Hotchkis & Wiley Global Value Fund on Workday, Inc.
Thesis
Hotchkis & Wiley believes AI-disruption fears around Workday materially underestimate the durability of mission-critical enterprise systems and the cost and risk of replacing them. Recent fundamentals did not support the bear case: subscription revenue grew 14%, the 12-month backlog grew 16%, retention remained strong and margins expanded. Workday is also deploying its own AI agents, giving the company a path to participate in AI adoption rather than simply being displaced by it.
“We continue to believe the disruption thesis significantly underestimates enterprise switching costs and the non-code moat that makes Workday durable.”
Key risks
- AI disruption of enterprise application software