Core Viewpoint - Workday's stock performance has shown resilience, with a recent increase and positive projections for upcoming financial results, indicating potential growth opportunities in the human resources software sector [1][2]. Company Performance - Workday's stock closed at $243.39, reflecting a +1.49% change from the previous day, outperforming the S&P 500's gain of 0.58% [1]. - Over the past month, Workday shares have appreciated by 2.69%, surpassing the Computer and Technology sector's gain of 0.6% and the S&P 500's loss of 0.84% [1]. Financial Projections - The upcoming EPS for Workday is projected at $1.99, representing a 14.37% increase year-over-year [2]. - Revenue is expected to reach $2.22 billion, marking an 11.34% increase from the same quarter last year [2]. - For the full year, analysts anticipate earnings of $8.41 per share and revenue of $9.48 billion, reflecting changes of +15.21% and +12.21% respectively from the previous year [3]. Analyst Estimates - Changes in analyst estimates for Workday are crucial as they reflect short-term business trends and analysts' confidence in the company's performance [4]. - The Zacks Consensus EPS estimate has decreased by 1% in the past month, and Workday currently holds a Zacks Rank of 3 (Hold) [6]. Valuation Metrics - Workday has a Forward P/E ratio of 28.51, which is higher than the industry average of 25.98 [6]. - The PEG ratio for Workday stands at 1.46, indicating a favorable growth outlook compared to the Internet - Software industry average PEG ratio of 2.2 [7]. Industry Context - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 143, placing it in the bottom 43% of over 250 industries [8].

Financial Data and Key Metrics Changes - The company reported Q1 2025 adjusted EPS of $1.57 and adjusted EBITDA of $102 million, which fell below guidance due to higher than expected benefits costs [5][6] - The average number of paid worksite employees increased by 0.7% year-over-year to 306,023, but growth was slightly below guidance due to delays and cancellations in new client starts [5][6] - Gross profit per worksite employee decreased to $338 per month from $378 in Q1 2024, attributed to an 8.4% increase in benefits costs per covered employee [6][9] Business Line Data and Key Metrics Changes - Client retention improved to 91% in Q1 2025 from 88% in Q1 2024, indicating strong client loyalty despite market challenges [20] - Client net hiring was slightly positive but significantly weaker compared to historical norms [6][20] - The company experienced a 3% increase in worksite employees paid from new client sales compared to Q1 2024, despite overall hiring challenges [5][6] Market Data and Key Metrics Changes - A client survey indicated that 66% of respondents expect the economic climate to negatively affect their business, up from 29% in January [16] - The percentage of clients expecting to add employees in the coming quarter decreased to 34% from 43% [16] - The Northeast region showed better results compared to other areas, but overall trends were consistent across the nation [70] Company Strategy and Development Direction - The company is focusing on mitigating benefits cost challenges through pricing adjustments and plan design changes, with a forecasted benefits cost per covered employee range of 6.5% to 7.5% for the full year [10][35] - The strategic partnership with Workday is a key focus, with a go-to-market plan established to target mid-market businesses, which is expected to significantly drive growth starting in 2026 [30][31] - The company aims to leverage the Workday partnership to enhance service offerings and client engagement, particularly for businesses with 150 to 5,000 employees [88] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the unexpected rise in benefits costs but remains optimistic about future profitability improvements in 2026 [10][64] - The company anticipates a modest improvement in worksite employee growth throughout the year, barring significant changes in the macroeconomic environment [36] - Management noted that the current period of uncertainty is less likely to be a temporary spike, suggesting a more cautious approach to forecasting [86] Other Important Information - Operating expenses were managed slightly below budget, with a 2% increase year-over-year, primarily due to investments in the Workday partnership [11][12] - The company returned $23 million in cash dividends and repurchased 224,000 shares at a cost of $19 million in Q1 [12] - The effective tax rate for the quarter was 29%, consistent with the previous year [12] Q&A Session Summary Question: Can you elaborate on the onboarding pauses mentioned in Q1? - Management noted a dramatic reversal in small business optimism due to government actions, leading to delays and cancellations in onboarding new clients [40][41] Question: What is the expected cadence of spending for the Workday partnership? - The company anticipates stable spending throughout the year, with costs expected to decrease in subsequent years as the project matures [45][48] Question: What actions from Washington could improve customer sentiment? - Management believes that stabilizing the tax system and regulatory environment could significantly boost confidence among clients [53][54] Question: How quickly can pricing adjustments be made in response to healthcare costs? - Pricing changes are already being implemented, with expectations for improved margins as the year progresses [63][64] Question: Are there regional or industry differences in healthcare costs and hiring hesitancy? - The company has observed better results in the Northeast, but overall trends are consistent across the nation [70] Question: What is the expected profitability from the Workday partnership? - Management anticipates higher upfront pricing and ongoing revenue contributions from the new joint solution, though specific figures are still being analyzed [78][79]

Core Insights - Tech companies are increasingly investing in cloud software vendors, showcasing a trend of collaboration among them [1] - Veza has successfully raised $108 million in a financing round, with a valuation exceeding $800 million [2] - Snowflake has utilized Veza's software for access management, highlighting the importance of controlling data access to mitigate security risks [3] Group 1: Investment Trends - Major tech firms like Google, Amazon, Microsoft, and Nvidia are making significant investments in AI startups, while cloud software vendors are also becoming aggressive in corporate investing [1] - The collaboration among software vendors, as seen in Veza's funding round, indicates a strategic shift towards collective investment efforts [1] Group 2: Veza's Business Model - Veza's software assists companies in managing employee access to various internal technologies, which is crucial for maintaining security [2][3] - The company has integrated with over 250 technologies, enhancing its value proposition in the market [4] Group 3: Security and Access Management - Snowflake's use of Veza emphasizes the need for effective access management to prevent over-provisioning, which can lead to increased security risks [3] - The ability to manage permissions for new hires and departures is a key feature of Veza's software, allowing for better control over corporate data access [3]

Company Performance - Workday's stock closed at $224.87, reflecting a +1.76% change from the previous trading day's close, outperforming the S&P 500's daily gain of 1.67% [1] - Over the past month, Workday shares have decreased by 12.59%, which is worse than the Computer and Technology sector's loss of 9.93% and the S&P 500's loss of 6.57% [1] Upcoming Earnings - Workday's upcoming EPS is projected at $1.99, indicating a 14.37% increase compared to the same quarter last year [2] - The Zacks Consensus Estimate for revenue is $2.22 billion, representing an 11.34% increase from the year-ago period [2] Annual Estimates - For the annual period, earnings are anticipated at $8.42 per share and revenue at $9.48 billion, reflecting increases of +15.34% and +12.28% respectively from the previous year [3] Analyst Estimates - Recent changes to analyst estimates for Workday often reflect shifting short-term business dynamics, with upward revisions indicating analysts' positive outlook on the company's operations [4] Zacks Rank - Workday currently holds a Zacks Rank of 3 (Hold), with a 0.9% decline in the Zacks Consensus EPS estimate over the past month [6] Valuation Metrics - Workday's Forward P/E ratio is 26.25, which is higher than the industry average of 24.08 [7] - The PEG ratio for Workday is 1.35, compared to the average PEG ratio of 1.96 for Internet - Software stocks [7] Industry Ranking - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 79, placing it in the top 32% of all industries [8]

Group 1 - The article expresses a positive view on Workday's business and its growth in the cloud software sector [1] - The author highlights the importance of identifying high-quality companies with strong competitive advantages and solid management for long-term investment [1] - The focus is on companies that have a history of creating shareholder value, indicating a preference for sustainable growth [1] Group 2 - The author has a beneficial long position in Workday, ServiceNow, and HubSpot, indicating confidence in these companies' future performance [1]

Group 1 - The article discusses a positive outlook on Workday (WDAY), highlighting a recommendation for a buy rating based on expected higher multiples due to the company's growth potential [1] - The author emphasizes a fundamentals-based approach to value investing, arguing against the misconception that low multiple stocks are inherently cheap [1] - The focus is on identifying companies with long-term durability, steady growth, and strong balance sheets, while acknowledging the risks associated with overpaying for successful companies [1] Group 2 - The article does not contain any disclosures regarding stock positions or plans to initiate positions in the mentioned companies [2] - It clarifies that the opinions expressed are personal and not influenced by any business relationships with the companies mentioned [2] - The article also notes that past performance does not guarantee future results and that no specific investment advice is being provided [3]

Company Overview - Workday, Inc. (WDAY) shares increased by 10% to close at $231.42, following a period of 13.4% loss over the past four weeks, indicating a strong recovery backed by solid trading volume [1] - The company is experiencing growth due to a diversified product portfolio, particularly in human capital management and financial management solutions across sectors like healthcare, education, and financial services [2] Growth Drivers - Demand for Workday's solutions is rising, and management is focusing on integrating advanced AI and machine learning capabilities, which are expected to enhance operational efficiencies [2] - Ongoing cost discipline and improved efficiencies are contributing positively to the company's performance [2] - Workday is gaining traction in international markets, aided by the U.S. Government's decision to suspend higher tariffs for 90 days for most countries except China, which reduces uncertainty for near-term growth prospects [2] Financial Performance Expectations - Workday is projected to report quarterly earnings of $1.99 per share, reflecting a year-over-year increase of 14.4%, with revenues expected to reach $2.22 billion, up 11.3% from the previous year [3] - The consensus EPS estimate has been revised 1.1% higher over the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [4] Industry Context - Workday operates within the Zacks Internet - Software industry, where other companies like Getty Images Holdings, Inc. (GETY) have shown significant volatility, with GETY's stock closing 13.5% higher recently but having a -33.2% return over the past month [4] - The contrasting performance of companies within the same industry highlights the potential for investment opportunities based on individual company fundamentals [4][5]

Core Insights - Productive Day has launched the NEW Powerhouse Program to enhance workday productivity using its proprietary system, Taskology [1][2] - The initiative aims to help corporate executives, teams, and professionals streamline their work processes and achieve better results [1][2] - Taskology is designed to simplify workload management and improve efficiency by providing straightforward methods for managing tasks, time, email, and information [3][4] Company Overview - Productive Day, founded in 2003, specializes in consulting and training for corporate leaders, teams, and motivated professionals [5] - The company has a track record of helping clients reclaim 1-2 hours of their day and reduce email time by up to 50% [5] - The Powerhouse Program builds on the success of Taskology, which has been effective in delivering lasting results for over two decades [2][5]

Group 1 - Scrumconnect Consulting has signed a partnership agreement with Workday, Inc. to enhance Workday's presence in local government, academia, and the NHS in the UK [2] - Scrumconnect currently supports 16 of the CDDO's top 75 government services, demonstrating its effective user-centered approach [3] - A dedicated Workday Centre of Excellence is being established in Newcastle to assist customers in optimizing their Workday investments [3] Group 2 - As a Workday Partner, Scrumconnect will provide Application Management Services (AMS) in three areas: Build, Run, and Enhance [4] - The company aims to help organizations without in-house Workday expertise by supporting configuration, integration, and data management [4] - Scrumconnect has published a new guide for public sector leaders managing Workday, offering practical advice for post-implementation management [5] Group 3 - Workday Financial Management and Human Capital Management (HCM) provide comprehensive support for financial and people-based processes, enhancing operational visibility and adaptability [6] - Scrumconnect is committed to improving public sector digital services, focusing on user experience and delivering value [7]

Core Insights - Workday, Inc. is launching a new marketing campaign featuring rock stars Gwen Stefani, Paul Stanley, and Billy Idol to promote its AI agents, emphasizing the humorous contrast between the worlds of rock 'n' roll and corporate business [1][3][4] - The campaign includes two new TV commercials titled "Carmen the Rock Star" and "Goodnight Rock Stars," which will debut during The Masters event from April 7-13, 2025 [1][3] Company Overview - Workday is positioned as an AI platform designed for managing people, money, and agents, with a focus on enhancing business operations through advanced technology [8] - The company serves over 11,000 organizations globally, including more than 60% of the Fortune 500, indicating a strong market presence [8] Product Features - Workday's AI agents differ from typical task-based agents by offering a configurable set of skills that can perform hundreds of individual tasks, thereby streamlining and automating processes across various job roles [5][6] - The role-based agents include functionalities for Contracts, Payroll, Financial Auditing, Policy, Recruiting, Talent Mobility, Succession, and Optimize Agents, showcasing the versatility of Workday's offerings [6] Marketing Strategy - The campaign aims to illustrate how Workday's customers are the "true rock stars" of the business world, using the platform to effectively manage their operations [7] - Emma Chalwin, the chief marketing officer, highlights that the campaign reflects Workday's core value of fun and commitment to helping customers progress [7]