Enterprise software firm Workday Inc. gave investors plenty to cheer about today, reporting better-than-expected second-quarter results and raising its fiscal 2022 subscription revenue guidance, sending its stock up 4% in after-hours trading.

The company reported a profit before certain costs such as stock compensation of $1.23 per share on revenue of $1.26 billion, up 19% from a year ago. That was much better than expected, with Wall Street looking for earnings of just 78 cents per share on revenue of $1.24 billion.

Workday, which sells financial and human capital management software for enterprises, also said its subscription revenue in the quarter came to $1.1 billion, up almost 20% from the year ago period.

Workday co-Chief Executive Officer Chano Fernandez (pictured) told investors the growth was fueled by demand from large enterprise customers for the company’s human resources, finance and planning solutions. “Looking to the future, we are well positioned for the second half of the year and will continue to invest in our go-to-market strategy and our people, who are foundational to our success,” he said.

The company’s results were a bit of a surprise, as some analysts had warned that its prospects were less than optimistic, citing slowing growth in large enterprise resource planning and HCM projects in enterprises. The company has struggled to deliver in recent quarters too, and its stock has declined since hitting a record high in February.

Cowen analyst J. Derrick Wood said in a research note prior to the call that Workday’s transactional deals were solid and that its growth would depend on financial traction.

During the quarter Workday made good progress with large enterprises. The company’s other co-CEO, Aneel Bhusri, said Workday now has more than 55 million users, with more than half of the Fortune 500 now using its software.

Earlier this month Workday announced an expanded partnership with Google Cloud, giving its customers another deployment option for its Financial Management, Human Capital Management and Adaptive Planning services.

Holger Mueller, an analyst with Constellation Research Inc., said it was good to see Workday picking up growth again after struggling in the last few quarters, noting that it grew significantly more in the quarter just gone than the one before. He also pointed out how Workday was close to breaking even, with its smallest loss on record.

“Although its growth is still under 20%, a mark it would easily pass before the pandemic, it’s clear that Workday’s portfolio is being demanded and implemented by enterprises as they now enter the post-pandemic world,” Mueller said. “It’s good to see the innovation on the cloud platform side with Google too.”

Mueller also highlighted Workday’s recent announcement that it’s extending its payroll support services into the important markets of Australia and Germany.

“Expanded payroll support is key for continuing success in Workday’s flagship industry of human capital management, because it means enterprises have one fully integrated HCM suite with real-time automation around payroll information and processes,” he said.

For the next quarter, Workday Chief Financial Officer Robynne Sisco said, the company is targeting subscription revenue of $1.156 billion to $1.158 billion, representing growth of 20% at the high end. For the full year, the company now expects subscription revenue of $4.5 billion to $4.51 billion, meaning growth of 19%.

Photo: Workday/Facebook