As Promised Salesforce.com Delivers A $US1 Billion+ Quarter (And It's A Beat)

Salesforce.com released its earnings today. Profits were right in line with expectations: 9 cents earnings per share, non-GAAP, exactly what analysts were expecting. On a GAAP basis, its EPS was a loss of $US0.21.

Revenue was $US1.08 billion, marking the first time Salesforce.com has delivered a quarter at over $US1 billion.

CEO Marc Benioff says it’s the first time any cloud computing company has produced a $US1 billion quarter.

And that’s a slight beat. Analysts were expecting $US1.06 billion, according to Yahoo Finance.

The company is offering guidance of on revenue for the fourth fiscal quarter of $US1.124 billion to $US1.129 billion, a GAAP net loss per share of 25 cents to 24 cents, a non-GAAP EPS profit of 5 cents to 6 cents. That guidance is right in line with what analysts polled by Yahoo Finance expect for next quarter.

Full year guidance is $US4.050 billion to $US4.055 billion.

It also offered guidance for 2015 of of $US5.15 billion to $US5.20 billion, analysts were expecting on average $US5.19.

Here’s the press release:

Salesforce.com Announces Fiscal 2014 Third Quarter Results

Guides Fiscal 2015 Revenue to More Than $US5 Billion

– Revenue of $US1.08 Billion, up 36% Year-Over-Year

– Deferred Revenue of $US1.73 Billion, up 34% Year-Over-Year

– Unbilled Deferred Revenue of Approximately $US4.20 Billion, up 40% Year-Over-Year

– Operating Cash Flow of $US138 Million, up 30% Year-Over-Year

– Raises FY14 Revenue Guidance to $US4.050 – $US4.055 Billion

– Initiates FY15 Revenue Guidance of $US5.15 – $US5.20 Billion

SAN FRANCISCO, Nov. 18, 2013 /PRNewswire/ — Salesforce.com (NYSE: CRM), the world’s #1 CRM platform (http://www.salesforce.com/), today announced results for its fiscal third quarter ended October 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130612/SF30598LOGO)

“Salesforce.com is the first enterprise cloud computing company to deliver a $US1 billion quarter, with outstanding third quarter revenue growth at 36%,” said Marc Benioff, Chairman and CEO, salesforce.com. “Given the strong customer response to our next generation social and mobile cloud technologies, I’m delighted to announce that we expect to deliver our first $US5 billion year during our fiscal year 2015.”

Salesforce.com delivered the following results for its fiscal third quarter:

Revenue: Total Q3 revenue was $US1.08 billion, an increase of 36% year-over-year, benefited in part by the acquisition of ExactTarget which closed in July 2013. Subscription and support revenues were $US1.00 billion, an increase of 36% year-over-year. Professional services and other revenues were $US72 million, an increase of 50% year-over-year.

Earnings per Share: Q3 diluted GAAP loss per share was ($0.21), and diluted non-GAAP earnings per share was $US0.09. The company’s non-GAAP results exclude the effects of $US142 million in stock-based compensation expense, $US49 million in amortization of purchased intangibles, and $US13 million in net non-cash interest expense related to the company’s convertible senior notes, and is based on a non-GAAP tax rate of approximately 27%. GAAP EPS calculations are based on a basic share count of approximately 600 million shares. Non-GAAP EPS calculations are based on approximately 640 million diluted shares outstanding during the quarter, including approximately 26 million shares associated with the company’s convertible 0.75% senior notes due 2015.

Cash: Cash generated from operations for the fiscal third quarter was $US138 million, an increase of 30% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at $US1.09 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of October 31, 2013 was $US1.73 billion, an increase of 34% year-over-year, benefited in part by the acquisition of ExactTarget. Current deferred revenue increased by 38% year-over-year to $US1.69 billion, benefited in part by longer invoice durations. Non-current deferred revenue decreased by 26% year-over-year to $US48 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the third quarter at approximately $US4.20 billion, up 40% year-over-year.

As of November 18, 2013, salesforce.com is initiating revenue and EPS guidance for its fourth quarter of fiscal year 2014. In addition, the company is raising its full fiscal year 2014 revenue and updating its EPS guidance previously provided on August 29, 2013. The company is also initiating revenue guidance for fiscal year 2015.

Q4 FY14 Guidance: Revenue for the company’s fourth fiscal quarter is projected to be in the range of $US1.124 billion to $US1.129 billion, an increase of 35% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.25) to ($0.24), while diluted non-GAAP EPS is expected to be in the range of $US0.05 to $US0.06. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $US145 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $US47 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $US12 million. EPS estimates assume a GAAP tax rate of approximately negative 1%, which reflects the estimated quarterly change in the tax valuation allowance, and a non-GAAP tax rate of approximately 36%. The GAAP EPS calculation assumes an average basic share count of approximately 609 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 654 million shares.

Full Year FY14 Guidance: Revenue for the company’s full fiscal year 2014 is projected to be in the range of $US4.050 billion to $US4.055 billion, an increase of 33% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.45) to ($0.44) while diluted non-GAAP EPS is expected to be in the range of $US0.33 to $US0.34. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $US512 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $US147 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $US47 million. EPS estimates assume a GAAP tax rate of approximately 31%, which reflects the estimated annual change in the tax valuation allowance, and a non-GAAP tax rate of approximately 35%. Note that the tax valuation allowance adds complexity, causing potential volatility in our forecasted GAAP tax rate. The GAAP EPS calculation assumes an average basic share count of approximately 598 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 635 million shares.

Full Year FY15 Guidance: Revenue for the company’s full fiscal year 2015 is projected to be in the range of $US5.15 billion to $US5.20 billion. The company will provide its expectations for FY15 GAAP and non-GAAP EPS when it announces its fourth quarter fiscal year 2014 results in February 2014.

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