Once upon a time, the enterprise resource planning (ERP) software space only had a few players. Today, companies like Workday (WDAY) offer businesses new options through their software as a service (SaaS) platforms.
The company grew from securing $75 million in capital in 2009 to nearly $2.5 billion in annual revenue. Workday currently boasts 8,200 employees and consistently ranks as one of the best places to work. Its software provides end-to-end solutions for recruiting and human resources management for companies of all sizes.
Many companies pick Workday’s software for its user-friendly interface and navigation. Customers include big names such as Eli Lilly, Bridgestone, DBS Banks and nearly 2,200 others.
Workday at a glance
Founded in 2005, Aneel Bhusri and Dave Duffield created one of the first cloud-based applications for finance and HR management. In recent years, the company used its strong cash position to acquire other software companies to add to its portfolio.
Over the years the company hit several major milestones:
- November 2006: Launched Workday Human Capital Management.
- August 2007: Released beta version of Workday Financial Management.
- October 12, 2012: Workday debuted on the NYSE.
- September 2013: Created Workday Student, a cloud application geared towards higher education.
- October 2015: Workday hits 98% satisfaction, the best out of all major enterprise application providers.
- June 2018: Signed a deal to acquire Adaptive Insights software for $1.55 billion.
Learn more about the company’s history.
History of Workday stock
Since its debut in 2012 at $28 per share, the company’s first day of trading closed at $48.69, a whopping 73.4% gain. If you had invested at the initial public offering price of $28, you would have seen the stock rise to $54.50 a share by the end of 2012 and hit a high in 2018 of $157.12. A $1,000 purchase of stock at the IPO would have been worth $1,946 at the end of 2012 and $5,611 at its peak in 2018.
Why Purchase Workday Stock?
Pros of purchasing Workday stock:
- Workday has consistently grown revenues every year since its IPO and grew over 36% in 2016.
- Gross margin hit 70.6% this year, expanding from 51.4% in 2012.
- Over $1 billion in annual revenue per year.
- Market research firm Gartner expects the Global SaaS market to grow at 18.4% CAGR from 2016-2020.
Cons of purchasing Workday stock:
- The company has yet to post positive earnings in any year.
- Large competitors Oracle and SAP are working to add innovation to their product lines.
- Its stock currently trades at expensive ratios of 13x sales and 20x tangible book value.
How to Purchase WDAY
Workday’s stock trades under the ticker symbol WDAY on the NASDAQ exchange. You can pick up shares of Workday following these simple steps:
- Decide how much you want to invest.
Look at your overall portfolio and determine how much you want to invest in Workday’s stock. Consider your overall risk profile and how adding Workday will change your portfolio’s risk.
- Select a stockbroker.
Choose a stockbroker that is registered and regulated with the US Securities and Exchanges Commission. Most large banks also have brokerage arms.
- Purchase shares of Workday.
When you’ve decided the number of shares you want to purchase and picked a broker, place an order to buy shares of Workday.
Your order will only execute during the regular trading session, unless you place a special order for extended hours.
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Future Outlook for Workday Stock
Though its share over the overall ERP market remains small, Workday currently owns 20% of the cloud ERP market. The company currently spends $187 million in capital expenditure to invest in its future. By expanding beyond human resource management into talent management, Workday looks to take more market share from competitors.
While the company experienced sizable growth in the past several years, it will begin to face significant competition in the finance ERP market. Larger competitors like Oracle and SAP have extremely deep pockets and are expected to defend their market share.
Additionally, Workday continues to make headway into the international markets. The company grew revenues outside the U.S. by 28% last year. Workday brought on customers such as Shell Oil, Siemens and Johnson Electric into its international business.
Final Thoughts
Workday holds nearly $3 billion in cash and short term investments on its balance sheet. In fiscal 2018, the company generated $465.7 million in cash from operations. Even with tough competition and the large amount of capital available, Workday sits in a good position to be able to continue to invest in its future.