Workday (WDAY) Stock Forecast & Price Target

Workday demonstrated significant growth in its financial metrics, with a nearly doubled annual contract value (ACV) for its Recruiting Agent in Q4 compared to Q3, alongside an increase in average selling price (ASP) for the core Recruiting solution. The company's strong performance was supported by effective back-to-base selling and a 30% contribution from new business, reflecting robust full-suite adoption. Furthermore, an increase in FY26 non-GAAP operating margins to 28% emphasizes Workday's commitment to balancing profitability with growth, alongside a notable 15% projected growth in subscription revenue.

Workday's outlook appears negative as the company reported a subscription revenue guidance of $2.05 billion for F1Q25, which is slightly below consensus estimates, alongside maintained full-year FY26 guidance of $8.8 billion that reflects only a modest 14% year-over-year growth despite an unfavorable foreign exchange impact. Furthermore, Workday's New Annual Contract Value (ACV) has seen a decline of 7% year-over-year, indicating potential difficulties in attracting new business, which raises concerns about future revenue growth. Additionally, the company's operating cash flow guidance of $2.75 billion for FY26 falls short of the $2.91 billion consensus, exacerbated by significant cash outflows related to restructuring efforts.