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Salesforce.com profit beats estimates, shares drop after hours
August 22, 2017 / 8:50 PM / in 3 months

Salesforce.com profit beats estimates, shares drop after hours

(Reuters) - Salesforce.com Inc posted a quarterly profit that narrowly beat analysts’ estimates as it invested heavily to fend off competition in the cloud-based software sector.

FILE PHOTO - The Salesforce logo is pictured on a building in San Francisco, California, U.S. October 12, 2016. REUTERS/Lily Jamali/File Photo

Shares of the company fell 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 million, or 24 cents per share, a year earlier.

Analysts were expecting net income of $229 million for the quarter.

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.

“Salesforce’s growth is impressive,” said Joe Tenebruso, analyst for Motley Fool. “There aren’t many businesses that sizes that are growing so rapidly.”

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.

“In the next few years, 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.”

Total operating costs rose 19.7 percent to $1.84 million in the second quarter ended July 31.

On an adjusted basis, the company earned 33 cents per share.

Analysts on average had expected a profit of 32 cents and revenue of $2.51 billion, according to Thomson Reuters I/B/E/S.

Reporting by Salvador Rodriguez in San Francisco and Laharee Chatterjee in Bengaluru; editing by Anil D'Silva and G Crosse

Our Standards:The Thomson Reuters Trust Principles.
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