Buoyed by improved market demand across its portfolio, Workday, Inc. WDAY has soared 17.1% over the past year compared with the industry’s growth of 46.3%, outperforming peers like Cadence Design Systems, Inc. CDNS but lagging SAP SE SAP.

Workday is poised to benefit from high demand for its Human Capital Management (HCM) and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Moreover, the growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise.

One-Year Price Performance

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WDAY Rides on Portfolio Strength

Workday’s HCM suite of applications has witnessed a solid growth momentum, driven by the transition of organizations to the cloud. A steady flow of customers portrays a high customer satisfaction rate, which bodes well for its long-term business model. Workday is also gaining traction in the international market, driven by higher digital transformation initiatives across finance and human resource domains, in tune with the evolving market conditions.

The company is expanding its portfolio beyond core HCM solutions into the financial domain. It is customizing them for diverse industries and verticals, such as education, the public and financial services, among others. This has helped it witness strong renewals and expand its customer base as business enterprises aim to consolidate spend and improve efficiency levels. This augurs well for the long-term growth of the company.

WDAY Offers Healthy Outlook

Workday has witnessed steady top-line growth over the years, which accentuates the diversity and robustness of its product portfolio. Along with several new customer wins, the company has made several strategic expansions and contract renewals within its existing customer base. Workday also recorded solid traction among government customers. 

For fiscal 2025, the company expects subscription revenues in the range of $7.700 billion to $7.725 billion, suggesting growth of 17% year over year. Professional services revenues are expected to be in the $680-$690 million band. The non-GAAP operating margin is projected to be 25.25%. Capital expenditure is approximated to be around $330 million.

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WDAY Betting Big on AI

Management is strongly focusing on integrating advanced AI (artificial intelligence) and ML (machine learning) capabilities. The ongoing AI-powered product development emphasizes natural language generation, content search, summarization, content augmentation and document understanding.

Workday has partnered with Salesforce, Inc. CRM to revolutionize workplace efficiency and employee satisfaction. Together, these industry leaders are set to unveil a cutting-edge AI employee service agent designed to automate tasks, provide personalized support and deliver data-driven insights across organizations.

The acquisition of AI-powered talent orchestration solutions provider HiredScore reflects a broader policy of making AI a core element of its product offerings. This strong focus on AI prowess will enhance its market differentiation, increase upselling and cross-selling opportunities and solidify Workday’s position in the finance and human resource management market.

Workday recently inked a definitive agreement to acquire the leading AI-based Document Intelligence Platform Evisort for an undisclosed amount. With this buyout, WDAY is aiming to integrate Evisort’s AI-native solution across its finance and human resource solution suite. This will enhance information accessibility and speed up the process of data extraction, enabling WDAY clients to transfer accurate financial or operational details to the Workday platform directly in a matter of seconds.

Estimate Revision Trend of WDAY

Earnings estimates for Workday for 2024 have improved 7.7% to $6.97 over the past year, while the same for 2025 has increased 7.5% to $8.21. The positive estimate revision depicts optimism about the stock’s growth potential.

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End Note

With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Workday appears to be a solid investment proposition. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. 

The stock delivered a trailing four-quarter average earnings surprise of 9.1%. Workday currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

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