One-glance verdict
Undervalued
$472.91 our estimate vs market $209.99
Wall Street consensus: $209.25 (-55.8% lower than our fair-value estimate)
56% below our estimate, below the bear case
Fundamentals snapshot
Workday, Inc.
WDAY · NMS · Technology · Software - Application
Current price
$209.99
52-week range
$110.36 - $247.10
Market cap
$50.61B
Balance sheet
Healthy
8.98x Adequate
Net debt $369.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 6.3% last year.
- Reward Returns 16.0% on equity, ahead of 16% of its peers.
- Reward Free cash flow was positive in 8/10 years.
What this company does
Workday, Inc.
Workday sells cloud-based software that helps businesses manage their finances and human resources, like payroll and hiring, and makes money primarily through subscription fees from these services. This recurring revenue model (income that a business can count on receiving regularly) is important because it provides a predictable stream of income for the company. They also offer planning and supply chain (the process of moving a product from beginning to end, including all people, information, activities, and resources involved) solutions, serving a wide range of industries.
How the company got here
Workday started in 2005, evolving from a company initially named North Tahoe Power Tools, Inc. before its rebranding. Its founders, who had prior success in the enterprise software world, saw an opportunity to create cloud-based software that could handle complex business needs like human resources and finance. This shift to cloud computing was a major turning point, allowing businesses to access powerful software over the internet rather than installing it on their own computers. This approach made the software more accessible and easier to update, setting Workday on a path to become a major player in enterprise software.
What it actually does
Workday provides software applications that businesses use to manage their core operations, primarily focusing on human resources and finance. Think of it as a digital backbone for a company, helping them keep track of their employees, manage payroll, handle accounting, and plan for the future. Instead of using many different, disconnected software programs, businesses can use Workday's integrated system to streamline these essential functions. This helps companies operate more efficiently and gain better insights into their own performance.
Human Capital Management
This is Workday's largest business area, focusing on everything related to a company's employees. It helps businesses manage the entire employee lifecycle, from hiring and onboarding new staff to managing payroll, benefits, and employee development. Companies pay Workday to use this software to ensure their workforce is managed effectively and compliantly. This segment is the primary driver of Workday's revenue, forming the core of its offerings.
Financial Management
This segment provides businesses with tools to manage their money and accounting. It covers tasks like keeping track of income and expenses, managing bills and payments, and generating financial reports. By using Workday's financial management applications, companies can get a clearer, real-time picture of their financial health, helping them make better decisions and close their books faster. This is another significant revenue generator for Workday, complementing its HR offerings.
Planning
Workday offers applications that help businesses plan for the future, encompassing financial planning, workforce planning, and even sales forecasting. These tools allow companies to create budgets, model different scenarios, and set strategic goals. By integrating planning with their HR and financial data, businesses can create more accurate and actionable plans. This segment represents a growing area for Workday, as companies increasingly seek integrated tools for strategic decision-making.
What management is betting on now
Workday's management is focused on expanding its cloud-based software offerings, particularly in areas like planning and analytics, to provide businesses with more comprehensive insights. They are also investing in technologies like artificial intelligence to make their applications smarter and more helpful. The strategy is to deepen their relationships with existing customers by offering more advanced features and to attract new customers by highlighting the efficiency and strategic advantages of their integrated platform. This focus aims to solidify Workday's position as a leader in enterprise cloud applications for managing people and finances.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q3
$359.00M
FY2025 Q4
$1.03B
FY2026 Q1
$421.00M
FY2026 Q2
$588.00M
FY2026 Q3
$550.00M
FY2026 Q4
$1.22B
FY2027 Q1
$616.00M
FY2027 Q2
$460.00M
Revenue
$2.65B
Net income
$632.00M
Diluted EPS
2.57
Operating cash flow
$519.00M
Free cash flow
$460.00M
Fetching…
Sources
Revenue
$2.54B
Net income
$222.00M
Diluted EPS
0.87
Operating cash flow
$696.00M
Free cash flow
$616.00M
Fetching…
Sources
Revenue
$2.53B
Net income
$145.00M
Diluted EPS
0.56
Operating cash flow
$1.28B
Free cash flow
$1.22B
Fetching…
Sources
Revenue
$2.43B
Net income
$252.00M
Diluted EPS
0.94
Operating cash flow
$588.00M
Free cash flow
$550.00M
Fetching…
Sources
Revenue
$2.35B
Net income
$228.00M
Diluted EPS
0.84
Operating cash flow
$616.00M
Free cash flow
$588.00M
Fetching…
Sources
Revenue
$2.24B
Net income
$68.00M
Diluted EPS
0.25
Operating cash flow
$457.00M
Free cash flow
$421.00M
Fetching…
Sources
Revenue
$2.21B
Net income
$94.00M
Diluted EPS
0.34
Operating cash flow
$1.11B
Free cash flow
$1.03B
Fetching…
Sources
Revenue
$2.16B
Net income
$193.00M
Diluted EPS
0.72
Operating cash flow
$406.00M
Free cash flow
$359.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $472.91 vs current price $209.99
Wall Street consensus is the average analyst price target: $209.25 (-55.8% lower than our fair-value estimate).
Our most-likely fair value is $472.91 a share — about 125.2% above today's price of $209.99, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $369.0M. Interest coverage 9.0x.
Net debt
$369.00M
Interest coverage
8.98x
Workday, Inc.'s profit covers its interest bill about 9.0 times over.
Healthy
Worse cushion
Baseline
Better cushion
WDAY
BASELINE
Workday, Inc.
Total debt $3.77B Interest coverage 8.98x This is the baseline the peer rows are being compared against.
Total debt $169.14B Interest coverage 4.88x -46% vs WDAY Carries about 1.8x less debt cushion than WDAY.
Total debt $11.15B Interest coverage 19.55x +118% vs WDAY Carries about 2.2x more debt cushion than WDAY.
Total debt $8.45B Interest coverage 79.30x +783% vs WDAY Carries about 8.8x more debt cushion than WDAY.
Total debt $5.51B Interest coverage 12.58x +40% vs WDAY Carries about 1.4x more debt cushion than WDAY.
What you should know
The case for and against WDAY
3 Rewards
0 Risks
Rewards
-
Revenue grew 6.3% last year.
-
Returns 16.0% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
42.77x
Forward P/E
15.86x
P/B
7.83x
P/S
4.98x
EV/EBITDA
31.07x
PEG ratio
0.61x
Profitability
How much profit each dollar creates
Gross margin
75.8%
Operating margin
11.8%
Net margin
12.3%
ROE
16.0%
ROA
4.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.58x
Current ratio
0.91x
Quick ratio
0.81x
Total debt
$3.77B
Total cash
$3.40B
Growth
How the business has been compounding
Revenue TTM
$10.15B
Revenue 5Y CAGR
16.8%
EPS TTM
4.91
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$3.08B
Free CF TTM
$2.78B
FCF margin
27.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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