Salesforce forecasts top analysts’ estimates
Salesforce. com Inc. forecast first- quarter revenue and profit that will exceed analysts’ projections, getting a lift as corporate customers shift more spending to cloudbased services.
Sales in t he period that ends in April will be US$1.885 billion to $1.895 billion, the San Francisco-based company said in a statement Wednesday.
Analysts on average had estimated revenue of US$1.86 billion, according to data complied by Bloomberg. The company also topped sales predictions in the fiscal fourth quarter.
Chief executive Marc Benioff, a pioneer in the market for cloud computing, is investing in new products and acquisitions to fuel growth as Salesforce benefits from the growing interest among businesses to access software via the Internet rather than installing it on their own machines. Almost 60 percent of organizations are adopting cloud-based services beyond one or two small applications, according to IDC.
“Salesforce is the only enterprise software company of the cloud era who has critical mass — and is not going away,” said John Rizzuto, an analyst at Suntrust Robinson Humphrey Inc.
Salesforce shares rose about eight per cent in extended trading. They had declined less than one per cent to US$62.52 at the close in New York, leaving them down 20 per cent this year.
The company’s shares took a hit earlier this month along with those of other software companies after Tableau, a maker of data- analysis and charting software, saw its value plummet by half in one day following results that fell short of some estimates. That raised concerns among investors that Salesforce — which reached all-time highs in December — could also stumble.
For the fourth quarter, which ended in January, profit before certain costs was 19 cents a share, matching analysts’ average projection.
Sales in the quarter rose 25 per cent to US$ 1.81 billion, beating the estimate of US$1.79 billion.
Unbilled deferred revenue, a closely watched number that indicates the amount of business booked but not yet recognized, increased 25 per cent to US$7.1 billion.
Keith Block, Salesforce’s chief operating officer, said big deals helped fuel results.
“We had an outstanding quarter — again, just a historic quarter,” Block said. “We drove an all- time high in large transactions in the quarter. We had over 600 seven-figure-plus transactions.”
Salesforce has been stepping up acquisitions to expand its reach into areas such as pricing and machine learning. In December, the company agreed to buy Steel-Brick Inc., which helps companies manage price quotes for customers. Last week, Salesforce acquired startup PredictionIO, which assists software developers.
First- quarter profit excluding certain items will be US23 cents to US24 cents a share, Salesforce said, compared with an average estimate of US21 cents. For fiscal 2017, the company forecast profit of US99 cents to US$ 1.01 per share, compared with predictions for US99 cents. Revenue for the year will be US$ 8.08 billion to US$8.12 billion, Salesforce said, while the average analyst projection was US$8.08 billion.
“What we’re seeing is a strong fourth- quarter finish, a strong ’ 16,” said Salesforce chief financial officer Mark Hawkins, adding that the company is doing well even as some may have concerns about the economy. “Across all clouds, across all geographies, we’re seeing a consistently strong performance.”
Salesforce.com Inc. chief executive Marc Benioff is investing in new products to fuel growth as his firm capitalizes on business’ shift toward cloud-based software.