Why Workday, Inc. Shares Surged

Why Workday, Inc. Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cloud computing company Workday, Inc. spiked 13% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has slumped in recent months on concerns over slowing growth, but a better-than-expected Q4 -- adjusted loss of $0.12 per share beat Wall Street by $0.05 on a revenue spike of 76% -- coupled with upside guidance is quickly easing those worries. In fact, subscription revenue surged 82% year over year, suggesting that the company's new product initiatives are quickly gaining traction.

Now what: Management now expects Q4 revenue of $133 million-$138 million, well above the average analyst estimate of $129.1 million. "We continue to innovate rapidly across all initiatives," said Chairman, co-founder, and co-CEO Aneel Bhusri. "In the third quarter, we announced the availability of Workday Big Data Analytics, confirmed that Workday Recruiting is progressing well and on schedule, and we continued our investment in Workday Financial Management, broadening the scope and scale for the world's largest organizations." Of course, Workday now up about 75% from its 52-week lows and sporting a price-to-sales multiple in the mid 30s, much of that progress might already be baked into the valuation.

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The article Why Workday, Inc. Shares Surged originally appeared on Fool.com.

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