Rule of 40 - WDAY

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From NTNX slide deck conversation started here: http://discussion.fool.com/ntnx-revisited-33013290.aspx?sort=who…

Rule of 40: Sum of FCF & sales growth should be 40% or greater.

Slide 53 states 21 public software companies received a rule of 40 score > 40%.
They excluded all companies with <20% growth or < $200m in revenue unless IPO was 2009 or later.

Of the 21 companies that met criteria, here are the six companies specifically listed in the presentation:
VMW
CRM
NOW
SPLK
WDAY
NTNX

I purchased a small amount of WDAY back when it was recommended by RB in 2016: https://www.fool.com/premium/rule-breakers/coverage/1069/cov…. Haven’t bought more, but it’s always near the top of the list when making allocation decisions.

I always thought it fit the mold of stocks on this board, but don’t have the chops to analyze its financials. I do find the pedigree to be impressive. Company led founders are Dave Duffield and Aneel Bhusri both formerly of Peoplesoft.

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FWIW Cramer has 7 cloud players which overlap your list with WDAY NOW CRM and SPLK.
I know he’s a controversial figure but at least he is one of the few commentators that I have seen acknowledge the cloud players and SAAS.

https://www.cnbc.com/2018/03/12/cramer-introduces-the-cloud-…

Rob

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I work in IT for a large corporation. We switched to using Workday for our HCM. It was the smoothest implementation we have ever had for switching to cloud solution. As employee, that’s where I go to see my paystub, search for internal jobs, etc. etc. and it is good, user-friendly interface.

We switched to many cloud solutions and find short-comings in most of them (eg. using SailPoint for access management and everyone hates it!), except in Workday everyone seems to be happy. As developer myself, I focus a lot of UX experience. Workday delivers it all.

I hope that this is not “noise” since it is feedback from real world.

(I don’t own any WDAY as I am just starting my active investment journey)

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PDXFool23 et al:

I work for a large I/T vendor that switched to Workday 2 years ago - it was also the smoothest implementation I’d ever seen of a major system in the 7 years I’ve worked for my employer. As a manager, Workday has made my life so much easier. I can now manage almost twice as many employees with the same administrative effort. It also gives me capabilities like 360 degree feedback mechanisms, customer reports, simplified hiring, and approval workflows that I could not do before in my current or former companies.

I don’t currently own WDAY stock, but it’s on my watch list and my gut is it would be a wise investment.

…Marc

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