Workday (WDAY) AI Stock Analysis

• Market Cap: $66.56B
• Dividend Yield: N/A
• Average Volume (3M): 2.23M
• Price to Earnings (P/E): 127.0
• Beta (1Y): 1.11
• Revenue Growth: 16.94%
• EPS Growth: -62.24%
• Country: US
• Employees: 20,482
• Sector: Technology
• Sector Strength: 65
• Industry: Software - Application
• EPS (TTM): 1.92
• Shares Outstanding: 216,635,330
• 10 Day Avg. Volume: 1,351,419
• 30 Day Avg. Volume: 2,234,476
• PEG Ratio: -1.93
• Price to Book (P/B): 7.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.64
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 2.23
• Enterprise Value/Gross Profit: 10.51
• Enterprise Value/Ebitda: 28.10
• 1Y Price Target: $303.86
• Price Target Upside: 17.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 33

Workday's overall stock score is supported by its strong financial performance and positive earnings outlook due to strategic growth in AI and international markets. Technical indicators present a mixed picture, and a high P/E ratio suggests potential overvaluation. The lack of dividend yield could deter income investors. Despite restructuring challenges, the company's strategic direction remains promising.

Positive Factors

AI Capabilities

Workday is rapidly expanding its AI capabilities and product portfolio, showing early traction in AI adoption.

Financial Performance

WDAY delivered strong FQ4 results exceeding both subscription revenue and backlog estimates.

Market Confidence

Analyst recommends an 'Outperform' rating with a $320 price target, indicating confidence in the company's future performance.

Negative Factors

Competition

Competition is fierce, software in transition, and the macro environment fragile.

Regional Challenges

Despite the strength in the UK and Germany, management noted EMEA continues to be a headwind to growth and is not baking in any major improvement in the segment.

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 primarily generates revenue through a subscription-based model, where customers pay recurring fees to access its cloud-based software solutions. The company's key revenue streams include subscriptions from its Human Capital Management (HCM) and Financial Management applications. Additional revenue is derived from professional services, such as consulting and training, which help clients implement and optimize Workday solutions. Strategic partnerships with leading technology firms and a strong focus on innovation and customer satisfaction also contribute to its financial success.

Workday 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 259.18
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 259.18 is above the 20-day moving average (MA) of 238.23, above the 50-day MA of 240.67, and above the 200-day MA of 248.46, indicating a bullish trend. The MACD of 5.16 indicates Negative momentum. The RSI at 67.40 is Neutral, neither overbought nor oversold. The STOCH value of 92.44 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDAY.

Workday Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	80 Outperform	$13.18B	25.49	24.99%	0.59%	9.86%	-14.34%
WDAY	79 Outperform	$66.56B	127.01	6.15%	―	16.94%	-62.24%
PCTY	78 Outperform	$10.33B	46.62	19.70%	―	14.63%	17.15%
COIN	73 Outperform	$50.19B	20.74	15.83%	―	48.30%	5.09%
BILL	71 Outperform	$4.62B	482.28	0.97%	―	14.52%	―
GRAB	67 Neutral	$19.72B	864.29	0.38%	―	17.24%	―
Sector *	60 Neutral	$10.96B	10.28	-6.73%	2.97%	7.74%	-12.45%

Workday Corporate Events

Workday Appoints Gerrit Kazmaier as New President

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.