Research

WDAY – Market expectations are for continued Uniform ROA expansion, but management may have concerns about customers, guidance, and business efficiency

November 18, 2020
  • Workday, Inc. (WDAY:USA) currently trades near recent highs relative to
    UAFRS-based (Uniform) assets, with an 11.6x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their ability to win customers, meet guidance, and improve efficiency

  • Specifically, management may lack confidence in their ability to meet their recently revised subscription revenue guidance and sustain backlog growth. In addition, they may have concerns about their ability to make businesses more flexible and fill key positions. Furthermore, management may lack confidence in their ability to win new customers for the HCM and procurement business. Finally, they may be exaggerating the opportunity Extend presents in terms of making the overall business more efficient it its R&D spend