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Workday Inc. (NASDAQ: WDAY) announced yet another impressive quarter on Thursday after the market closed. This time, the company accelerated its already impressive growth on the strength of its core business and continued additions of large enterprise customers.
Shares are up nearly 10% in after-hours trading as the market absorbs the news. So let's open the books to get a better idea of what drove Workday over the past few months.
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Workday results: The raw numbers
| Metric | Fiscal Q3 2019* | Fiscal Q3 2018 | Year-Over-Year Growth |
|---|---|---|---|
| Revenue | $743.2 million | $555.4 million | 33.8% |
| GAAP net income (loss) | ($153.3 million) | ($85.5 million) | N/A |
| GAAP earnings (loss) per share | ($0.70) | ($0.41) | N/A |
DATA SOURCE: WORKDAY. *FOR THE QUARTER ENDED OCTOBER 31, 2018. GAAP = generally accepted accounting principles.
What happened with Workday this quarter?
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For comparison, in early September, Workday told investors to expect lower revenue in the range of $721 million to $723 million.
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Top-line gains were driven by a 34.7% increase in subscription revenue, to $624.4 million, and 29.4% growth in professional-services revenue, to $118.8 million.
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On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation and acquisition costs, Workday generated net income of $73.5 million, or $0.31 per share, well above the $0.14 per share most investors were anticipating.
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Generated operating cash flows of $114.3 million and free cash flows of $58.9 million.
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Following last quarter's early August close of its $1.55 billion acquisition of business-planning cloud-platform company Adaptive Insights, Workday went live on Adaptive Insights' Business Planning Cloud product in only 10 weeks. Adaptive Insights also extended its flagship product with a new strategic workforce-planning solution.
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The company unveiled Workday People Analytics, using AI-powered analytics to provide key metrics on critical business activities.
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Notable new HCM (human capital management) customers this quarter included Bank of Montreal, Glencore International, and American Airlines subsidiary Piedmont Airlines. New Workday Financial Management customers included Atlanta Braves Baseball, Spectrum Health, H&R Block, Fox, and an unnamed "large U.S.-based financial services organization."
What management had to say
Workday co-founder and CEO Aneel Bhusri stated:
We had a great third quarter and continue to see significant momentum across our suite of products. We extended our market leadership in HCM, welcoming more Fortune 500 customers to the Workday community, and accelerated adoption of Workday Financial Management as more finance organizations move to the cloud. As we look to the remainder of fiscal 2019, we are confident that our commitment to customer satisfaction and product innovation, coupled with our strong company culture, will continue to deliver meaningful growth and customer success.