Workday Inc. saw its stock fall sharply in after-hours trading today despite posting strong fiscal fourth-quarter results that included quarterly revenue from subscriptions passing $1 billion.

The company reported a profit before certain costs such as stock compensation of 73 cents per share on revenue of $1.13 billion, up 15.9% from one year ago. That was better than expected, since Wall Street was looking for a profit of just 55 cents a share on revenue of $1.12 billion.

Workday, which sells financial and human capital management software for large enterprises, also reported quarterly subscription revenue of $1.01 billion, up 19.8% from a year ago, the first time it has achieved that milestone. That helped the company inch closer to profitability, as it shaved its net loss for the quarter to $71 million.

Workday President and Chief Financial Officer Robynne Sisco said the company’s solid fourth-quarter results were a testament to the resiliency of its business and the mission-critical nature of its offerings.

For the full year, Workday reported total revenue rose 19%, to $4.32 billion. Cash, cash equivalents and marketable securities as of Jan. 31 came to $3.54 billion.

“We had a very strong close to the year, as more organizations accelerate their HR and finance technology investments and adopt cloud-based systems to respond to an evolving world,” Workday co-Chief Executive Chano Fernandez (pictured) said in a statement.

During the quarter, Workday announced that it’s planning to acquire Peakon ApS for about $700 million. Peakon has created a cloud service for collecting employee feedback. It helps organizations measure employee sentiment and collect feedback by sending out surveys. Workday also provides features for measuring employee sentiment within its HR software products, and the acquisition is designed to enhance that part of the its portfolio.

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE that Workday put in an impressive shift, showing resilience in its key growth drivers despite the effects of the COVID-19 pandemic on the economy.

“It has crossed the $1 billion subscription revenue per quarter barrier, putting it on a $4 billion subscription run rate for the next quarters,” he said. “Workday also said it will reduce its losses substantially year over year, which is good to see.”

Mueller further highlighted Workday’s successful cost management: “It’s maintaining its investment into product, with R&D expenses greater than its sales and marketing and general and administrative costs,” he said. “Few technology vendors have been able to deliver that ratio at a $4 billion run rate. Now, investors will be looking for Workday to show more revenue-generating product innovation in 2021.”

The company seems confident it will be able to do that. In a conference call with analysts, Sisco said Workday is forecasting 2022 subscription revenue in the range of $4.38 billion to $4.4 billion, which would represent growth of 16% for the year. She said the company can achieve that by accelerating its bookings growth, which if successful, will lead to a faster pace of subscription revenue growth.

Despite that promise, investors were apparently put off by Sisco’s revelation that Workday plans to invest $270 million in the next quarter on “strategic priorities tied to its expansion efforts”, which she said will include corporate information technology infrastructure and customer data centers.

That sent Workday’s stock down more than 7% in the after-hours session.

“These data center investments, along with other investments we’re making in our technology and platform, including our entrance into the federal market and our expanded use of the public cloud, are expected to reduce our non-GAAP subscription gross margins to slightly under 85% in fiscal year 2022,” Sisco said.

Photo: Workday/Facebook