Salesforce Revenue Rises but Outlook Disappoints
August 31 2016 - 5:50PM
Dow Jones News
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 8.9% to $72.40 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.
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. The San Francisco company's
bookings in the quarter reached $2.93 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 tess.stynes@wsj.com
(END) Dow Jones Newswires
August 31, 2016 17:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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