- Workday reported Q1 revenue and earnings beating expectations, with a focus on expanding TAM in the public sector and international markets.
- The company continues to build its partner ecosystem by adding Google Cloud Partners in Q1, as it accelerates its pipeline and drives higher ACV per customer.
- Meanwhile, it rolled out the general availability of its AI Marketplace, giving customers access to AI solutions from Workday and its partners, thus deepening adoption and monetization opportunities.
- Although the company faces increasing deal scrutiny as businesses are cautious, I believe that given its growth drivers and strong fundamentals, it is attractively priced to drive upside.
Introduction & Investment Thesis
Workday (NASDAQ:WDAY) is a cloud-based software company that provides solutions for financial management, spend management, human capital, planning, and analytics. I initiated a “hold” rating on the stock on March 31st, and since then, the stock has declined close to 20%, underperforming the indices. Although I was optimistic about the company’s growth levers of international expansion and its partner ecosystem along with its strong financial discipline, I rated the stock a “hold” because I believed that its future growth estimates were priced into its valuation, with little upside left for long-term investors.
The company reported its Q1 FY25 earnings, where revenue and earnings grew 18.1% and 30% YoY, respectively, beating estimates. During the quarter, the company continued to acquire new customers while deepening adoption among existing ones, with particular strength in the public sector and healthcare verticals. Personally, I like that the company is focusing on expanding its total addressable market (“TAM”) in select verticals such as the public sector as well as international markets to gain market share by leveraging its partner ecosystem, a culture of product innovation, and the smart acquisition of HiredScore.
READ FULL ARTICLE HERE!
