WDAY
Workday, Inc.
$205.72
High-Growth Software
80%
Revenue × Terminal Margin DCF
Mild
·
Conviction
Overvalued
Trading 0.2% above fair value
You pay
$205.72
Bear
$127.61
Fair
$205.38
Bull
$282.75
Bear
$127.61
-38.0%
8% rev growth, 20% terminal margin
Fair
$205.38
-0.2%
14% rev growth, 26% terminal margin
Bull
$282.75
+37.4%
18% rev growth, 30% terminal margin
Adjust Assumptions
14.0%
26.0%
12.0%
Key Value Driver
Revenue growth (14%) × margin expansion to 26%
Terminal Value % of EV
50%
Implied Market Multiple
5.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (81 analysts)
$201.85
Divergence from AlphaVal
2%
Summary
Projecting 14% revenue growth with FCF margins expanding from 30% to 26% over 10 years, discounted at 12%, the base-case value is $205.38 per share.
Warnings
Gross margin of 76% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep