Salesforce Earnings Continue to Defy Gravity
On Thursday, Salesforce.com (NYSE:CRM) reported its first quarter earnings report and saw a net loss of $19.5 million; this compared to the previous year’s $530 million net profit. While it is a usually a slow quarter for the company, it reported total revenues of $695 million and earnings per share of $0.37; this exceeded analysts’ estimates with adjusted earnings per share of $0.34 and $678.21 million in revenue.
Even better for the company, figures came in higher than Saleforce’s guidance of $0.33 to $0.34 and $673 million – $678 million, respectively.
In addition, with the company reporting sales as 38 percent on revenues from the previous year, Salesforce.com chairman and CEO, Marc Benioff said the company is poised to hit its first $3 billion year; in 2011, the company saw $2 billion in sales for the first time.
Salesforce.com Revenues on the Rise
Salesforce’s revenues of $695 million comes from company making most of its money from its core, cloud-based CRM software; subscription and support revenues for this came in at $655 million. Rounding out sales was professional services, attributing $40 million. But when breaking sales down, subscriptions increased 38 percent while professional services rose 30 percent.
Also on the rise in the quarter was deferred revenues, which are the revenues not collected yet by Salesforce from its customers. The company said that overall deferred revenue as noted on its balance sheet increased 46 percent to $1.33 billion from the previous year, a rise of 46 percent from last year.
Looking at unbilled deferred revenue, which the company has contracted but it’s unbilled and not on the balance sheet, also rose to $2.7 billion from $2.2 billion in 2011. Increases in both could reflect Salesforce’s growth, but it may also be an indication that customers aren’t making their payments; this is something Salesforce listed as a risk factor.
On the cash front for the quarter, Salesforce made $213 million, a 53 percent rise from the previous year. Combining total cash, cash equivalents and marketable securities, this totaled $1.7 billion.
Along with the company’s $3 billion in revenues projected for the year, Salesforce.com also forecast revenues for the second quarter to rise quarter over quarter to the $724 million-$728 million range; this is a 33 percent rise from 2011’s second quarter.
Thanks to a research note by Canaccord Genuity analyst Richard Davis, the stock had high expectations to rise on Friday. He wrote that Salesforce.com could increase by three-eighths percent on Friday, due to “at least temporary exhaustion of risk-off selling of high valuation growth stocks,” and “a positive halo effect from a successful Facebook IPO,” according to TechCrunch.
Once again, the company exceeded expectations. On Friday, the stock closed up 8.8 percent to $145.58.