Shares of human-capital management cloud platform Workday (NASDAQ:WDAY) soared in 2017, rising 53.9% according to data provided by S&P Global Market Intelligence. And bullishness toward the stock has persisted into 2018, with the stock up 12% year to date.
The stock's rise follows strong growth in 2017 in subscription revenue, driven by high renewal rates, add-on sales with current customers, and strong growth in new customers.
Capturing the company's strong growth in revenue during 2017, Workday's trailing-nine-month revenue ending Oct. 31 (the end of Workday's most recently reported quarter) increased 38% compared to the year-ago period to about $1.6 billion. This was fueled primarily by a 40% increase in subscription revenue, which accounted for 83% of Workday's trailing-nine-month revenue.
With the business regularly outperforming management's own expectations, management had to repeatedly raise guidance for its full-year 2017 financial expectations.
Looking ahead, Workday CEO Aneel Bhusri expects momentum to continue. "The outlook for the remainder of fiscal 2018 [(Workday's fiscal 2018 began on Feb. 1, 2017 and ends on Jan. 31, 2018)] and beyond is bright as we continue to add new customers for HCM and Financial Management," Bhusri said in the company's most recent quarterly earnings release, "and unlock new growth drivers such as Workday Prism Analytics and the Workday Cloud Platform."
For its full-year fiscal 2018, Workday notably expects its subscription revenue to increase 38% year over year.