Quarterly Updates For Zscaler, Hims & Hers, and Workday

Let’s take a look at the quarterly reports - and update fair values - for Zscaler, Hims & Hers, and Workday.

Zscaler (ZS)

"Zero Trust" cloud security service provider Zscaler delivered another on-point quarter for its Q2. Revenue was up 35% year-over-year, deferred revenue (future sales) was up 35%, and billings grew 27%. It was business as usual, as Zscaler adds more customers, and scales up existing customers with more products and users. The company continues to execute right in line with the valuation model, so the fair value gets only a minor bump up to $159 from $155. The stock is trading a good bit above that at present, so we will hold.

Hims & Hers Health (HIMS)

A great quarter for Hims & Hers, which saw revenue grow 48% for the quarter and 65% for the year. Subscribers were up 48% to over 1.5 million. The firm continues to execute on the plan we outlined in the original write-up, and with 4 huge core product categories (sexual health, dermatology, mental health, weight loss), there is a lot of growth runway to go (over 100 million addressable population in U.S. alone). 2024 revenue guidance was above my modeling by 700 basis points (!), showing just what a strong growth story this continues to be. Even with a big jump in the stock, which has appreciated over 62% for us in just over 3 months, it still looks on the border of buyable. I’m raising the fair value price by a buck up to $17.

Workday (WDAY)

Workday is a "steady Eddie" company, with super-sticky clients and a predictable revenue model. Revenues grew 17% for the quarter over last year. Subscription revenue backlog was impressive at 20% growth, a testament to Workday’s continuing growth opportunities. New CEO Carl Eschenbach said it succinctly - Workday is the leading provider of solutions to help large organizations manage their people and money. Those are perhaps the two most important things for any organization!

Workday continues to chug along, and it remains an outstanding business. Now, if we could just get a decent buy-in price…. I’m raising the fair value a bit to $233 (from $220), but the firm’s attractiveness is no secret, with the stock trading close to $300. We will leave it on the Watch List and hope for a better price in the future.