Salesforce.com, inc. Earnings Cheat Sheet: Higher Expenses Shrinks Margins

S&P 500 (NYSE:SPY) component salesforce.com, inc. (NYSE:CRM) reported a drop to a loss in the second quarter driven by higher costs. Salesforce.com, Inc. 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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salesforce.com, inc Earnings Cheat Sheet for the Second Quarter

Results: Swung to a loss of $4.3 million (3 cents per diluted share) in the quarter. The application software company had net income of $14.7 million or 11 cents per share in the year earlier quarter.

Revenue: Rose 38.4% to $546 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CRM reported adjusted net income of 30 cents per share. By that measure, the company was in line with estimates. It beat the average revenue estimate of $528.6 million.

Quoting Management: “We’re expecting over 40,000 people to register for Dreamforce which takes place in San Francisco later this month. It’s the cloud event of the year where attendees can learn how to supercharge their relationships with employees and customers using social, mobile and open cloud technologies,” said Marc Benioff, Chairman and CEO, salesforce.com. “We hope to see you there.”

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 31.2%, with the biggest boost coming in the most recent quarter when revenue rose 38.4% from the year earlier quarter.

Gross margin shrank 2.4 percentage points to 77.9%. The contraction appeared to be driven by increased costs, which rose 55.4% from the year earlier quarter while revenue rose 38.4%.

CRM’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $530,000 in the first quarter, a profit of $10.9 million in the fourth quarter of the last fiscal year and $21.1 million in the third of the last fiscal year.

Competitors to Watch: Microsoft Corporation (NASDAQ:MSFT), Google Inc. (NASDAQ:GOOG), Oracle Corporation (NASDAQ:ORCL), Servicesource Intl. Inc (NASDAQ:SREV), SAP AG (NYSE:SAP), NetSuite Inc. (NYSE:N), Intl. Business Machines Corp. (NYSE:IBM), Pegasystems Inc. (NASDAQ:PEGA), LivePerson, Inc. (NASDAQ:LPSN), and Constant Contact, Inc. (NASDAQ:CTCT).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)

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