Salesforce Revenue Rises but Outlook Disappoints--Update

By Tess Stynes 

Salesforce.com Inc. said its revenue rose 25% in the latest quarter on improved sales across its cloud-computing offerings, led by the continued growth in its service that allows customers to build applications.

Shares, though, fell 7.4% to $73.50 in recent after-hours trading on the company's lackluster guidance for the current quarter. The company's stock has risen nearly 15% over the past year.

The company's bookings, a key metric for cloud companies that indicates future business, also disappointed, reaching $1.83 billion. Analysts had expected $1.9 billion, according to FactSet.

For the period ended July 31, revenue increased to $2.04 billion from $1.63 billion a year earlier. The company expected revenue of $2.01 billion to $2.03 billion.

For the year ending in January, Salesforce.com raised its revenue outlook to $8.275 billion to $8.325 billion from its previous projection of $8.26 billion to $8.32 billion. Salesforce.com also affirmed its per-share earnings estimate of 93 cents to 95 cents.

However, for the current quarter, the company forecast per-share earnings of 20 cents to 21 cents and revenue of $2.11 billion to $2.12 billion. Analysts polled by Thomson Reuters expected per-share profit of 24 cents and revenue of $2.13 billion.

Salesforce.com's results are considered a bellwether for the portion of the cloud-computing industry known as software as a service, a sector that offers access to software applications over the internet. The company, known for web-based access to software used by salespeople to keep track of their customers, has expanded into marketing, customer service and vertical industries.

During the latest quarter, the company's App Cloud, a service customers used to build applications, remained its fastest-growing area, with revenue climbing 43% to $353.4 million.

In the company's flagship sales-contact management service, called Sales Cloud, revenue rose 13% to $754.9 million.

Over all, Salesforce.com reported a profit of $229.6 million, or 33 cents a share, compared with a year-earlier loss of $852,000, or break-even on a per-share basis.

Excluding stock-based compensation, the release of part of a tax-valuation allowance related to its recent acquisition of Demandware Inc., and other items, adjusted per-share earnings rose to 24 cents from 19 cents. The company expected per-share profit of 21 cents to 22 cents.

Salesforce.com, which has been growing through acquisitions, during the quarter lost its bid to buy professional social-networking site LinkedIn Corp., which was acquired by Microsoft for $26.2 billion. Still near quarter's end, Salesforce.com completed its $2.8 billion purchase of e-commerce platform Demandware. Customers will be able to use the Demandware platform, to be renamed Salesforce Commerce Cloud, to complete sales transactions.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

August 31, 2016 17:48 ET (21:48 GMT)

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