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Why Workday Stock Soared 57% in 2018

By Daniel Sparks – Updated Apr 17, 2019 at 4:48PM

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Accelerating growth in Workday's subscription revenue impressed investors.

What happened

Shares of human-capital management cloud platform Workday (WDAY -2.50%) stock was on fire yet again in 2018, rising 56.9% during the year, according to data provided by S&P Global Market Intelligence. This adds to the company's 54% gain in 2017.

The stock's momentum in 2018 was driven by the company's strong customer and revenue growth during the year.

Workday cloud platform

Image source: Workday.

So what

Workday's business grew rapidly in 2018. For the nine months ending Oct. 31, 2018, Workday's revenue jumped 30% year over year. Subscription revenue, which accounts for 84% of Workday's total revenue, increased 32% over this same time frame. 

Capturing the company's strong performance, subscription revenue in the company's third quarter of fiscal 2018 increased 35% year over year -- a significant acceleration compared to the metric's 30% growth in Q2.

Now what

On the heels of such strong results, Workday boosted its outlook for its full year of fiscal 2019. The company expects full-year subscription revenue to be between $2.375 billion and $2.377 billion, representing about 33% year-over-year growth.

"We continue to prioritize investing in long-term growth initiatives, while delivering solid operating and cash flow margins over time," said Workday co-president and CFO Robynne Sisco in the company's third-quarter earnings release.

Check out the latest Workday earnings call transcript.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Workday. The Motley Fool has a disclosure policy.

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