Fundamentals snapshot
WDAY · NMS · Technology · Software - Application
Current price
$143.76
52-week range
$110.36 - $257.09
Market cap
$35.50B
One-glance verdict
Wall Street consensus: $171.13 (-66.9% lower than our fair-value estimate)
Buy below $413.55 for a 20% safety cushion
Now $143.76 — 72% below our estimate, below the bear case
Balance sheet
Net cash $548.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
What this company does
Workday sells online software that helps large companies manage their two most important assets: their people and their money. Most of its income comes from selling subscriptions to these tools, which creates predictable, recurring revenue (income that comes in regularly, like a magazine subscription). This steady stream of sales is often valued by investors because it can make the company's future financial performance easier to predict.
Workday was started in 2005 by two executives, Dave Duffield and Aneel Bhusri, from a company called PeopleSoft right after it was bought by a much larger competitor, Oracle. They saw an opportunity to build business software differently, using the internet (what we now call the cloud) instead of selling software that companies had to install on their own computers. Their first product, launched in 2006, focused on Human Capital Management (helping companies manage their employees). A key moment was its successful initial public offering (IPO, the first time a company sells its shares to the public) in 2012, which showed that investors believed in its cloud-based model. Over the years, Workday has grown by adding new products like financial management and by acquiring other companies, such as Adaptive Insights, to bolster its planning capabilities.
Imagine a single, secure website where a large company's employees can manage everything from their pay stubs and time off to their career development. That's the core of what Workday provides. It sells online (or "cloud-based") software that helps big organizations manage their two most important assets: their people and their money. Instead of having separate, clunky programs for human resources and accounting, Workday combines them into one system that's easier to use and provides a clearer picture of the business. Companies pay a recurring fee, called a subscription, to access these tools, which helps them with tasks like payroll, recruiting, budgeting, and financial reporting.
This is Workday's main business, making up more than 90% of its total revenue (the money it brings in before expenses). Companies pay Workday a recurring fee, typically on multi-year contracts, to access its suite of cloud-based applications for finance and human resources. This subscription model provides a predictable stream of income for Workday. The fee often depends on the number of employees a customer has, so as the customer grows, Workday's revenue can also increase. This segment includes access to all of Workday's software, from Human Capital Management (for tasks like payroll and employee benefits) to Financial Management (for accounting and budgeting).
This is a much smaller part of the company, representing less than 10% of total revenue. When a new customer decides to use Workday's software, it can be a complex process to get everything set up and running smoothly. Workday offers professional services to help with this implementation, as well as training and other support to ensure customers are getting the most out of the software. While important for customer success, this is not the company's primary focus for making money, and Workday often works with external partner firms to deliver these services.
Workday is heavily focused on integrating Artificial Intelligence (AI) into its products to make them smarter and more automated. The goal is to move beyond just being a system for storing information and become a tool that helps managers make better decisions, for example, by predicting which employees might be looking to leave. The company is also pushing to sell more of its financial management software to its existing human resources customers, creating a more deeply integrated system. Another key priority is expanding internationally and attracting more mid-sized companies, not just the giant corporations it has traditionally served.
Price history
Earnings history
Click any quarter to read the call summary and what the numbers say.
Is it cheap or expensive?
Wall Street consensus is the average analyst price target: $171.13 (-66.9% lower than our fair-value estimate).
Buy below $413.55 for a 20% safety cushion. That means buying at least 20% below our fair value, as a buffer in case our estimate turns out too rosy.
Our most-likely fair value is $516.94 a share — about 259.6% above today's price of $143.76, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Net cash $548.0M - more cash than debt. Interest coverage 9.0x.
Workday, Inc.'s profit covers its interest bill about 9.0 times over.
Total debt $3.80B Interest coverage 8.98x This is the baseline the peer rows are being compared against.
Total debt $162.16B Interest coverage 5.05x -44% vs WDAY Carries about 1.8x less debt cushion than WDAY.
Total debt $9.08B Interest coverage 19.55x +118% vs WDAY Carries about 2.2x more debt cushion than WDAY.
Total debt $2.43B Interest coverage 79.30x +783% vs WDAY Carries about 8.8x more debt cushion than WDAY.
Total debt $4.40B Interest coverage 11.87x +32% vs WDAY Carries about 1.3x more debt cushion than WDAY.
What you should know
The numbers
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Valuation
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What you should know