Workday (WDAY) Stock Forecast & Price Target

Workday's subscription revenue for the fourth quarter demonstrated a robust growth rate of 15.7% year-over-year, reaching $2.36 billion and exceeding company guidance, driven partly by inorganic factors and one-time revenue impacts. The company has successfully maintained improved margins while continuing to invest strategically, particularly in financial solutions and artificial intelligence, which is anticipated to support high-teens revenue growth over the next few years. Furthermore, the expansion of Workday's sales organization across diverse industries and geographies, along with a solid 15.8% year-over-year growth in the 12-month subscription backlog, suggests a strong foundation for sustained customer acquisition and retention amid increasing competitive pressures.

The analysis indicates a negative outlook for Workday's stock due to lower-than-expected subscription revenue guidance, which was revised down to $2.355 billion for F1Q, reflecting a decline of 1.1% quarter-over-quarter. Additionally, the company has adjusted its full-year free cash flow growth guidance to 15%, which falls short of consensus expectations of 16.8%. The downward revision of FY27 subscription revenue growth from 13% to a range of 12-13%, along with reduced growth targets, highlights increasing competitive pressures and raises concerns about Workday's market position relative to other software providers.