Analysts Views Mixed as Salesforce.com Reports Loss for Q3
Salesforce.com (NYSE: CRM) Nov. 16 reported a loss of $3.76 million, or 3 cents per share, on sales of $584 million, as the company saw some challenges in its billings for the third quarter.
Salesforce.com, whose Web-based software is used to power customer management operations, said its non-GAAP (non-Generally Accepted Accounting Principles) earnings were 34 cents a share, excluding $57 million in stock-based compensation.
Wall Street analysts had expected Salesforce.com to report sales of $572 million on earnings of 31 cents a share.
The company noted its third-quarter revenue rose 36 percent from the year-ago quarter, as did the company's subscription and support sales, which reached $549 million. Professional services and other revenue reached $35 million, up 34 percent from a year ago.
"Salesforce.com is the first enterprise cloud-computing company to exceed a $2.3 billion annual revenue run rate," Salesforce.com CEO and Chairman Marc Benioff said in a statement. "And today, we're excited to announce that we expect to reach a $3 billion annual revenue run rate during our fiscal year 2013."
Yet Salesforce.com's deferred revenue also dropped from $935 million in Q2 to $918 million for this quarter, indicating weaker bookings from a quarter ago.
"New business is getting harder to get," noted Global Equities Research analyst Trip Chowdry. He downgraded Salesforce.com shares in October due to tougher competition from Oracle (NASDAQ:ORCL), which typically attacks any enterprise software company that enters its orbit.
Oracle's purchase of RightNow Technologies will make it a stronger force in software-as-a-service (SaaS) CRM, which is Salesforce.com's bailiwick. Oracle also launched a Public Cloud to directly challenge Salesforce.com.
Some analysts are bullish about Salesforce.com's strategy and progress.
Susquehanna Financial Group analyst Derrick Wood, who believes Oracle's bid for RightNow is creating new opportunities for Salesforce.com to hire sales talent and poach RightNow customers, said he expects to see a number of eight-figure deals for Salesforce.com, which inked three such deals last quarter.
"Our sources also indicate that CRM signed a $28 million ELA agreement with the General Services Administration department, a five-year deal that includes core SFA, Force.com and Chatter collaboration suite," Wood wrote in a research note to clients Nov. 15.
"We have also heard of a strong acceleration in deal activity with Force.com and Service Cloud, which we think should help drive solid growth in seven-figure transactions (they signed 60 last quarter)."
Going forward, Salesforce.com is projecting revenue for the fourth quarter of between $620 million and $624 million on a net loss per share of approximately 6 cents to 5 cents, with earnings per share excluding expenses of between 39 cents and 40 cents.