CRM Salesforce Inc

Revenue forecasts and metrics rise at the technology firm, but quarterly loss widens

By Rachael King and Jay Greene 

Salesforce.com Inc. posted a 29% jump in deferred revenue for its fiscal fourth quarter, a sign the business-software company continues to rack up customers moving computing operations to the cloud.

Because Salesforce relies on subscriptions of its web-based, on-demand software, deferred revenue provides a strong picture of the company's prospects.

The measure, which consists primarily of billings received in advance for subscription services, rose to $5.54 billion. Nomura Securities Co. analyst Frederick Grieb had forecast deferred-revenue growth of 22%.

In an interview, Salesforce operating chief Keith Block said the company continues to take away market share from the competition. "That's outstanding execution," he said.

Despite the strong quarter, Salesforce shares fell 1.9% in after-hours trading. Analysts said the results were tempered by the company's guidance for deferred-revenue growth of 22% to 23% for the current quarter, which they translated into lower growth in billings.

Salesforce attributed that to seasonality, saying its fourth quarter is generally its strongest. "Fundamentally, our demand environment is very strong and as a result we raised our guidance for the whole year," finance chief Mark Hawkins said on the company's earnings call.

Revenue from Sales Cloud, the company's flagship sales-force automation business, rose 14% to $804.9 million. That was the highest growth since the quarter ended April 2016.

Salesforce benefited from marketing its products to specific industries such as financial services and retail, Mr. Block said.

Other businesses continued to grow, but at a slower rate. Service Cloud, which helps companies run customer-service operations, grew 24%, down from 40% in the quarter that ended in July 2015.

Salesforce's acquisition of Demandware Inc. last July drove revenue growth of 62% in the company's Marketing Cloud, used for email and advertising campaigns.

For the quarter ended Jan. 31, Salesforce's loss widened to $51.4 million, or 7 cents a share, from $25.5 million, or 4 cents a share, in the comparable period a year ago.

Excluding the impact of items such as amortization and stock-based compensation, adjusted per-share earnings rose to 28 cents from 19 cents a year earlier.

Analysts surveyed by Thomson Reuters had forecast adjusted earnings of 25 cents a share.

Revenue rose 27% to $2.29 billion for the quarter, compared with analysts forecasts of $2.28 billion.Annual revenue rose 26% to $8.39 billion. Salesforce said it expects fiscal 2018 revenue of between $10.15 billion and $10.20 billion, reaching a longstanding goal of $10 billion in full-year revenue.

For the fiscal first quarter, Salesforce expects revenue of between $2.34 billion and $2.35 billion and a loss of 2 cents to 3 cents a share, with adjusted per-share profit of 25 cents to 26 cents a share.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

March 01, 2017 02:50 ET (07:50 GMT)

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