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Workday: Continues To Put In Work Despite Market Weakness

Dec. 06, 2018 8:34 PM ETWorkday, Inc. (WDAY)2 Comments


  • Workday is still near their all-time highs, despite contracting over 20% pre-earnings during the broader market sell off.
  • Q3 revenue grew 34%y/y which was ahead of consensus estimates for 30% y/y growth and an acceleration from Q2.
  • With $3 billion run-rate in revenue, Workday is deserving of their premium valuation for the foreseeable future.

After falling 20% from their pre-earnings all-time highs, Workday (NASDAQ:WDAY) has proven to withstand the market correction and has now reached new all-time highs. This is a rather impressive feat given the overall weakness in the tech market, however, WDAY has rallied over 30% since reporting earnings.

WDAY remains the leading HCM company and among the best SaaS companies in the tech coverage. Despite a soft October and early November, WDAY reported another very strong beat and raise quarter with revenue growth accelerating. Their recent acquisition of Adaptive Insights gives them a strong place in the planning software market, competing directly with recent IPO, Anaplan (PLAN).

WDAY data by YCharts

In Q3, revenue grew an impressive 34% y/y, accelerating from Q2 and was ahead of consensus estimates for 30% y/y growth. Despite being the clear leader in the HCM market, WDAY continues to find ways to accelerate growth, which remains above 30%. This is very impressive for a company who just reported a run-rate revenue of nearly $3 billion.

With the stock rising above their previous all-time highs due to impressive and accelerating revenue growth, the current stock price may have fully priced in continued success. Trading at ~$165, WDAY’s valuation is currently above 10x forward revenue, a valuation that may scare off many investors given the recent market turbulence and fears of a market correction/recession.

Q3 Earnings and Guidance

WDAY recently acquired Adaptive Insights, a leading planning software player, competing directly with Anaplan (PLAN), who recently went public. Management remains very confident in software planning tools used in Financial Planning & Analysis. In Q3, WDAY saw their Financials subscription revenue grow more than 50%, a testament to both the growing power of Adaptive Insights and the software planning market.

Source: Company Presentation

In Q3, revenue grew 34% y/y to $743.2 million, reaching a

This article was written by

Individual investor with hands-on experience in the equity markets. Largely focusing on Tech companies or major mispricings in the market.

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