Image source: Workday Inc.

The market's initial reaction may not show it, but Workday Inc. (NASDAQ:WDAY) just punched the clock on another impressive quarter. Shares of the cloud-based HR and finance applications company fell around 3% in Tuesday's after-hours trading despite releasing better-than-expected fiscal first-quarter 2017 results.

Quarterly revenue climbed 38% year over year, to $345.4 million, including a 39% increase in subscription revenue, to $280 million, and 31% growth in professional services revenue, to $65.4 million. For perspective, each of these figures were above Workday's most recent guidance, which called for revenue in the range of $337 million to $339 million, including subscription revenue of $277 million $278 million. During the subsequent conference call, Workday CFO Robynne Sisco elaborated that total derived billings -- or the sum of revenue and the sequential change in unearned revenue -- was $372 million for the quarter, up 37% from the same year-ago period and also ahead of guidance, which called for total derived billings between $360 million and $365 million.

Trending toward the bottom line -- and keeping in mind Workday consciously forsakes profitability in favor of taking market share and driving top-line growth -- that translated to an operating loss of $73.6 million, and a net loss of $80.6 million, or $0.41 per share, compared to a net loss of $61.6 million, or $0.33 per share in last year's first quarter. On an adjusted basis, which adds perspective by excluding items like stock-based compensation, Workday generated operating income of $11.1 million, and net income of $10.7 million, or $0.05 per share.

In this case, note Workday doesn't typically provide specific financial guidance for its bottom line. But as I pointed out in my earnings preview last week, analysts' consensus estimates predicted Workday would incur an adjusted net loss of $0.02 per share on lower revenue of $338.7 million. 

Meanwhile, Workday continued to generate healthy cash flows; Operating cash flow jumped just over 75% year over year, to $161.5 million, and after accounting for $34.5 million in capital expenditures excluding owned real estate, free cash flow climbed 98.8% over the same period, to $127 million. Recall last quarter, management told investors they expect growth in both operating and free cash flow (excluding investments in new buildings) to be roughly in line with billings growth this fiscal year.

Workday CEO Aneel Bhusri added,

We delivered great results and growth across all of our products in the first quarter. We continue to see increased customer adoption of Workday Financial Management as well as strong demand in EMEA and APJ as more organizations take finance and HR to the cloud. We are on track to deliver innovative new products -- Workday Planning, Workday Learning, and Workday Student -- later this year, which we believe will accelerate our momentum based on extremely positive customer feedback and interest.

Looking forward, Workday anticipates current-quarter revenue to be in the range of $371 million to $373 million, representing growth of roughly 31% to 32% over last year's fiscal Q2. Within that total should be subscription revenue of $303 million to $304 million, or 35% to 36% growth, with derived billings up 34% to roughly $420 million. To that end, according to Sisco during the call, Workday's professional services segment will achieve growth of "only" 15% to 17% year over year in the fiscal second quarter "as a result of our pushing more services to our ecosystem." Though we don't pay much attention to Wall Street's near-term demands, note analysts' consensus estimates called for fiscal Q2 revenue of $370.9 million, or just below the low end of Workday's guidance range. 

Finally, for the full fiscal-year 2017, Workday now expects derived billings to increase to a range of $1.87 billion to $1.885 billion, or 31% to 32% growth, representing a modest increase from its previous forecast for full-year derived billings of $1.855 billion to $1.875 billion. At the same time, Workday reiterated its guidance for full fiscal-year 2017 subscription revenue to be in the range of $1.275 billion to 1.285 billion, up 37% to 38% over last year.

So it might seem strange to see the market driving shares down in response for now. But while shares were technically down around 5% year to date going into Tuesday's close, investors would do well to remember Workday stock had also rebounded to the tune of 60% from its February lows, thanks to a combination of both the market's historically painful start to the year and Workday's impressive fiscal fourth-quarter 2016 report released in late February.

Nonetheless, there's no denying this was a solid beat and (selective) raise from Workday. As the company continues to enjoy strong demand for its flagship applications while looking forward to the impending release of promising new products, I think long-term investors should be more than happy with this performance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.