Workday stock climbed on Wednesday amid the software maker's updated financial guidance at an analyst day. Activist investor Elliott Management disclosed a $2 billion stake in Workday, making it one of the biggest shareholders.
At the analyst day on Tuesday, Workday lowered its subscription guidance but hiked its outlook for some financial metrics. It also announced an expanded partnership with Microsoft.
"We walked away incrementally positive on the durability of the growth profile with higher-than-expected operating margin and free cash flow," said Goldman Sachs analyst Kash Rangan in a report.
Workday lowered its fiscal 2027 subscription revenue target to 13% from 15%. In fiscal 2026 it expects subscription revenue growth of 14%.
Elliott Management Surfaces
"With end-market growth in the low-teens and margins in the high-20s trailing large-cap peers in the low-40s, management's shift toward margin expansion over aggressive growth sets a more achievable bar," said Jefferies analyst Brent Thill in a report.
Meanwhile, Elliott Management said it was supportive of the company's plan laid out at the investor meeting. In 2023, the hedge fund built a position in Salesforce, leading the software maker to focus more on profitability.
Also, Workday increased its share repurchase program to $5 billion, up by $4 billion.
On the stock market today, Workday stock rose 8.4% to 237.33 in morning trading. In 2025, Workday stock had retreated about 13% as of Tuesday's market close.
Sana Labs Acquisition
Workday on Tuesday said it has agreed to buy artificial intelligence startup Sana Labs in a $1.1 billion deal. Sana sells an AI-native platform for learning and knowledge management.
"The acquisition of Sana helps create a one stop shop for enterprise search and workflow automation," said Bank of America analyst Brad Sills in a report. "Users will be able to find answers, information, and files by searching across companies most critical data sources. Additionally, it will empower agents to take proactive actions by anticipating needs, summarize insights, and assist with projects."
Workday sells software for human resources management, such as payroll tools. About 70% of revenue comes from human capital management products. It has expanded into financial software. Slowing subscription revenue growth has pressured Workday stock.
Workday and other software makers are rolling out autonomous, goal-driven AI "agents" that complete tasks on their own.
At the analyst day, Workday told analysts that annual recurring revenue from artificial intelligence products rose 50% to $450 million in the second quarter.
Software industry incumbents such as Workday, ServiceNow and Salesforce continue to acquire AI startups. In earlier deals, Workday purchased Evisort, Flowise, Paradox, HiredMind and Plex.
Workday Stock Technical Ratings
Workday reported second-quarter earnings that topped Wall Street estimates, while revenue edged by views amid lowered expectations. Q2 earnings rose 71% to 84 cents per share. Workday's revenue climbed nearly 13% to $2.348 billion, including acquisitions. Analysts expected Workday to post earnings of 75 cents per share on revenue of $2.342 billion.
Workday stock holds a Composite Rating of 67 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Workday stock has an Accumulation/Distribution Rating of D, according to IBD MarketSurge analysis. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Salesforce will host its annual Dreamforce conference on Oct. 14-16. At the event, more AI announcements are expected.
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