Shares of Workday climbed nearly 9% on Wednesday after activist investor Elliott Management revealed a stake of more than $2 billion in the company and expressed support for its leadership. Workday has been actively working to maintain its competitive edge in a consolidating human resources software market, where integrating AI has become essential to meeting evolving client demands.
In a move to signal its confidence in its long-term growth trajectory, the company announced on Wednesday its plan to buy back $5 billion worth of its stock through fiscal 2027. On Tuesday, Elliott praised Workday’s chief executive officer and finance chief, citing their strong recent progress and describing the management team as both proven and effective. The investor also stated that it was encouraged by its ongoing engagement with Workday and believes the company’s multi-year strategy is well-positioned to deliver significant long-term value for its shareholders.
Jefferies analysts noted that Elliott’s disclosed stake could add “healthy pressure” on the company to meet its free cash flow targets for fiscal 2028. In a separate development, the California-based firm announced a deal on Tuesday to acquire AI firm Sana for approximately $1.1 billion, adding to its recent series of AI-focused acquisitions that included Paradox and Flowise.
Analysts at Evercore ISI remarked in a note that “Workday is evolving its core platform and making acquisitions that should help the company deliver durable growth in an AI world.” Workday’s customers rely on its single cloud-based platform, which provides applications for managing services such as recruitment, payroll, accounting, and audits. The Sana acquisition adds to a flurry of deal-making activities within the HR software sector, especially after private equity firm Thoma Bravo agreed to purchase Workday’s rival, Dayforce, for $12.3 billion last month.
