What Happened?
Shares of enterprise software company Workday (NASDAQ: WDAY) jumped 3.7% in the afternoon session after the company announced the appointment of Zakaria Haltout as group vice president to lead its expansion in the Middle East.
Haltout, who had over 20 years of leadership experience in the region, was set to establish and grow Workday's direct operations there. This appointment demonstrated the company's commitment as Middle Eastern enterprises increased their investments in AI and cloud technologies. Adding to the positive sentiment, Workday also completed its acquisition of Sana, a leading AI company. The move was expected to allow Workday to integrate Sana's AI-powered knowledge tools into its platform, creating a more intelligent interface for its users.
After the initial pop the shares cooled down to $230.62, up 3.2% from previous close.
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What Is The Market Telling Us
Workday’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 12.4% on the news that the company reported underwhelming third-quarter results.
Its billings missed, as the company observed continued deal scrutiny in EMEA. Also, key deals slipped in the quarter, affecting revenue recognition. Regarding its AI potential, management's comment suggests it is still early days. This may have unsettled some investors who were hoping for more optimistic updates, especially in light of stronger results reported by some SaaS peers. Guidance also fell slightly short, with Q4 subscription revenue and non-GAAP operating margin missing by a bit. Overall, this quarter was weak, leaving room for improvement.
Workday is down 8.4% since the beginning of the year, and at $230.62 per share, it is trading 17.6% below its 52-week high of $279.91 from December 2024. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at an investment worth $1,025.
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