By Ingrid Lunden
The ongoing interest and use of cloud-based services has brought a generally good set of results to one of the leaders in the enterprise software-as-a-service (SAAS) business. Salesforce.com released Q1 earnings just now and in a quarter that is traditionally slower for the company, it swung to a net loss of $19.5 million, compared to a net profit of $530 million a year ago. Nevertheless, total revenues for the quarter were $695 million and earnings per share of $0.37 — beating estimates from analysts as polled by First Call, who expected adjusted EPS of $0.34 and $678.21 million for revenue. The figures were also better than Saleforce’s (NYSE:CRM) own guidance of $0.33-$0.34 for the EPS and revenue of $673 million – $678 million.
The sales were an increase of 38 percent on revenues for the same period a year ago, and Marc Benioff, chairman and CEO, salesforce.com, says that the company is on track for its first $3 billion year; last year the company broke new ground with $2 billion in sales.
Within salesforce’s revenues of $695 million, the company is making the vast majority of its money on its core, cloud-based CRM software, for which subscription and support revenues were $655 million. Professional services accounted for a much smaller portion of sales at just $40 million. Subscriptions are growing more: they were up by 38 percent compared to 30% for professional services.
Deferred revenues — that is, revenues that Salesforce has yet to collect from its customers — is up by quite a lot. Salesforce notes that overall deferred revenue on the balance sheet was $1.33 billion, a rise of 46 percent on last year. Meanwhile unbilled deferred revenue — business that is contracted but unbilled and off the balance sheet — was up to $2.7 billion from $2.2 billion a year ago. Rises in both might be a reflection of Salesforce’s own growth, but could also be a sign of customers delaying their payments, which Salesforce cites as a risk factor in its business.
Salesforce says that it generated cash of $213 million in Q1, up 53 percent over last year. Total cash, cash equivalents and marketable securities are at $1.7 billion.
In addition to the bullish projections on $3 billion in revenues for the full year, Salesforce.com says that it expects revenues for the next quarter to be up on this quarter and in the range of $724 million and $728 million, up 33 percent on last year’s Q2.
Looks like tomorrow might be a good trading day for Salesforce.com. In a research note, Canaccord Genuity analyst Richard Davis noted that the thinks that shares of Salesforce.com might rise by as much as three-eight percent on Friday, due to “at least temporary exhaustion of risk-off selling of high valuation growth stocks,” and “a positive halo effect from a successful Facebook IPO.”