Episode Details

Workday, Inc. Q1 2026 earnings breakdown - conversational walkthrough with a price-aware verdict and Wall Street consensus comparison. THE CALL: BUY (4/5 conviction, STRONG) - CURRENT @ $121.85 - same - BUY below $120.00 with $100.00 stop - AVOID above $185.00 TRIGGER: Watch for Q2 subscription backlog growth holding above 13 percent and any AI-attach disclosure that reaccelerates net new bookings, which would justify a re-rating back above $160. WINDOW: 12-18 months. TRACKER: charged-alpha.com/calls/WDAY WALL STREET CONSENSUS - Ratings: 0 Strong Buy / 45 Buy / 34 Hold / 2 Sell / 0 Strong Sell - BUY - Median 12-month price target: $173.50 (range $110 - $230) - Charged Alpha vs consensus: Charged Alpha call is broadly in line with consensus. THESIS Workday is the cheapest scaled enterprise-SaaS compounder in the market at roughly 3.3x EV/Sales, growing subscription revenue in the mid-teens with a record 13.3 percent GAAP operating margin and a 24 percent free-cash-flow margin. The market is still pricing the death of hyper-growth and ignoring the birth of a durable, highly profitable franchise. Bull lever: If subscription growth holds near 14 percent and non-GAAP operating margin lands at the high end near 29 percent, FY27 free cash flow clears three and a half billion and the stock re-rates toward 5x sales, a clear path back to $185 plus. Key risk: Enterprise software budgets are under scrutiny and a sharper deceleration in Human Capital Management bookings, or AI vendors disintermediating the back office, would compress both growth and the multiple. QUALITY CHECK - Management quality grade: A- (Carl Eschenbach brought go-to-market and operating rigor from VMware; the margin inflection under his tenure has been dramatic and capital allocation now includes a disciplined buyback.) - Earnings quality grade: B (Cash conversion is outstanding and the beat carried no one-time helpers, but the gap between GAAP and non-GAAP earnings is wide because stock-based compensation runs at a heavy sixteen percent of revenue.) CHAPTERS 0:00 Hook 0:18 The Print 1:12 The Trend 1:57 The Segments 2:41 The FCF Bridge 3:29 Guidance & The Narrative Diff 4:32 Peer Dot-Plot 5:16 Management & Earnings Quality 6:47 S8_Call KEY METRICS - Q1 FY2027 - Revenue: $2,542M (+13.48% YoY, +0.99% vs est) - EPS GAAP: $0.87 (vs $0.78 est, +11.5% beat; +248% YoY) - EPS non-GAAP: $2.66 - Gross margin: 83.79% - Operating margin: 13.3% GAAP (record) - FCF margin: 24.2% ($616M; TTM FCF ~$3B) - Subscription revenue: +13.8% YoY, 92% of total - EV/Sales: ~3.3x vs NOW ~14x SEGMENT HIGHLIGHTS - Subscription (92% of revenue): up ~13.8% YoY - Professional services: ~8% of revenue, near breakeven - International: over 25% of revenue, growing ~15% - 12-month subscription backlog: growing low-teens GUIDANCE - FY27 outlook reaffirmed; subscription revenue ~$9.9B (+14%) - Non-GAAP operating margin target ~28-29% - $1B share buyback program in place DATA SOURCES - FMP (financialmodelingprep.com) - Workday Q1 FY2027 Earnings Release (2026-05-21) DISCLAIMER This is for informational and entertainment purposes only. Not financial advice. Charged Alpha does not have a position in WDAY. Do your own research before any investment decision. #WDAY #Workday #enterprisesoftware #SaaS #cloud #earnings #investing #ChargedAlpha