Market Overview

Workday Uses Analyst Conference To Highlight Its Differences From Competition

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Workday Inc’s (NYSE: WDAY) analyst day and user conference highlighted a number of “critical differences” in the company’s underlying architecture versus that provided by competitors, Baird’s Steven M. Ashley said in a report. He maintained an Outperform rating on the company, with a price target of $95.

Workday’s Rising attendance came in at 7,000, up 30 percent y/y, including over 620 prospective customers versus last year’s 420 number. Customer satisfaction of 97 percent was impressive and in-line with that recorded over the previous four years, analyst Ashley mentioned.

Financial Management

Workday announced two new Financial Management customers, namely Panera Bread Co (NASDAQ: PNRA) and Denny's Corporation (NASDAQ: DENN).

“Financial Management application continues to gain traction and the company now reports 250 Financials customers (up from 160 at Rising one year-ago). Our conversations with partners in expo hall included bullish comments on Financials pipeline and hiring,” Ashley wrote.

Strong Growth Ahead

From a bottom-up perspective, the current penetration, at ~1,350 customers, represents merely 4 percent of prospective target customers, which includes 33,000 companies with more than 1,000 employees. From a top down prospective, Workday indicated a TAM of $65 billion, up from $60 billion last year and $40 billion at its IPO.

“Updated TAM framework shows Workday in the early stages of a strong growth story,” the analyst commented.

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