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Shares of (NYSE:CRM) fell some 5.3% in Friday's trading session after the provider of cloud computing and related social enterprise solutions released its first quarter results for its fiscal 2014 after the market close on Thursday.

Investors are disappointed with the lack of profit improvements, as the company is still guiding for a full year GAAP loss. The full year revenue guidance came in a bit softer than expected as well.

First Quarter Results generated first quarter revenues of $892.6 million, up 28% on the year, and up 6.9% on the previous quarter. Unfavorable currency movements shaved off 2 percent points of total revenue growth. Revenues came in just ahead of consensus estimates of $887.1 million. posted first quarter non-GAAP earnings of $0.10 per share. The company reported a $67.7 million net loss on a GAAP basis, with GAAP losses per share tripling to $0.12.

CEO and Chairman Marc Benioff commented on the first quarter developments, " delivered another quarter of strong growth, with constant currency revenue, deferred revenue, and operating cash flow all growing 30% or more year over year."

Look Into The Results

Despite the sizable revenue growth, gross margins fell by some 160 basis points to 76.6%. There was no benefit of operating leverage to be found in operating costs as well.

Total operating expenses actually increased by 20 basis points to 81.6% of total revenues. A 90 basis points drop in marketing and sales expenditures was offset by increased investments in Research & Development.

Looking Into The Remainder Of The Year

For the current second quarter, guides for revenues of $931 to $936 million, up 27 to 28% on the year. Non-GAAP earnings per share are expected to come in between $0.11 and $0.12 per share, while GAAP losses are expected to narrow towards $0.06-$0.07 per share.

On average, analysts expected to guide for non-GAAP earnings of $0.12 per share on revenues of $934.6 million.

Full year revenues are expected to increase between 26 and 27%, and should come in between $3.835 and $3.875 billion. Non-GAAP earnings are expected to come in between $0.47 and $0.49 per share. Mainly due to large stock based compensation expenses, expects to report GAAP losses of $0.31 to $0.33 per share.

Analysts were looking for full year non-GAAP earnings of $0.49 per share on revenues of $3.87 billion.

Valuation ended its first quarter with $3.1 billion in cash, equivalents and marketable securities. The company operates with $1.7 billion in convertible debt outstanding and capital lease obligations, for a net cash position of around $1.4 billion.

Factoring in a 5% correction in Friday's trading session, the market values at around $25.3 billion. Factoring in the net cash position of $1.4 billion, operating assets of the firm are valued around $23.9 billion.

This values operating assets of the firm at 6.2 times 2013's expected annual revenues. Operating assets are valued around 100 times expected non-GAAP earnings. Note that this excludes stock-based compensation expenses.

Given the lack of profits, does not pay a dividend at the moment.

Some Historical Perspective

Long term shareholders have seen incredible returns. Shares have more than ten-folded over the past decade, and have seen very strong returns, especially in the second part of the decade.

Shares traded around $6 in the aftermath of the financial crisis and have moved in a strong uptrend ever since. Shares reached levels in their high-thirties back in 2011. After a consolidation phase, shares recently hit all time highs of $47 per share.

Between its fiscal 2010 and 2013, has increased its annual revenues by a cumulative 133% to $3.05 billion over the past year. While the company reported solid profits of $80 million in 2010, the company was forced to report a $270 million loss over the past year as expense growth outpaced revenue growth.

Investment Thesis

While the revenue growth rate at continues to be impressive, investors are not pleased with the lack of improvements in the bottom line.

Revenues continue to grow at a healthy pace. North America, which generates roughly two third of total revenues, saw a 30% increase in first quarter revenues. European revenues grew by a solid 38%, while Asian revenues grew by merely 7%, heavily impacted by unfavorable foreign exchange movements. A stronger dollar, notably against the Yen, shaved off 10 percent points of revenue growth in the continent.

The lack of operating leverage, continued costs related to acquisitions, and the discrepancy between GAAP and non-GAAP earnings are causes for concerns. Even as the company guides for full year non-GAAP earnings of $0.47-$0.49 per share, implying non-GAAP earnings of $270 million, the company is still valued around 100 times non-GAAP earnings.

Worse, expects to take $0.78 per share in stock-based compensation expenses, some $450 million per year. These expenses are currently not being taken into account in the non-GAAP earnings estimate, while they really represent their normal cost of business for the company.

Unlike some of its competitors, the revenue multiple at 6 times 2013's annual revenues is not even that aggressive. Yet is already much larger in size, preventing's growth rates from keeping up with some of its competitors' due to its size, despite a quite aggressive acquisition strategy.

Yet it is not revenues that investors are most concerned about. Investors and analysts are slowly becoming disappointed with the lack of profitability improvements. Earnings furthermore came in line with consensus estimates, while the company has a tradition to beat on estimates.

With cloud based software companies being the hottest area in the wider technology sector, few are accounting for an expected increase in competition. Large names like SAP (NYSE:SAP), Oracle (NYSE:ORCL) and Microsoft (NASDAQ:MSFT) are showing an active interest in the market, while smaller competitors have raised a lot of capital as well in recent times. The increased focus of large established players will undoubtedly result in increased competition.

Overall I remain slightly bearish. With its inflated currency, the company's own stock, the company made a string of acquisitions in recent years, thereby boosting revenue growth. The lack of non-GAAP profitability and the significant stock-based compensation expenses should be accounted for as well.

With shares trading near all time highs I remain very cautious. As Wall Street becomes impatient, a bearish position might offer the best risk-reward in the coming period.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.