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Workday
(NASDAQ:WDAY)
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Rating:73Outperform
Price Target:
$234.00
▲(20.36% Upside)
Action:Reiterated
Date:10/24/26
WDAY’s score is driven primarily by strong cash flow generation and improving profitability with manageable leverage, reinforced by supportive margin and free-cash-flow guidance. Offsetting these positives are a premium valuation (P/E 42.42) and signs of near-term technical stretch (high Stoch/upper-range RSI), plus execution risk around AI monetization timing and backlog mix.
Positive Factors
Recurring SaaS revenue
Workday’s subscription-led model creates recurring revenue visibility through multi-year contracts, renewals, and customer expansion across HCM, finance, planning, and analytics. This structure supports durable customer relationships and makes future revenue less dependent on repeated one-time sales.
Negative Factors
Cooling revenue growth
The sharp deceleration in reported revenue growth signals that Workday’s established business is expanding more slowly than in prior years, increasing the importance of new products and customer expansion. Slower growth can reduce operating leverage and make execution on the next growth cycle more consequential.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring SaaS revenue
Workday’s subscription-led model creates recurring revenue visibility through multi-year contracts, renewals, and customer expansion across HCM, finance, planning, and analytics. This structure supports durable customer relationships and makes future revenue less dependent on repeated one-time sales.
Read all positive factors
Workday Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Shows profitability across different business segments, highlighting which areas are most lucrative and where there might be room for improvement or strategic focus.
Shows profitability across different business segments, highlighting which areas are most lucrative and where there might be room for improvement or strategic focus.
Data provided by:
The Fly
The FlyWorkday (WDAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$50.61B
Dividend YieldN/A
Average Volume (3M)2.35M
Price to Earnings (P/E)42.4
Beta (1Y)1.00
Revenue Growth13.83%
EPS Growth126.19%
CountryUS
Employees20,896
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)4.95
Shares Outstanding196,000,000
10 Day Avg. Volume2,337,707
30 Day Avg. Volume2,346,417
Financial Highlights & Ratios
PEG Ratio2.16
Price to Book (P/B)5.88
Price to Sales (P/S)4.80
P/FCF Ratio16.52
Enterprise Value/Market Cap0.79
Enterprise Value/Revenue3.92
Enterprise Value/Gross Profit5.18
Enterprise Value/Ebitda23.88
Forecast
1Y Price Target
$212.82Price Target Upside9.46% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering31
EPS Forecast (FY)11.09
Revenue Forecast (FY)$10.67B
Workday Business Overview & Revenue Model
Company Description
Workday, Inc. delivers comprehensive, cloud-hosted enterprise software solutions to clients worldwide. These platforms empower organizations to strategize, operate, examine performance, integrate with existing systems, and oversee their overall bu...
How the Company Makes Money
Workday primarily makes money through subscription fees for its software-as-a-service (SaaS) applications. Customers typically sign multi-year contracts and pay recurring fees to access Workday’s cloud products, with pricing commonly influenced by...
Workday Earnings Call Summary
Earnings Call Date:Aug 27, 2026
(Q2-2027)
| % Change Since: |
Next Earnings Date:Dec 01, 2026
Earnings Call Sentiment Positive
The call highlighted strong AI-driven adoption, rapid ARR growth from AI SKUs, sizable engagement metrics (recruiting interactions, deployment/adoption momentum), healthy subscription revenue growth (+14% YoY) and expanding non-GAAP margins. Management emphasized active customer adoption initiatives (Sana Lighthouse, UMSA migration), platform openness, and continued investment in AI while completing buybacks and raising margin guidance. Primary risks are timing and monetization of consumption-based AI (flex credits), a mix shift affecting backlog growth rates, a GAAP/non-GAAP margin gap, and the early-stage nature of much of the AI revenue — all of which may delay near-term revenue realization. Overall, the positives around product momentum, customer traction, and margin discipline outweigh the execution and timing challenges.Positive Updates
AI-driven New ACV Contribution
AI products generated more than $100 million of new ACV in the quarter, accounting for over 25% of all new ACV closed in Q2.
Negative Updates
Monetization Lag from Consumption Model
Although ~5,500 customers use agents, only ~200 customers signed up for flex credits in the quarter, indicating a lag between agent adoption and meaningful consumption-based monetization that may delay revenue recognition.
Read all updates
Q2-2027 Updates
Positive
Negative
AI-driven New ACV Contribution
AI products generated more than $100 million of new ACV in the quarter, accounting for over 25% of all new ACV closed in Q2.
Read all positive updates
Company Guidance
Workday delivered detailed FY‑2027 guidance: subscription revenue of $9.94–9.95B (≈13% growth), Q3 subscription revenue ≈$2.515B (≈12% growth) with Q3 CRPO growth of 11–12%; Q3 professional services $175M and FY professional services $710M. They raised FY‑2027 non‑GAAP operating margin to 31% (Q3 ≈30%), expect GAAP margins ~18–19 points below non‑GAAP (Q3 ≈18 points lower) and a FY non‑GAAP tax rate of ~19%. Cash‑flow and capital guidance: operating cash flow ~$3.45B, capex ≈$270M, and free cash flow ≈$3.18B (≈15% growth). As context, Q2 results included subscription revenue $2.407B (+14%), total revenue $2.649B (+13%), non‑GAAP operating income $824M (31.1% margin), 12‑month subscription backlog (CRPO) $9.03B (+14.2%), total subscription backlog $27.4B (+8%), gross revenue retention 97%, net expansion ~60% of subscription revenue growth, Q2 operating cash flow $520M and free cash flow $460M; the company repurchased $1.3B this quarter (completing a $5B plan), now has a $4B open‑ended repurchase program, $3.4B in cash/marketable securities, and 20.9k employees. Looking ahead, they see FY‑2028 subscription growth roughly consistent with an ≈11% second‑half FY‑27 exit rate and at least a 2‑ppt expansion in non‑GAAP operating margin.Workday Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
82
Very Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 10.16B | 9.55B | 8.45B | 7.26B | 6.22B | 5.14B |
| Gross Profit | 7.70B | 7.23B | 6.38B | 5.49B | 4.51B | 3.71B |
| EBITDA | 1.67B | 1.36B | 1.08B | 752.00M | 206.00M | 377.00M |
| Net Income | 1.25B | 693.00M | 526.00M | 1.38B | -367.00M | 29.00M |
Balance Sheet | ||||||
| Total Assets | 15.86B | 18.07B | 17.98B | 16.45B | 13.49B | 10.50B |
| Cash, Cash Equivalents and Short-Term Investments | 3.40B | 5.44B | 8.02B | 7.81B | 6.12B | 3.64B |
| Total Debt | 3.77B | 3.82B | 3.36B | 3.30B | 3.25B | 2.10B |
| Total Liabilities | 9.40B | 10.27B | 8.94B | 8.37B | 7.90B | 5.96B |
| Stockholders Equity | 6.46B | 7.80B | 9.03B | 8.08B | 5.59B | 4.54B |
Cash Flow | ||||||
| Free Cash Flow | 2.84B | 2.78B | 2.19B | 1.91B | 1.30B | 1.38B |
| Operating Cash Flow | 3.08B | 2.94B | 2.46B | 2.15B | 1.66B | 1.65B |
| Investing Cash Flow | 1.89B | 333.00M | -1.78B | -1.75B | -2.51B | -1.61B |
| Financing Cash Flow | -5.57B | -3.32B | -1.15B | -268.00M | 1.20B | 110.25M |
Workday Technical Analysis
Positive
194.42
Price Trends
193.36
Positive
168.76
Positive
155.65
Positive
Market Momentum
4.50
Negative
66.78
Neutral
93.17
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 194.42 is above the 20-day moving average (MA) of 192.39, above the 50-day MA of 193.36, and above the 200-day MA of 155.65, indicating a bullish trend. The MACD of 4.50 indicates Negative momentum. The RSI at 66.78 is Neutral, neither overbought nor oversold. The STOCH value of 93.17 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 38 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $15.98B | 51.13 | 9.34% | ― | 8.19% | 6.70% | |
76 Outperform | $9.24B | 35.51 | 23.44% | ― | 11.04% | 22.52% | |
73 Outperform | $50.61B | 42.42 | 16.78% | ― | 13.83% | 126.19% | |
72 Outperform | $4.67B | 103.37 | -123.75% | ― | 19.67% | ― | |
71 Outperform | $12.16B | 29.12 | 40.43% | 0.55% | 9.23% | 27.04% | |
67 Neutral | $2.02B | 59.15 | 10.84% | ― | 8.62% | -58.32% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
WDAY
Workday
209.99
-28.92
-12.10%
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390.14
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PAYC
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274.59
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38.43%
PCTY
Paylocity
177.19
25.74
17.00%
WK
Workiva
85.80
-2.72
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BL
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34.80
-19.76
-36.22%
Workday Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Workday Issues $2.5 Billion in Senior Notes
Positive
Oct 23, 2026
On October 21, 2026, Workday entered into an underwriting agreement for a public offering of $2.5 billion in senior unsecured notes, and completed the issuance and sale of these notes on October 23, 2026. The multi-tranche offering includes notes ...
Business Operations and StrategyM&A Transactions
Workday to Acquire Agentic Identity Platform ConductorOne
Positive
Oct 13, 2026
On October 12, 2026, Workday entered into a definitive agreement to acquire ConductorOne, Inc. (C1.ai), a leading agentic identity platform that governs access for both people and AI agents across core enterprise systems. The transaction, announce...
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Workday Expands Revolving Credit Capacity with New Facility
Positive
Oct 1, 2026
On October 1, 2026, Workday, Inc. entered into a new Credit Agreement that replaces its April 6, 2022 facility and expands its revolving credit capacity from $1.0 billion to $1.5 billion. The agreement, led by Wells Fargo as administrative agent a...
Business Operations and Strategy
Workday Announces Strategic Reorganization and Workforce Reduction
Negative
Sep 29, 2026
On September 29, 2026, Workday initiated a reorganization across certain functions to better align team structures with its strategic growth priorities, including a reduction of about 2.5% of its workforce, mainly in Product and Technology, and cu...
Business Operations and StrategyStock BuybackFinancial Disclosures
Workday Posts Strong Q2 Results, Expands Share Buybacks
Positive
Aug 27, 2026
On August 27, 2026, Workday reported fiscal 2027 second-quarter results for the period ended July 31, 2026, with total revenue rising 12.8% year-on-year to $2.649 billion and subscription revenue up 13.9% to $2.471 billion, while GAAP operating in...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.