Salesforce's deferred revenue growth picks up, H-P partnership announced

|By:, SA News Editor

In tandem with its FQ3 report, Salesforce (CRM) has announced it's partnering with H-P (HPQ) to offer customers using its apps dedicated cloud computing instances (called Superpods) using H-P's converged infrastructure (i.e. integrated server/storage/networking systems).

H-P will be the first Salesforce customer to use a Superpod. The deal represents a nice reference win for H-P's slumping enterprise hardware unit, and gives Salesforce the chance to offer enterprises nervous about relying on cloud CRM apps a greater level of hardware control.

With an FQ3 revenue beat in the bag, Salesforce (CRM) is guiding for FY14 (ends Jan. '14) revenue of $4.05B-$4.055B and EPS of $0.33-$0.34 vs. a consensus of $4..03B and $0.34. The company is also establishing FY15 revenue guidance of $5.15B-$5.20B, which compares with a $5.19B consensus.

The deferred revenue balance (boosted by the ExactTarget deal) rose 34% Y/Y in FQ3 to $1.73B, outpacing FQ2's 30% clip. Unbilled deferred revenue rose 40% to $4.2B after rising 33% in FQ2.

Spending remains aggressive: Opex rose 38% Y/Y to $905.8M. Sales/marketing spend +36% to $581.2M, R&D +50% to $170.7M.

Free cash flow rose 19% Y/Y to $65.2M, a little above net income of $57.6M. FCF was pressured by $72.7M in capex (+43% Y/Y).

CRM +0.7% AH. CC at 5PM ET. FQ3 results, PR, cloudconnect deal.