inc. Earnings: Shrinking Margins for Fifth Consecutive Quarter

Increasing costs did not help S&P 500 (NYSE:SPY) component inc. (NYSE:CRM) in the fourth quarter as the company reversed to a loss. is a cloud computing company, which provides customer relationship management (NYSE:CRM) products to businesses. It offers a technology platform for Internet-based computing, storage, and connectivity solutions for customers and developers.

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Results: Reported a loss of $4.1 million (3 cents per diluted share) in the quarter. inc. had a net income of $10.9 million or 8 cents per share in the year-earlier quarter.

Revenue: Rose 38.3% to $631.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: The mean estimate for inc. was 4 cents per share. Analysts were expecting revenue of $622.9 million.

Quoting Management: “’s 38% revenue growth in the fourth quarter was a spectacular finish to our fiscal year, a year in which we delivered 37% revenue growth and added nearly 2,500 employees, including nearly 2,000 in the U.S.,” said Marc Benioff, Chairman and CEO, “Given the strong customer response to the social enterprise, we’re excited to raise our guidance today, which puts us on pace to exceed the $3 billion revenue run rate during FY13.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 35.2%, with the biggest boost coming in the second quarter when revenue rose 38.4% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.4 percentage points to 78.4% from the year-earlier quarter. In that span, margins have contracted an average of 1.8 percentage points per quarter on a year-over-year basis.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 8 cents a share to 7 cents over the last thirty days. The average estimate hasn’t changed from 18 cents per share for the fiscal year.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at

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