Workday (NASDAQ:WDAY) reported its third-quarter results after Monday's market close. The enterprise resource planning software company delivered results that were better than expectations, with the big stories from the earnings release coming in the form significant earnings and revenue beats. While results were better than consensus estimates, they may not have met the market's expectations, as the release triggered a roughly 5% decline in the company's share price in after-hours trading.

The results
Analysts estimated that Workday revenue for the quarter would come in at $205 million, and actual sales for the quarter came in at $215.1 million, representing a roughly 4.9% beat on expectations. This quarter's revenues were 68% higher than the corresponding quarter in 2013, This revenue growth comes in notably below the average revenue quarterly increase of 77% year-over-year that the company had seen over the previous eight quarters. For the final quarter of its fiscal year, Workday projects year-over-year growth between 54% and 56%, a range that might give investors pause at current stock prices. 

On the other hand, revenue from subscriptions was up 75% YOY, coming in at $164.4 million. Subscription revenue is a key metric to watch for Workday investors, as subscribers are substantially less likely to take their business elsewhere. Total revenue for the quarter ending in October arrived 15.1 % higher than revenue for the July ended quarter, when the company delivered $186.8 million in sales. Operating cash flow for Workday's third quarter was $41 million, with free cash flow at $13.3 million. This brings 12-month-trailing free cash flow to -$4.8 million.

Workday's operating loss for the quarter was $51.5 million. Non-GAAP earnings per share were -$0.03, representing a 70% beat on analyst expectations of -$0.10 per share. Looking at GAAP figures tells a less remarkable story, however. Analysts expected a GAAP loss per share of $0.34, while actual losses were $0.33 per share, or roughly 3% better than expected. GAAP losses in the corresponding quarter of the last fiscal year were $0.23 a share.

What does the future look like for Workday?
Workday has the benefit of operating in a growing market. Human capital management app sales hit roughly $10 billion in 2013 according to IDC, and are expected to grow at a 8.2% CAGR through 2018, reaching $15.4 billion in revenue.

In order to continue to deliver growth in line with investor expectations, Workday needs to continue to secure new customers and grow subscription revenues. It's scored some significant wins on the customer addition front recently, with Rolls Royce signing on for Workday's Human Capital Management suite, and Huron Consulting Group signing on as a service partner. The addition of Rolls Royce to Workday's client base is significant as the cloud-based software-as-a-service provider aims to improve its standing in Europe and other overseas territories. With a market cap of roughly $16.1 billion, Rolls Royce represents a notable win in Workday's goal to move up market. Conversely, Huron Consulting has a relatively small market cap at $1.55 billion, but its role as a deployment partner has the potential to lead to bigger things, as it is connected to government, health care, and education segments that Workday aims to become increasingly prominent in. Going forward, adding large customers that also act as service partners looks to be one of the company's best avenues to rapid revenue growth.

Growing product adoption rates and driving predictive data
Workday is also tasked with delivering substantial growth in products outside of its main Human Capital Management suite. To that end, Workday Recruiting, an add-on application that can be used in conjunction with the chief HCM platform, has been seeing good uptake, according to the company. Workday is also counting on becoming a bigger player in the financial sector, and the extent to which Workday Financial Management finds ongoing success will likely play a significant role in the company's valuation.

Workday's recently unveiled Insight Applications suite is another key product to watch going forward. Set for release in 2015, the platform will be Workday's first major foray into using big data and predictive analytics for human resource management. Rather than simply gathering and organizing relevant data, this new product will actually provide companies with suggestions for employee career paths, talent retention, use of funds, and other business scenarios.

The key engine driving Insight Applications will also be incorporated into other Workday apps, potentially improving the draw of the company's ecosystem. This is a bold new direction for Workday, but it's not alone in the predictive data push, as it seems like other ERP companies are also looking to predictive management solutions as a potential next-big-thing in the field. If Workday's Insight Applications delivers, it could significantly improve the company's competitive prospects against more entrenched ERP providers like Oracle and SAP AG. Of course, the opposite is also true, and Workday's outlook could be dented if its push into predictive management comes up short amid broader support for related technologies.