Workday (WDAY) AI Stock Analysis

• Market Cap: $51.02B
• Dividend Yield: N/A
• Average Volume (3M): 2.44M
• Price to Earnings (P/E): 80.9
• Beta (1Y): 1.05
• Revenue Growth: 13.35%
• EPS Growth: -60.76%
• Country: US
• Employees: 20,482
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.32
• Shares Outstanding: 213,000,000
• 10 Day Avg. Volume: 2,407,270
• 30 Day Avg. Volume: 2,439,372
• 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: 1.20
• Enterprise Value/Revenue: 6.65
• Enterprise Value/Gross Profit: 8.79
• Enterprise Value/Ebitda: 46.47
• 1Y Price Target: $273.44
• Price Target Upside: 41.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 31
• EPS Forecast (FY): 9.07
• Revenue Forecast (FY): $9.54B

• Rating: 73 Outperform
• Price Target: $215.00 ▲(11.56% Upside)

Workday's strong financial performance and positive earnings call sentiment are major strengths, supported by strategic corporate events. However, high valuation concerns and mixed technical indicators temper the overall score.

Positive Factors

Recurring subscription revenue and backlog

Robust subscription growth and a sizable, growing backlog increase revenue visibility and predictability. Recurring ARR and backlog provide durable cash flow and sales runway, supporting multi-quarter growth and enabling longer-term investment in product and customer success.

Strong cash generation and low leverage

Consistent free cash flow growth and very low debt-to-equity provide financial flexibility for R&D, M&A, and share repurchases. Strong cash conversion reduces refinancing risk and supports durable capital allocation without stressing the balance sheet over the next several quarters.

AI adoption and strategic acquisitions

High customer adoption of embedded AI features and targeted AI-focused acquisitions deepen product differentiation and switching costs. This structurally strengthens competitive advantage, enhances upsell potential, and supports sustainable ARR expansion beyond short-term cycles.

Negative Factors

Relatively low operating (EBIT) margins

Despite high gross margins, low EBIT margins indicate heavy operating expense load (sales, R&D, G&A). Persistent margin pressure limits operating leverage and can constrain durable profitability improvements unless efficiency or pricing power materially improves over the medium term.

Negative EPS growth

Sharp year-over-year EPS decline signals volatility in reported earnings that may reflect margin compression, one-time items, or rising costs. Sustained negative EPS growth can hinder reinvestment, slow ROE improvement, and reduce financial resilience across upcoming quarters.

Exposure to public/funding-sensitive end markets

Concentration in sectors dependent on public funding creates structural demand risk: grant cuts or fiscal constraints can delay purchases and renewals. This can lengthen sales cycles and weaken backlog conversion in those segments over a multi-quarter horizon.

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 subscription basis, which can include annual fees based on the number of users or a flat rate depending on the services utilized. Key revenue streams include Human Capital Management (HCM) and Financial Management solutions, both of which have shown strong growth as organizations increasingly transition to cloud-based systems. Additionally, Workday offers professional services, such as implementation and consulting, which contribute to its earnings. The company has formed significant partnerships with various organizations, enhancing its market reach and integration capabilities, thus driving customer adoption and retention. Factors contributing to its earnings include a strong focus on customer satisfaction, continuous product innovation, and a growing demand for cloud-based enterprise solutions.

Workday Financial Statement Overview

Summary

Workday exhibits strong financial performance with consistent revenue growth, robust profit margins, and a solid balance sheet with low leverage. The company effectively manages its cash flows, ensuring financial stability and growth potential. However, there is room for improvement in operational efficiency to enhance EBIT margins further.

Income Statement

Workday's income statement shows a solid performance with a consistent revenue growth rate of 3.13% TTM, supported by a strong gross profit margin of 82.06%. The net profit margin has improved to 6.96% TTM, indicating enhanced profitability. However, the EBIT margin is relatively low at 6.65% TTM, suggesting room for operational efficiency improvements.

Balance Sheet

The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.09 TTM, indicating low leverage and financial stability. The return on equity is moderate at 6.52% TTM, showing a reasonable return on shareholders' investments. The equity ratio is robust, highlighting a solid capital structure.

Cash Flow

Workday's cash flow statement is strong, with a free cash flow growth rate of 8.07% TTM, indicating healthy cash generation. The operating cash flow to net income ratio of 0.55 TTM suggests efficient conversion of income into cash. The free cash flow to net income ratio of 0.93 TTM demonstrates effective cash management.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.45B	7.26B	6.22B	5.14B	4.32B
Gross Profit	6.38B	5.49B	4.51B	3.71B	3.12B
EBITDA	1.08B	752.00M	206.00M	377.00M	87.33M
Net Income	526.00M	1.38B	-367.00M	29.00M	-282.43M
Balance Sheet
Total Assets	17.98B	16.45B	13.49B	10.50B	8.72B
Cash, Cash Equivalents and Short-Term Investments	8.02B	7.81B	6.12B	3.64B	3.54B
Total Debt	3.36B	3.30B	3.25B	2.10B	2.24B
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: Negative
• Last Price: 192.72
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDAY, the sentiment is Negative. The current price of 192.72 is below the 20-day moving average (MA) of 211.08, below the 50-day MA of 218.06, and below the 200-day MA of 232.45, indicating a bearish trend. The MACD of -6.01 indicates Positive momentum. The RSI at 25.78 is Positive, neither overbought nor oversold. The STOCH value of 4.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WDAY.

Workday Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	76 Outperform	$8.70B	19.22	28.56%	0.94%	9.72%	-2.69%
WDAY	73 Outperform	$51.02B	80.92	7.34%	―	13.35%	-60.76%
BL	71 Outperform	$3.15B	47.87	21.85%	―	7.36%	-40.62%
DDOG	69 Neutral	$42.93B	409.42	3.52%	―	26.63%	-46.13%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TEAM	61 Neutral	$34.72B	-182.46	-15.35%	―	19.51%	53.35%
SNOW	54 Neutral	$70.55B	-51.48	-53.32%	―	28.48%	-19.12%