Salesforce Posts Loss After Big Purchase -- WSJ

By Aaron Tilley 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 4, 2019).

Salesforce.com Inc. posted a fiscal third-quarter net loss after closing its biggest-ever acquisition even as its customer billings remained on a growth track.

The provider of subscription-based business software said Tuesday that it had a net loss of $109 million, compared with a $105 million net profit a year earlier.

In August, Salesforce said it had completed the purchase of Tableau Software, a data analytics platform, for more than $15 billion in stock. The addition, Salesforce has said, is expected to help the company build out a new business in data analytics software, though the deal's charges weighed on last quarter's bottom line.

Shares fell 1.9% in after-hours trading as some projections for billings growth in the current quarter disappointed investors. The company said the figure reflected the Tableau acquisition and some early renewal in the prior quarter.

Sales in the quarter ended Oct. 31 increased 33% to a record $4.51 billion, compared with the $4.45 billion that analysts surveyed by FactSet had expected. Salesforce's closely watched anticipated billings for the coming months from its subscription-based revenue model rose 28% year over year. It previously promised growth of 24% to 25%.

Salesforce's co-chief executive officer, Marc Benioff, told analysts that despite economic slowdowns in several important markets, companies were continuing to invest in digital tools underpinning growth prospects. In Europe, where tech spending is slowing, sales rose 42% in the latest quarter on a currency-adjusted basis, the company said.

The San Francisco company raised last month the top end of its full-year sales guidance to $17 billion after boosting its outlook over the summer. Salesforce also said it would increase sales to as high as $35 billion in the fiscal year ended Jan. 31, 2024.

Salesforce's focus on rapidly boosting revenue has come with acquisitions to maintain momentum. In addition to the Tableau deal, Salesforce paid $6.5 billion last year for MuleSoft, a company that makes software to help customers tap into data from legacy computer systems as they migrate to the cloud. This year, Salesforce agreed to buy ClickSoftware, a provider of field-service management software, for $1.35 billion.

In keeping with the focus on growth, Salesforce said Tuesday that revenue in the current quarter should reach $4.74 billion to $4.75 billion. Analysts had forecast sales of $4.74 billion.

The company also said sales in the first quarter of the coming fiscal year should rise as much as 29% to $4.84 billion compared with the prior-year period.

Write to Aaron Tilley at [e-mail]

(END) Dow Jones Newswires

December 04, 2019 02:47 ET (07:47 GMT)

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