Shares of the company slipped 1 percent after the bell on Tuesday after closing at $92.95 on the New York Stock Exchange. The San Francisco- based tech giant’s net income grew to $241 million, or 33 cents per share, from $170…
(Adds comments from CEO Marc Benioff)
Aug 22 (Reuters) – Salesforce.com Inc posted a quarterly profit that beat analysts’ estimates as it invested heavily to fend off competition in the cloud-based software sector.
Shares of the company slipped 1 percent after the bell on Tuesday after closing at $92.95 on the New York Stock Exchange. Despite strong growth in revenue, the stock shares fell slightly as some investors expected even greater performance, analysts said.
The San Francisco-based tech giant’s net income grew to $241 million, or 33 cents per share, from $170 million, or 24 cents per share, a year earlier.
The company also reported deferred revenue – a key metric for the subscription-based software business – of $4.82 billion for the quarter, up 26 percent on the year, beating expected revenue of $4.69 billion, according to financial and data analytics firm FactSet.
Revenue from Sales Cloud, the company’s flagship product, rose 17.4 percent to $886.4 million, while total revenue jumped 25.8 percent to $2.6 billion. Analysts on average had expected a profit of 32 cents and revenue of $2.51 billion, according to Thomson Reuters I/B/E/S.
« Salesforce’s growth is impressive, » said Joe Tenebruso, analyst for Motley Fool. « There aren’t many businesses that size that are growing so rapidly. »
Reflecting the strong growth, Salesforce also raised its revenue guidance for the remainder of fiscal year 2018 by $100 million.
The cloud-based software maker has boosted spending on research and development as well as marketing and sales as it faces intense competition from companies including Oracle Corp and Microsoft Corp.
« It’s going to be a tough battle in the cloud, » said Tom Taulli, InvestorPlace.com analyst. « Salesforce has done a great job so far, but the competition has gotten better. »
Spending on marketing and sales for the period came in at $1.2 billion, up nearly 26 percent from last year, while research spending came in at $386 million, up 33 percent from last year.
« There’s a question of where is that research and development going? » said Andrew Bartels, research analyst with Forrester Research Inc. « Is it going to create actual value? That remains to be determined. »
On a call with analysts, Chief Executive Marc Benioff highlighted the company’s investments in Einstein, its artificial intelligence technology, saying he expects the technology to be a big part of Salesforce’s future growth.
You see that the cloud was a huge driver of growth, mobile was a huge driver of growth, and now youve got AI, » Benioff said. (Reporting by Salvador Rodriguez in San Francisco and Laharee Chatterjee in Bengaluru; editing by G Crosse and Cynthia Osterman)
