Workday Inc (NASDAQ:WDAY) is set to report first quarter results after Thursday’s closing bell as investors weigh slowing growth trends, questions around its artificial intelligence strategy, and whether the company can sustain its long-term margin and revenue targets following recent leadership changes, analysts at Jefferies have highlighted.
The software company, which has seen its shares fall roughly 16% since Aneel Bhusri returned as chief executive, is expected to post in-line results for the fiscal first quarter, according to the analysts.
The brokerage said estimates for subscription revenue growth of about 13% and current remaining performance obligations (cRPO) are appropriate heading into the print.
However, Jefferies flagged execution risk and said it sees limited upside to near-term estimates, noting that a lack of a breakout product and rising AI-related investment costs could weigh on margins.
A key focus for investors will be Workday’s artificial intelligence roadmap, which remains relatively unclear, according to Jefferies’ channel checks.
The firm said AI currently represents about 4% of revenue and adoption of AI-focused products appears early-stage, with partners describing integration of acquired assets and new AI tools as still developing.
Jefferies outlined several questions for management, including how AI will contribute to revenue growth, when it could become a meaningful driver of sales, and whether the company’s fiscal 2028 growth target of 13% to 14% remains achievable.
The firm noted that target implies market share gains against competitors such as SAP and Oracle, despite intensifying competition in back-office software.
Margin trajectory will also be in focus, with investors concerned that increased AI investment could slow operating margin expansion. Workday has previously indicated fiscal 2027 operating margin expansion toward 30%, though Jefferies suggested expectations for continued improvement may be too optimistic given current spending trends.
International growth is another area of scrutiny. While international markets represent roughly half of Workday’s total addressable market, Jefferies noted that growth in that segment has decelerated, lagging the US in the most recent fiscal year.
Despite near-term concerns, Jefferies pointed to strengths including high customer retention of about 97% and a user base of roughly 75 million, saying these factors support the company’s positioning in enterprise software.
However, it maintained a ‘Hold’ rating, citing execution risk and uncertainty around Workday’s medium-term growth and margin outlook.
Shares of Workday traded down 4% at $121, down about 43% in the year to date.
