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salesforce.com, inc. : Salesforce.com Swings To 1Q Loss; Core Results Beat View

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05/18/2012 | 12:59am CEST

--Pace of hiring continues, adds 500 1Q employees

--Raises revenue outlook to $3 billion for FY 2013

--Providing Facebook-style interaction for businesses

(Updates from beginning with management comments.)

By Steven D. Jones


Salesforce.com Inc.'s (CRM) swung to a fiscal first-quarter loss as operating costs and stock-based expenses jumped, although the company's top-line growth and quarterly billings easily exceeded expectations.

Shares jumped 7.6% to $144 after hours as the company's adjusted earnings and sales beat its expectations and as the company raised its full-year view.

In addition to accelerating sales, Salesforce.com retained more customers and sold licenses for additional seats to existing customers, Graham Smith, chief financial officer, told analysts on the earnings call. Founded to sell sales-automation tools, Salesforce now uses its social networking feature called Chatter to link customers and companies, deliver customer service, human resources and other functions from the cloud.

"The business mix continues to become more diverse," said Smith, "with more than 40% of new business in the quarter coming from non-sales cloud contracts."

During the recession, customer attrition ticked up into the high teens. Now Smith said "attrition is at its lowest level since we started reporting the number."

The performance shows that customers are responding to Salesforce's strategy to create a new "front office" for business through social networking, said Chief Executive Marc Benioff.

"Customers can initiate a transaction through a call center, finish an application on the website, ask a question on Facebook and get a response on Twitter," he said. Through social media companies "are pulling customers together and putting them in the driver's seat," to make transactions happen efficiently and quickly, he said.

The company now sees full-year adjusted earnings of $1.60 to $1.63 a share and revenue of $2.97 billion to $3 billion. Its February view called for per-share earnings of between $1.58 and $1.62 and revenue of between $2.92 billion to $2.95 billion.

For the current quarter, Salesforce sees adjusted earnings of 38 cents to 39 cents a share and revenue of 724 million to $728 million. Analysts polled by Thomson Reuters recently projected 38 cents and $714 million, respectively.

Known for its cloud-based sales-management software, the company is turning its focus to selling bundles of social and mobile services and closing longer-term deals. Salesforce has said its social cloud features are leading to larger deals and are the most direct way for its enterprise customers to become "more social and mobile" to serve their own customers and employees.

However, concerns have emerged regarding Salesforce's ability to maintain its growth rate as it continues to expand rapidly. The company last year introduced Chatter, a social-networking feature that is now integrated with its cloud-based suite of sales and business-management software, and earlier this year launched Desk.com, a new service aimed at turning routine customer service into a social engagement that can improve sales. Recent acquisitions have included Radian6, which adds a suite of products to help clients track and analyze their outreach efforts while watching what is being said about their brand, and Assistly, which allows the company to offer cloud services to small and emerging businesses.

For the quarter ended April 30, Salesforce reported a loss of $19.5 million, or 14 cents a share, compared with a year-earlier profit of $530,000, or breakeven a share. Excluding items such as stock-based compensation and amortization, per-share earnings rose to 37 cents from 28 cents. Revenue rose 38% to $695.5 million.

In February, the company forecast per-share earnings of 33 cents to 34 cents on revenue of $673 million to $678 million.

Gross margin narrowed to 78.2% from 79.6%. Operating expenses were up 40%.

Subscription and support fees, which provide the bulk of the company's revenue, rose 38%. Professional services and other payments increased 30%.

-By Steven D. Jones, Dow Jones Newswires; 360-834-1865; steve-d.jones@dowjones.com

-Nathalie Tadena contributed to this article.

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Financials ($)
Sales 2017 8 312 M
EBIT 2017 1 069 M
Net income 2017 185 M
Finance 2017 332 M
Yield 2017 -
P/E ratio 2017 257,32
P/E ratio 2018 218,90
EV / Sales 2017 6,15x
EV / Sales 2018 4,94x
Capitalization 51 416 M
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salesforce.com, inc. Technical Analysis Chart | CRM | US79466L3024 | 4-Traders
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Number of Analysts 47
Average target price 93,4 $
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Marc Russell Benioff Chairman & Chief Executive Officer
Keith G. Block Vice Chairman, President & COO
Mark J. Hawkins Chief Financial Officer & Executive Vice President
Alan G. Hassenfeld Independent Director
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