Shares in Workday Inc. dropped slightly in after-hours trading today despite the enterprise cloud applications provider beating analysts’ predictions in its fiscal first-quarter earnings.

For the quarter ended April 30, Workday reported revenue rose 1% from a year ago, to $1.18 billion, and subscription revenue rose 17%, to $1.03 billion. The company booked a $38.3 million operating loss, or 19 cents per share, compared with $144.5 million or 68 cents per share in the same quarter of 2020.

Workday earned a profit before costs such as stock compensation of $288.5 million, or 87 cents per share, more than double last year’s $130.5 million or 44 cents per share. According to MarketWatch. analysts had been predicting an adjusted profit of 73 cents per share on revenue of $1.16 billion.

Highlights in the quarter included the finalization of Workday’s acquisition of workforce analytics provider Peakon ApS, an announcement by the company that it will increase its headcount by 20% or more than 2,500 more hires in fiscal 2021. and the achievement of a customer satisfaction rating of 97%.

For the quarter ahead, Workday said, it expects its subscription revenue to grow to between $1.095 billion and $1.097 billion, up 18% year-over-year, while the company has raised its fiscal 2022 guidance for subscript revenue to between $4.425 billion and $4.44 billion. Analysts had been predicting $1.081 billion and $4.407 billion, respectively.

Despite moderately beating analysts’ predictions across the board, this is the third straight quarter Workday’s stock price has dropped after it beat analyst predictions. The reasoning isn’t necessarily one of a company doing badly but one that isn’t growing fast enough.

“The pandemic has caught up with Workday, which managed to grow ‘only’ $60 million in total revenue compared with last quarter,” Constellation Research Inc. analyst Holger Mueller said. “An indicator of the challenges with enterprises implementing ERP projects can be seen by the vendor only adding $6 million more in professional service year-over-year.”

The good news, he added, is that Workday made up for that with subscription services, which he called the more valuable source of revenue.

“Last quarter, we said that management needs to find ways to grow revenue and that’s where there seems to be a challenge,” Mueller added. “Closing the Peakon acquisition should help in this quarter, and it is good to see that Workday is investing further, announcing a hiring goal of 2,500-plus employees going forward, beefing up its Atlanta location.”

Workday shares were down 1.2% as of 8 p.m. EDT.

Photo: Workday