WDAY · Workday
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $180
Note written ·
Price against the kill line
9.1% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $180.00, on record since 10 November 2026. The shares are up 2.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $180, which would take the shares back toward where they traded before the 13 August 2026 Reuters report on Silver Lake. Fiscal third-quarter cRPO growth under the guided 11% low end, or a public end to the talks, would also show the case failing.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 27 August 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 2,649
- Revenue, change on a year (%)
- +12.8
- Operating margin (%)
- 11.8
- Free cash flow, four quarters ($M)
- 2,844
- Net cash, cash less debt ($M)
- 414
- Price to earnings (×)
- 38.7
- Enterprise value to sales (×)
- 4.7
- Enterprise value to operating income (×)
- 44.3
All filed numbers
What Workday reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 2,649 | +12.8 | 11.8 |
| first filed | 2,542 | +13.5 | 13.3 |
| first filed | 2,532 | +14.5 | 6.9 |
| first filed | 2,432 | +12.6 | 10.6 |
| first filed | 2,348 | +12.6 | 10.6 |
| first filed | 2,240 | +12.6 | 1.7 |
| Pre-tax income ($M) | 327 |
| Net income ($M) four quarters: 1,251 | 632 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | −8.8 |
| Operating cash flow ($M) | 3,081 |
| Capital spending ($M) | 237 |
| Free cash flow ($M) | 2,844 |
| Cash and short-term investments ($M) | 3,403 |
| Debt ($M) long-term debt | 2,989 |
| Net cash, cash less debt ($M) | 414 |
| Deferred revenue ($M) +13.8% on a year | 4,459 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 1,895 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 6,460 |
| Market value ($M) | 48,387 |
| Enterprise value, market value plus net debt ($M) | 47,973 |
| Enterprise value to sales (×) | 4.7 |
| Enterprise value to operating income (×) | 44.3 |
| Price to earnings (×) | 38.7 |
| Price to book value (×) | 7.5 |
| Free-cash-flow yield (%) | 5.9 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.2% of shares outstanding sold short, 6.0 days of average trading to cover, +1.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $188.8M |
| 12 monthsfrom | $0 | $574.0M |
The thesis
Workday's shares are modestly more likely to beat the S&P 500 over the next three months. The business is slowing but intact, and the shares still carry an unconfirmed Silver Lake take-private premium. The fiscal third-quarter report on 24 November 2026 settles whether current remaining performance obligations (cRPO, the contracted subscription revenue due within twelve months) grow inside the guided 11%–12%.
The shares closed at $190.64 on 12 November 2026. That is 19.5% below the 52-week intraday high of $236.80 (25 November 2025) and 4.0% below the close three months earlier, $198.68 on 14 August 2026. The shares fell 3.63% on 6 November 2026, from $200.17 to $192.90, with no company-specific catalyst in same-day coverage (JKN News). They have closed between $188.89 and $192.90 in every session since.
The guide already assumes a sharp slowdown from the 14.2% cRPO growth reported for the second quarter. A result inside the range would support the shares. A figure under 11% would show the case is wrong.
Coverage through 12 November 2026 shows no merger agreement and no per-share offer, three months after Reuters reported on 13 August 2026 that Silver Lake was in talks. Workday has said it does not comment on speculation. Company news on 12 November 2026 was routine: a Zuora partnership expansion on billing and usage-based pricing, a PayPal employee financial well-being partnership, and a Josh Bersin Company integration of its Galileo AI agent.
Bullish and bearish views on Workday, Inc.
The bull case on Workday, Inc. (WDAY), in brief: the guide already assumes a slowdown. The bear case: ServiceNow showed the penalty for backlog disappointment.
Bull case
- The guide already assumes a slowdown. Workday guided fiscal third-quarter cRPO growth to 11%–12% on 27 August 2026, after 14.2% growth to $9.034 billion in the second quarter. The same release guided subscription revenue of $2.515 billion, up 12%, and a 30.0% adjusted operating margin.
- Long-term targets were reaffirmed. At its 13 October 2026 analyst day Workday kept its fiscal 2028 targets: 11% subscription revenue growth entering the year, adjusted operating margin above 33% and $15 of free cash flow per share (Yahoo Finance coverage, 14 October 2026).
- AI revenue is becoming measurable. Workday said on 13 October 2026 that annual recurring revenue from its artificial intelligence products is approaching $600 million, and that about 25% of its core customers use one or more of them.
- Margins are moving up. Second-quarter adjusted operating margin was 31.1%, and full-year guidance rose to 31.0% (Workday results release, 27 August 2026).
- Capital return continues. Workday authorized a $4.0 billion Class A buyback on 27 August 2026, per its 8-K. On 22 October 2026 it priced $2.5 billion of senior notes and said it plans to retire $1.0 billion of 3.500% notes due 2027.
Bear case
- ServiceNow showed the penalty for backlog disappointment. ServiceNow's shares fell about 27% on 29 October 2026 even with revenue up more than 20% to $4.11 billion (CNBC). Workday fell about 5% the same day, according to 24/7 Wall St.
- The premium rests on press reports. Coverage put Workday's market value near $43 billion before the 13 August 2026 Reuters report and about $51.1 billion at that day's close of $206.45. No offer price has been reported, and the shares now trade below that close.
- The founders decide any deal. Trade coverage puts the co-founders' combined voting power near 68% through Class B shares, so no transaction closes without them. Co-founder David Duffield, a 10% owner, sold 99,835 shares at an average $187.55 on 9 October 2026 under a Rule 10b5-1 plan (SEC Form 4, filed 13 October 2026).
- Analysts have turned more cautious. KeyBanc downgraded Workday to Sector Perform on 16 October 2026. Several executives also sold shares in October under Rule 10b5-1 plans, including Chief Financial Officer Zane Rowe, who sold 6,000 shares at an average $187.23 on 6 October 2026 (SEC Form 4, filed 7 October 2026).
- Selling resumed without news. The 3.63% fall on 6 November 2026 had no company-specific trigger in JKN News coverage, which fits a deal premium wearing away as weeks pass without an agreement.
Price setup
The last close was $190.64 on 12 November 2026. The 50-day average of adjusted closes is $193.52, so the shares sit just under it. The 200-day average is $155.91, well below. The 52-week closing low was $112.50 on 10 April 2026.
The shares closed at $206.45 on 13 August 2026, the day of the Reuters report, and have not regained that close. Trading before the report was in the range implied by the roughly $43 billion market value cited above. A fall back toward that range would indicate the market has priced out most of the deal premium.
The post-report session on 25 November 2026 is the first chance to see how the shares price the cRPO figure and the fourth-quarter guide, after software peers sold off on backlog worries in late October.
Catalysts ahead
- 24 November 2026: Fiscal third-quarter 2027 results after the US close, with the call at 1:30 p.m. Pacific Time. Settles whether cRPO growth lands inside the guided 11%–12% range and whether the 31.0% full-year adjusted operating margin guide holds.
- 25 November 2026: First US trading session after the fiscal third-quarter report. Shows how the shares price the backlog figure and the fourth-quarter guide, after ServiceNow's 27% fall on 29 October 2026 raised the cost of a disappointment.
What would change the view
A daily close below $180, which would take the shares back toward where they traded before the 13 August 2026 Reuters report on Silver Lake. Fiscal third-quarter cRPO growth under the guided 11% low end, or a public end to the talks, would also show the case failing.
The risks this note tracks, each with what would confirm it:
- The reported Silver Lake discussions end without a transaction. Confirmed by: a statement from Workday or Silver Lake that talks ended, or a report from Reuters or another major outlet that they have collapsed.
- Subscription backlog growth falls below management's published range. Confirmed by: fiscal third-quarter cRPO growth under the 11% low end of the 27 August 2026 guidance, reported on 24 November 2026.
- Investors extend ServiceNow's bookings slowdown to all enterprise software. Confirmed by: further large falls in software peers on backlog guidance, or a weak fourth-quarter cRPO guide from Workday on 24 November 2026.
- The deal premium erodes as weeks pass without an agreement. Confirmed by: more sessions like 6 November 2026, when the shares fell 3.63% with no company-specific news, carrying the price toward the pre-report range.
- Analyst ratings and targets keep drifting lower as deal hopes fade. Confirmed by: further downgrades or target cuts of the kind KeyBanc made on 16 October 2026, when it moved Workday to Sector Perform.
What it trades with
Workday trades with enterprise software. From 23 October to 30 October 2026 it fell 5.8%, against 5.7% for the IGV software fund, 33.9% for ServiceNow and 2.0% for the Nasdaq Composite (FourWeekMBA, using Yahoo Finance closes). The near-match with IGV shows the deal premium has not insulated the shares from sector selling.
The take-private reports add a stock-specific factor that peers lack. Deal news would move Workday independently of the sector. Without it, ServiceNow and Salesforce results and AI-disruption sentiment set much of the direction.
The evidence, claim by claim (7)
- Workday will report fiscal third-quarter 2027 results after the US close on 24 November 2026, with a call at 1:30 p.m. Pacific Time. Workday press release, 2 November 2026 · as of
- Fiscal second-quarter 2027 cRPO was $9.034 billion, up 14.2%; subscription revenue was $2.471 billion, up 13.9%; adjusted operating margin was 31.1%. Workday fiscal second-quarter 2027 results release · as of
- Workday guided fiscal third-quarter cRPO growth to 11%–12%, subscription revenue of $2.515 billion (up 12%) and a 30.0% non-GAAP operating margin; it raised full-year adjusted operating margin guidance to 31.0% and authorized a $4.0 billion Class A buyback. Workday fiscal second-quarter 2027 results release and 8-K · as of
- Workday reiterated fiscal 2028 targets of 11% subscription revenue growth entering the year, non-GAAP operating margin above 33% and $15 free cash flow per share; AI annual recurring revenue is approaching $600 million. Yahoo Finance coverage of the Workday analyst day · as of
- Reuters reported Silver Lake was in talks to acquire Workday; the shares closed at $206.45, a market value of about $51.1 billion against about $43 billion before the report, with no offer price disclosed. Reuters report as carried by Investing.com and SiliconANGLE · as of
- ServiceNow shares fell about 27%, their worst day ever, after third-quarter results with revenue up more than 20% to $4.11 billion. CNBC, 29 October 2026 · as of
- Co-founder David Duffield, a 10% owner, sold 99,835 shares at an average $187.55 on 9 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 13 October 2026 · as of
Sources
- Workday ·
- Workday, Inc. - Form 8-K · sec.gov ·
- Workday Shares Retreat Nearly 4% on Wall Street · news.jkn.co.kr ·
- ServiceNow shares plunge 27% to worst day ever after earnings revive AI disruption fears · cnbc.com ·
- ServiceNow Tumbles 19% as Slower Contract Growth Overshadows Raised AI Target; Salesforce Slides 6%, Workday Drops 5% · 247wallst.com ·
- ServiceNow Fell 34% in a Week as Software Sold Off Around It · fourweekmba.com ·
- SiliconANGLE ·
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