Salesforce's guidance mixed; deferred revenue grows 31%

Salesforce (NYSE:CRM) expects FQ3 revenue of $1.365B-$1.37B and EPS of $0.12-$0.13 vs. a consensus of $1.37B and $0.13. FY15 (ends Jan. '15) guidance is for revenue of $5.34B-$5.37B and EPS of $0.50-$0.52 vs. a consensus of $5.34B and $0.51.

The deferred revenue balance rose 31% Y/Y in FQ2 to $2.35B, a slight slowdown from FQ1's 34% growth. The unbilled deferred revenue balance grew 32% to $5B, after growing 33% in FQ1.

GAAP sales/marketing spend rose to 51% of revenue from 50% a year ago, and R&D spend to 16% from 15%. G&A spend fell to 13% from 16%. Free cash flow more than doubled Y/Y to $174.3M, and was well above net income of $85.7M.

Americas revenue (71% of total) +39% Y/Y, Europe (19% of total) +42%, Asia-Pac (10% of total) +25%.

Sales Cloud (core CRM software) revenue totaled $610.1M, Service Cloud (customer support software) $318.7M, Salesforce1 (cloud app platform) $181.4M, and ExactTarget (cloud marketing software) $122.4M.

CRM -0.8% AH. FQ2 results, PR

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Comments (7)
  • Christopher Speetzen
    , contributor
    Comments (636) | Send Message
    Somebody please explain how this is a $34B company?
    21 Aug 2014, 04:24 PM Reply Like
  • jiri75
    , contributor
    Comments (181) | Send Message
    It is about international expansion. is still one of major grow area for consulting companies. It is very much given by the fact that allow ISV (independent software vendors) and consulting companies build application that can be offered to existing customer base. succeed in converting product into the platform. Similar what Apple did with iPhone.
    21 Aug 2014, 05:59 PM Reply Like
  • Ojasvi Rajpal
    , contributor
    Comments (76) | Send Message
    Pretty much sums up the bull thesis. Though I am very iffy about CRM's future given how the MSFT juggernaut is planning to gobble up this space.
    21 Aug 2014, 07:01 PM Reply Like
  • Jaka11
    , contributor
    Comments (30) | Send Message
    But,...but, it's an amazing company, which just had amazing quarter.
    And they only lost $60m.
    22 Aug 2014, 12:04 PM Reply Like
  • ReligiousWacko
    , contributor
    Comments (1865) | Send Message
    I really wish press outlets, especially finance ones like SA, would give out GAAP EPS in headlines instead of CRM's fantasy numbers. At least label the fantasy non-GAAP numbers as such.
    21 Aug 2014, 04:31 PM Reply Like
  • Esekla
    , contributor
    Comments (4791) | Send Message
    Regulations require the companies to feature GAAP #s at least as prominently as non-GAAP in financial reports. The same should apply to sites like this.
    22 Aug 2014, 10:33 AM Reply Like
  • MasterofallRulerofnone
    , contributor
    Comments (10) | Send Message
    because such absurdity allows them to own THE most expensive office space in San Francisco AND London. (All new leases so after initial freebies that'll bleed expenses - furnishings, etc too boot)
    21 Aug 2014, 05:11 PM Reply Like
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