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How Stronger Guidance and Buybacks Could Shape Workday’s (WDAY) AI-Driven Margin Story

Simply Wall St · 1d ago
  • Workday, Inc. recently reported past third-quarter results showing revenue of US$2,432 million and net income of US$252 million, alongside updated guidance calling for fourth-quarter subscription revenue of US$2,355 million and full-year subscription revenue of US$8,828 million, plus the completion of multiple share repurchase tranches totaling 6,668,234 shares for about US$1.59 billion.
  • Separately, Tabulera announced a new partnership integrating its benefits reconciliation platform with Workday Human Capital Management, enhancing automation, reducing billing errors, and potentially increasing the appeal of Workday’s ecosystem for HR and payroll clients.
  • Now we’ll examine how Workday’s stronger subscription revenue guidance and completed buybacks may influence its AI-focused, margin-improvement investment narrative.

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Workday Investment Narrative Recap

To own Workday, you need to believe its cloud HCM and finance platform, increasingly infused with AI, can keep winning large, sticky enterprise customers despite intense competition. The latest Q3 beat, firmer subscription revenue guidance and active buybacks support the near term focus on profitable growth, while the biggest ongoing risk remains that heavy AI and M&A investment does not translate into the margin gains many shareholders are watching for. On balance, the new information does not radically change that near term setup.

The fresh subscription revenue guidance for Q4 and the full year matters most here, because it directly ties into Workday’s key catalyst: broad adoption of its AI enabled HR and finance products that support higher average contract values. The Tabulera integration fits around that story by making Workday’s HCM stack more useful day to day, but it is the confirmed subscription revenue trajectory that most clearly relates to how the recent AI and efficiency narrative is tracking.

Yet, while Workday leans into AI driven growth, investors should also be aware that rising R&D and acquisition spend could...

Read the full narrative on Workday (it's free!)

Workday’s narrative projects $12.9 billion in revenue and $1.8 billion in earnings by 2028. This requires 13.0% yearly revenue growth and an earnings increase of about $1.2 billion from $583.0 million today.

Uncover how Workday's forecasts yield a $277.28 fair value, a 29% upside to its current price.

Exploring Other Perspectives

WDAY Community Fair Values as at Dec 2025
WDAY Community Fair Values as at Dec 2025

Twelve Simply Wall St Community valuations for Workday span roughly US$233 to US$348 per share, underscoring how far apart individual expectations can sit. Against that backdrop, the company’s heavy AI and M&A spending, which may or may not yield the margin expansion many expect, gives you a concrete lens to compare these different views and explore several alternative takes on the story.

Explore 12 other fair value estimates on Workday - why the stock might be worth as much as 62% more than the current price!

Build Your Own Workday Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.