Yesterday Workday, Inc. (NASDAQ: WDAY), an enterprise cloud application provider for the finance and human resource industries, reported strong subscription growth in its fiscal 2019 second quarter ended July 31, 2018. The company brought in subscription revenue of $565.7 million, a 30.2 percent increase year-over-year, and reported a subscription revenue backlog of $5.5 billion, a 26 percent increase year-over-year.

“Q2 was another strong quarter. We once again increased the number of both finance and HR customers in the Fortune 500 and made significant progress on our acquisition of Adaptive Insights to further enable customers to plan, execute, and analyze all in one system,” said Aneel Bhusri, Workday co-founder and CEO, in a September 4 news release. “With our focused product strategy, continued investment in opening our platform, and relentless commitment to customer success, we continue to add levers that drive enduring growth and our long-term position as the trusted partner for finance, HR, and business transformation.”

Other highlights for the quarter include:

• Total revenue was $671.7 million, a 27.9 percent increase year-over-year.
• In addition to subscription service revenue of $565.7 million, the company reported $106.1 million in professional services income. Subscription services represents 84.2 percent of total revenue; professional services revenue makes up the remaining 15.8 percent.
• Operating loss was $89.0 million, compared to an operating loss of $81.6 million for the same period last year.
• Non-GAAP operating income was $68.1 million, or 10.1 percent of revenue, compared to non-GAAP operating income of $49.0 million, or 9.3 percent of revenue, for the same period last year.
• Net loss per basic and diluted share was $0.40, the same net loss per share as reported for Q2 FY18.
• Operating cash flow was $56.7 million, and free cash flow was $4.3 million.
• Cash, cash equivalents and marketable securities were $3.0 billion at the end of July 2018.
• Unearned revenues were approximately $1.5 billion, a 21.3 percent increase year-over-year.

Robynne Sisco, co-president CFO for Workday, also commented on the quarter’s results.

“We executed extremely well in Q2, delivering another strong quarter of outperformance. Based on our second quarter results, and inclusive of the acquisition of Adaptive Insights, we are raising our fiscal 2019 revenue outlook and now expect subscription revenue of $2.341 to $2.348 billion, or growth of 31 percent. We expect our third quarter subscription revenue to be between $609 and $611 million, representing 31 percent to 32 percent growth. We are excited to welcome Adaptive Insights to Workday and look forward to the future of the combined company,” said Sisco.

In addition to the company’s financials, it shared several operational highlights:

• Fortune and the Great Place to Work Institute ranked Workday #4 on the list of 100 Best Workplaces for Millennials.
• Workday ranked #6 on the list of Best Large Workplaces in Europe by the Great Place to Work Institute.
• Workday announced its intent to acquire Stories.bi and Rallyteam, experts in machine learning.

Following the release of financials yesterday, Workday stock rose slightly. On Friday, August 31, Workday stock closed at $154.54 per share. As of 7:57 p.m. EDT yesterday, stock had risen to $156.69 per share, a $2.15 boost. This is significantly higher than its stock price a year ago when it was $108.16 (September 5, 2017).

Insider Take:

Workday may still be reporting losses, but it is making solid acquisitions that will help it continue its foothold in the HR and finance industries. If its stock value is any indication, investors are impressed with the direction the company is headed, and they are willing to stick around to see what’s next. Judging by the company’s increased guidance, the company is anticipating solid financials for the next two quarters, to finish fiscal 2019 strong.