of 242.08, and above the 200-day MA of 249.59, indicating a bullish trend. The MACD of 9.67 indicates Negative momentum. The RSI at 73.19 is Negative, neither overbought nor oversold. The STOCH value of 94.69 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDAY.
Workday Risk Analysis
Workday disclosed 39 risk factors in its most recent earnings report. Workday reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Workday Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $15.05B | 37.17 | 24.99% | 0.58% | 9.86% | -14.34% | |
79 Outperform | $73.08B | 139.65 | 6.15% | ― | 16.94% | -62.24% | |
78 Outperform | $11.10B | 50.13 | 19.70% | ― | 14.63% | 17.15% | |
74 Outperform | $67.87B | 49.93 | 15.83% | ― | 48.30% | 5.09% | |
69 Neutral | $4.77B | 482.28 | 0.97% | ― | 14.52% | ― | |
67 Neutral | $20.74B | 908.93 | 0.38% | ― | 17.24% | ― | |
60 Neutral | $11.59B | 10.39 | -7.23% | 2.94% | 7.46% | -10.76% |
* Technology Sector Average
Performance Comparison
WDAY
Workday
273.05
13.55
5.22%
PAYC
Paycom
260.36
81.48
45.55%
PCTY
Paylocity
201.04
29.61
17.27%
BILL
Bill.com Holdings
46.26
-13.53
-22.63%
GRAB
Grab
5.09
1.35
36.10%
COIN
Coinbase Global
266.46
41.27
18.33%
Workday Earnings Call Summary
Earnings Call Date:Feb 25, 2025
(Q4-2025)
| % Change Since: 6.99%|
Next Earnings Date:May 22, 2025
Earnings Call Sentiment Positive
Workday's Q4 and FY '25 results demonstrate strong growth, particularly in subscription revenue, core financial wins, AI monetization, and international expansion. Despite the need for restructuring and macro headwinds in EMEA, the overall performance and strategic advancements in AI and partnerships present a positive outlook.Q4-2025 Updates
Positive Updates
Strong Q4 Performance
Workday delivered 16% subscription revenue growth and a 26% non-GAAP operating margin in Q4. Total revenue in Q4 was $2.21 billion, up 15%. Full-year FY '25 subscription revenue was $7.718 billion, growth of 17%.
Record Number of Core Financial Wins
In Q4, Workday reported a record number of core financials wins, with significant expansions in financial services and healthcare, contributing to strong momentum.
AI Monetization and Growth
AI SKUs were involved in more than 30% of customer expansions. Extend Pro and Recruiting Agent doubled ACV from Q3 to Q4. The launch of the Agent System of Record and new role-based agents marks a significant AI advancement.
International Expansion
Despite macro headwinds, international revenue grew 16% in Q4, with strong performance in the UK and Germany, and new wins in APAC.
Successful Partner Ecosystem Growth
More than 15% of net new ACV in Q4 was sourced through partners, up from more than 10% last quarter.
Future Outlook and Guidance
Workday expects FY '26 subscription revenue of approximately $8.8 billion, growth of 14%, with an expected non-GAAP operating margin of approximately 28%.
Negative Updates
Restructuring and Associated Costs
Workday announced a restructuring that will reduce the workforce by approximately 8%, with an expected restructuring expense of approximately $180 million in Q1 FY '26.
Macro Challenges in EMEA
Continued macro headwinds were noted in EMEA, affecting growth despite strong individual country performances.
Company Guidance
During Workday's fourth-quarter fiscal 2025 earnings call, the company provided comprehensive guidance indicating a positive outlook for fiscal 2026. Subscription revenue for fiscal 2025 was reported at $7.718 billion, a 17% increase, with expectations for fiscal 2026 set at approximately $8.8 billion, representing a 14% growth. For the first quarter of fiscal 2026, subscription revenue is projected at $2.050 billion, with a growth rate of 13%. The company also highlighted a strong non-GAAP operating margin of 26.4% for the fourth quarter, with a fiscal 2026 target of approximately 28%. Cash flow from operations was $2.46 billion for the year, with a fiscal 2026 projection of $2.75 billion. Workday continues to emphasize strategic investments in AI, international markets, and its partner ecosystem, aiming for mid-teens subscription revenue growth and a 30% non-GAAP operating margin in the medium term.Workday Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Workday Appoints Gerrit Kazmaier as New President
Positive
Feb 25, 2025
On February 20, 2025, Workday announced the appointment of Gerrit Kazmaier as President, Product and Technology, effective March 10, 2025. Kazmaier, who brings extensive experience from Google Cloud and SAP, will lead Workday’s innovation strategy and product and technology organization. This leadership change follows the retirement of Sayan Chakraborty, who will continue as an advisor until December 2025. Kazmaier’s appointment is expected to drive Workday’s AI and cloud transformation initiatives, reinforcing its position as a leader in enterprise software innovation.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.