Workday 2027年第一季度：良好开端，仍需关注更多

+1917344 8506mark.moerdler@bernsteinsg.com +1 917344 8316firoz.vallj@bernsteinsg.com +1917344 8342shelly.tang@bernsteinsg.com Workday 1Q27: good start, more to watch 14.3%,beating consensus slightlyand 2Q guide was slightlyaboveconsensus.Keymetricsin thequarter remain healthy,with cRPO up 15.5%.AIARR reached $500M (includingSana) this quarter and management noted strong traction in consumption buildup which willpositively impact 2H and more in FY28 Whilethis was not a blowout quarter,givenstreet concernsaround SaaS apocalypseand Alongside earnings today, Workday held Sana Al Summit today, where they launched 2new agents (ITSM agent and Travel agent), expanding its product portfolio and TAM; andannounced Sana CEO, Joel Hellermark, to be the Chief AI Officer at Workday. For the stock to ultimately work, investors will want to see 1) growth acceleration and 2)validation of Al success, but given the depressed valuation (11x P/E),a streak of steadyresults should help strengthen investor confidence and drive stock performance in the nearterm.Fundamentally, we like WDAY's growth prospects, its Al strategy and its execution onmargin improvement. While it continues to be a show-me storyuntil one of the two catalystshappens, we think low valuation provides downside protection with upside optionality. Investment Implications Workday ($216 PT, Outperform): We continue to think that existential concern on systemof record businesses like Workday are overblown. While it would take time to disprove thebear thesisandseegrowthinflection,givendepressedmultiple,steadyand healthyresultsshouldhelpstrengtheninvestorconfidenceanddrivestockperformanceintheneartermGiven the durability of the business and margin improvement potential, we continue tolike the story. We raised our PT from $214 to $216,as we rolled forward our estimatesand lowered our target P/FE multiple from 16x to 15xto reflect step-down in peer groupvaluation. Source: Bloomberg,Bernstein estimates and analysis. (inlinewithhistoricalcadence)andtheir2Qguidewasalsoslightlyaboveconsensus.Keymetricsinthequarteralsoremainhealthy, with cRPO up 15.5% this quarter and retention staying at 97%. AI ARR reached $500M (including Sana) this quarter,will positively impact 2Hand more inFY28. clean quarteris what Workday needs and given the beaten-down expectation, the results drove the stock up 11% aftermarket announcements: ·Announced Sana CEO,Joel Hellermark,to be the Chief AI Officer at Workday. Sana is going to become the foundation of where Workday builds Al and the future front-end for Workday. In summary, the company is driving in the right direction, and we continue to like the story long-term with improving marginsandstablegrowth.Webelievethefundamentalsofthecompanyisintact,theAlriskonERPandHCMisoverblownandvaluewill continueto accrueto systemof recordsolutions,aswe havewritten innumerousnotesrecently.Whileforthestocktowork investors will want to see growth stabilization and then re-acceleration, and it would take some time to disprove the bearstrengthen investor confidence and drive stock performancein the near term.Given the $50OM Al ARR momentum that'sbeats in the subsequent quarters. In general what is the catalyst to drive the stock? We believe one of two things intothebusiness)whichwearewatchingforatanumberofourcoveredcompanies.Thetimingforwhichisstilluncertainbut webelieveit islikelyinlateCY26or atthelatestinearlyCY27. Validation that Al is not going to replace the incumbents (whether tools companies can use to build their own apps orAl competitors), in this case Workday. In all our conversations with Al and industry experts we continue to see a growing Overall, Workday continues to bea show-me story until one of the two catalysts happens -which could take a couple morelowvaluation provides down-sideprotection with upside optionality. KEYHIGHLIGHTSFROMTHEQUARTER 1Q key financial metrics summary: as Exhibit 2 shows, Subscription revenue in 1Q was $2.354B, up 14.3% from last year,slightly ahead ofconsensus.Total revenue of $2.542Brepresents 13.5% growth.US revenue inQ1was $1.89B,up 13%,and International revenue was $649M,up16%.Gross revenue retention rateis 97%,which remains relatively consistentthrough multiple quarters. Non-GAAP operating margin came in at 31.8% this quarter, above consensus as the company Margins: The company is being very disciplined driving operational leverage which is translating into consistent marginimprovement. (Exhibit 3). We continue to believe the company has a lot more room for margin improvement and could end Alisbecoming more real:Al products reached $50OM in ARRthis quarter,another step-up from the $40OM ARRlastquarter (4Q26) and 1.5 points of ARR contribution in 3Q25 (roughly $120M ARR, which did not include Sana impact).This puts Workday in the same neighborhood and potentially slightly ahead of a few other SaaS players. While some ofthe contribution comes from acquired solutions such as Paradox and Sana, we lik