Sales­force fore­casts top an­a­lysts’ es­ti­mates

National Post (Latest Edition) - - FINANCIAL POST - Brian Wo­mack Bloomberg

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.”

JUSTIN SUL­LI­VAN / GETTY IM­AGES

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.

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