Street Positive as Investor Day Showed ‘Litle Signs of a Slowdown’ By

© Reuters.

By Senad Karaahmetovic

Workday (NASDAQ:) held its Analyst Day yesterday where it discussed its financial projections and unveiled new initiatives.

The company reaffirmed its FY26 target of $10 billion in revenue and a 25% operating margin. Management noted it sees multiple growth levels that will help drive 20% subscription revenue growth.

Here’s what analysts who attended the event have to say about Workday, its plans, and the outlook for shares.

A Morgan Stanley analyst said: “Management presented an argument for a rising focus on Talent and accelerating change in the enterprise fundamentally changing the priority of HCM and Financials, yielding higher durability of growth against a quickly growing TAM. Trading at ~6X EV/Sales, durability is not priced in, in our view.”

A Bank of America analyst added: “While specific guidance for FY24 margin was not provided (as in years past), commentary suggests margin expansion to resume at a normal pace in FY24, following compression in FY23 from shift to cash-based comp and resumed travel/expense. We are also encouraged by commentary that stock-based comp expense is expected to come down as a % of revenue.”

A Stifel analyst noted: “Workday remains well positioned to achieve the $10B/20% targets as they execute across multiple growth initiatives driving robust FINS and HCM demand.”

A Needham & Company analyst said: “Customer/partner energy left us impressed with current demand trends. While a major new product announcement was missing, the company announced several enhancements to key products we feel should enable it to maintain its strong differentiation.”

A Cowen analyst noted: “We were impressed w/ 1) its growth/margin target framework thru CY25; 2) upward pressure on HCM growth & overall NRR; 3) a broadening product portfolio driving a greater diversity of growth across a $125b TAM; and 4) our encouraging conversations w/ partners.”

A Mizuho analyst added: “We believe Workday remains in a strong position to become the preeminent vendor in the back-office suite as it drives sustainable revenue growth and margin expansion in the medium term.”

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