WDAY - Workday: After The Fall Consider Wading Back In (Upgrade)
2024-06-24 11:43:17 ET
Summary
- Workday's stock has tumbled sharply after lowering its guidance alongside Q1 earnings, even though the full-year revenue cut of ~$40 million was small.
- Q1 revenue growth of 18% y/y actually accelerated one point versus Q4.
- Lowered headcount at Workday's customers are putting pressure on renewals and net retention rates.
- Still, at a lower valuation, Workday is a palatable stock, especially as it maintains its "Rule of 40" status. Upgrading to neutral.
A large number of tech companies have been rattled by weaker earnings releases this quarter, and Workday ( WDAY ) is no exception. The cloud software company, the best-known market leader in the human capital management ((HCM)) space and a juggernaut in financial products as well, cut its outlook for the full year, citing many of the same factors that peer software companies have noted: tighter enterprise budgets and lengthening deal cycles....
Workday: After The Fall, Consider Wading Back In (Upgrade)