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Why Workday Stock Soared 57% in 2018

What happened

Shares of human-capital management cloud platform Workday (NASDAQ: WDAY) 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.

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.

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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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