Last week enterprise cloud application provider Workday, Inc. (NYSE: WDAY) posted double-digit increases and operating losses for its fiscal second quarter 2017 ended July 31, 2016. Highlights include:

– Total revenue was $377.7 million, an increase of 34 percent year-over-year.

– Subscription revenue was $306.2 million, or 81.1 percent of total revenue, an increase of 37 percent year-over-year.

– Professional services revenue was $71.5 million, a 21 percent increase compared to $59.0 million year-over-year.

– Total derived billings – the sum of revenue and sequential change of total unearned revenue –  were $431.0 million, a 38 percent increase year-over-year.

– Derived subscription billings – the sum of subscription revenue and sequential change of total unearned revenue – were $359 million, a 42 percent increase year-over-year.

– Operating loss was $86.9 million, compared to an operating loss $67.6 million year-over-year.

– Total net loss was $108.0 million, compared to $69.4 million year-over-year.

– Net loss per basic and diluted share was $0.55, compared to a net loss per basic and diluted share of $0.37 year-over-year.

Aneel Bhusri, Workday co-founder and CEO, commented on the results in a press release: “We delivered record second quarter results with solid customer momentum and strong competitive win rates. The results were well balanced across our key initiatives as we saw consistent strength across product lines, industries, and geographies and we are proud to welcome our new largest customer based in the APJ region.”

Robynne Sisco, chief financial officer, was also pleased with the second quarter results.

“We again generated record quarterly revenues and strong trailing 12-month operating cash flows. Looking ahead, we anticipate third quarter subscription revenues to be within a range of $331 million to $333 million and third quarter total revenues to be $398 million to $400 million,” Sisco said.

In the quarterly earnings call, Sisco said the company continues to grow at a remarkable rate given the company’s scale. She said they have demonstrated strong momentum with new customers and continued strength with renewals and add-on product sales to existing customers. Sisco said they did not see any noticeable changes in their financials for the quarter due to Brexit.

Operational highlights for the quarter include Workday’s acquisition of Platfora, a provider of operational analytics and data discovery tools that help companies to visually interact with and analyze petabyte-scale data in seconds. In the second quarter, Workday had the second strongest quarter in company history for new Workday Financial Management customers.

The Motley Fool also reports that in Q2, Workday announced a new, multi-year strategic partnership with IBM. Workday uses the IBM cloud as the foundation for its development and testing environments. Workday works in a variety of industries including banking, healthcare, education, insurance, life sciences, manufacturing, retail and hospitality. It works with customers including Brown University, Cardinal Health, Chiquita, Hewlett-Packard, Netflix, Trip Advisor and Symantec.

Despite the big losses, investors seem satisfied with the direction of the company. At 4:31 PM Eastern on August 30, Workday, Inc. stock was valued at $84.97 per share, compared to a low of $48.90 per share on February 9.

What’s next for Workday? According to The Motley Fool, Workday is shifting its emphasis toward working with more medium-sized businesses and its “new lower-cost deployment technologies” built to serve that market. The company also hopes to complete its acquisition of Platfora for nearly $200 million.

“While we are pleased with our margin performance in Q2 which indicates the increasing profitability of our model, we have not changed our focus on growth over margin given the large opportunities still ahead of us,” Sisco said in the second quarter earnings call.

Insider Take:

The company has sustained big losses in the first two quarters of fiscal year 2017, but Workday is also in growth mode, scaling its business and acquiring companies that can help support that growth. Based on its assets of $2.8 billion, primarily in marketable securities, the company can afford both the operational loss – provided it is temporary – as well as the $200 million acquisition of Platfora.