Workday (WDAY) Stock Forecast & Price Target

Workday is supported by a durable cloud-only SaaS model that benefits from low switching costs and strong enterprise adoption, with F2Q subscription revenue of $2,471M rising 13.9% y/y and total revenue of $2,649M up 12.8% y/y, while expansions with existing customers accounted for 60% of revenue growth. The company also demonstrated healthy backlog and demand visibility, as 12-month subscription backlog reached $9.03B and subscription cRPO grew 14.2% y/y, and management’s outlook for roughly 11% subscription revenue growth in FY28 suggests continued scaling even as growth normalizes from earlier levels. Profitability remains a key fundamental strength, with FY27 operating margin guidance raised to 31% and an initial FY28 operating margin outlook of 33% or at least 2 points of operating leverage, indicating that Workday can convert its expanding cloud platform and emerging AI monetization into stronger earnings power over time.

Workday is facing a weakening fundamental growth profile, as cRPO guidance of 11%-12% missed consensus at 13.6%, current bookings rose only 10.1% y/y while total bookings fell 12%, and management’s FY28 outlook calls for subscription revenue growth of roughly 11%, below consensus of 11.7%. The deceleration appears structural rather than temporary, with lapsing acquisition and tenant-change tailwinds, a mix shift toward shorter renewals, underrepresentation in industries that sign large long-term contracts, and only modest net expansions of about 60% of subscription growth implying NRR of 108%-109%. Although margins and cash generation remain solid, with non-GAAP operating margin guided around 30.0%-31.1%, FY28 operating leverage of just over 2 points, and strong net cash of $4.1 billion, the company’s own disclosure that weaker corporate IT spending over the past 36 months could pressure demand reinforces a negative outlook on the stock.