* Full-year revenue up 35 pct at $3.05 bln, sees FY2014
revenue at $3.82-3.87 bln
* Cloud-based services drive growth, but erratic profit
performance a concern
* CEO says to continue expanding product line, including via
* Shares rise 4.9 pct after hours
By Gerry Shih
Feb 28 Salesforce.com Inc reported
better-than-expected quarterly sales of $835 million on
Thursday, as its cloud-based services continued to sell well
despite an uncertain macroeconomic picture.
Its shares gained 4.9 percent after hours to $177.50, after
closing up 1.4 percent at $169.22 on the New York Stock
The company, which provides sales and marketing software to
companies such as The Coca-Cola Co and Ford Motor Co
, has boasted one of the fastest rates of top-line growth
in the technology industry, with full-year revenue rising 35
percent from a year ago to $3.05 billion.
For its 2014 fiscal year, which began Feb. 1, Salesforce
said it expected sales to continue growing to between $3.82
billion and $3.87 billion, in line with Wall Street forecasts of
$3.85 billion, according to Thomson Reuters I/B/E/S.
Under Marc Benioff, Salesforce's CEO and founder, the
company's record of revenue growth has won favor among Wall
Street investors, who have driven up its share price to roughly
90 times forward earnings, one of the highest multiples in the
But questions are mounting over how long the 14-year-old
company can keep its shares surging, especially considering
Benioff's failure to produce consistent profits.
Considered the leader in cloud computing, Salesforce is
facing rising competition from Oracle Corp, SAP AG
and Microsoft Corp, which are intensely
pursuing Salesforce's customers and making splashy acquisitions
to match Salesforce's product offerings.
In recent years, Benioff has steered his company to cater
more to marketing rather than sales departments. Through
acquisitions and internal research and development, Salesforce
has, for instance, introduced tools that automate social media
ad campaigns or monitor Twitter chatter.
Benioff said on Thursday's earnings call that his company
sold new service contracts to Philips Electronics NV,
Unilever NV, Intuit Inc and others.
Despite soaring revenue, Benioff, a one-time sales executive
at Oracle, has often been criticized for delivering
underwhelming bottom lines. Salesforce reported another
quarterly loss on Thursday: a net loss of $20.8 million or 14
cents a share for the fourth quarter, widening from a loss of
$4.08 million or 3 cents a share a year earlier.
The company said that $108 million in stock-based
compensation expenses and a one-time tax charge had eaten into
its margins. Excluding those and other items, it earned 51 cents
a share, beating the Street's estimate of 40 cents.
Some analysts said they were willing to overlook a lack of
short-term profits and applauded Benioff for aggressively
expanding beyond the sales management software market and into
the massive new field of marketing software.
"New sales production was very good. All the metrics were
very good," said Steve Koenig, an analyst at Wedbush Securities.
"If you're looking at valuing Salesforce, you don't want to
look at the next year. You have to look at the long term, in
terms of grabbing more and more market share not only in CRM but
going beyond those markets."
Benioff, who made a series of major acquisitions in 2012
that included a $745 million deal for Buddy Media, a social
media marketing software company, pledged on Thursday to
continue investing heavily to expand his product line, including
"I think we're going to buy small and big," Benioff said.
"We're going to be aggressive. We need to look at everything."
Although Salesforce has won new customers and headlines with
its expanded product strategy, the early results of its
aggressive expansion are still unclear. The company disclosed in
October that Buddy Media was losing money at a rate of $40
million a year, and Chief Financial Officer Graham Smith said
Thursday that Buddy Media contributed just $11 million to
Salesforce's fourth-quarter revenue and $20 million for the
"I think they're well-positioned but they have work to do to
tie in this marketing area," said Koenig. "The offering is not
truly cohesive yet."
Benioff suggested that mobile software will be a key part of
this year's expansion. The company this week introduced new
capabilities in its customer service software so representatives
could talk to customers in mobile apps.
"We pioneered the shift to the cloud, we pioneered the shift
to social, and we pioneered the shift to mobile," Benioff said.