Pzena Investment Management, LLC - Focused Value on Workday, Inc.
Thesis
Pzena initiated Workday after the broader software sell-off caused by fears of AI disruption. The firm views Workday's cloud ERP products as mission-critical because they are deeply integrated into accounts payable, payroll, tax, financial reporting, and other core workflows, with gross revenue retention approaching 98%. Pzena believes the market is underappreciating that stickiness and also sees AI as a potential source of margin expansion, including through software development efficiencies.
“We believe the mission-critical nature of Workday’s offerings is underappreciated by the market, and we see a significant opportunity for AI-driven margin expansion, including in software development.”
Key risks
- AI-driven disruption to enterprise software