Image source: Workday.

What: Shares of enterprise cloud software provider Workday (NASDAQ:WDAY) surged 27.1% in March, according to data provided by S&P Global Market Intelligence. The stock's gains were driven by a strong earnings report, with the company beating analyst estimates across the board.

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So what: Workday reported quarterly revenue of $323.4 million, up 43% year over year and about $4 million higher than the average analyst estimate. Subscription revenue rose 44% to $261.8 million, while professional services revenue rose 39% to $61.6 million.

Non-GAAP EPS came in at a loss of $0.01, an improvement over a loss of $0.06 during the prior-year period, and $0.04 higher than analysts were expecting. On a GAAP basis, Workday lost $0.42 per share, worse than a $0.32 loss during the same period last year. GAAP operating loss was $73.4 million, representing 22.7% of revenue.

The company expects subscription revenue between $277 million and $278 million during the first quarter and total revenue between $337 million and $339 million. For the full year, revenue is expected to be in a range of $1.54 billion to $1.55 billion, representing 33.2% growth at the midpoint.

Now what: Workday continues to grow revenue at an astounding rate, even as it passed the $1 billion mark in fiscal 2016. The company is still wildly unprofitable on a GAAP basis, but it is free cash flow positive thanks to deferred revenue growth and its heavy use of stock-based compensation. In fiscal 2016, the company generated $125 million in free cash flow, compared to a $290 million GAAP net loss and a $2.5 million non-GAAP net loss.

Going forward, Workday will need to keep up its impressive growth rate to keep investors on board. Down the line, the company will eventually need to show that it can generate real profits. For the moment, though, investors are happy to wait as Workday spends heavily on growth.