Salesforce crushes earnings, raises revenue and profit outlook
It reported:
- Revenue of $2.39 billion. Analysts were expecting $2.35 billion.
- Adjusted EPS of $0.28. Analysts were looking for $0.26.
The company also said its earnings for the year would be better than previously expected. Salesforce now expects to post full-year non-GAAP EPS of $1.28 to $1.30. It expects its full-year GAAP EPS to range from $0.06 to $0.08.
In February, the company had projected GAAP earnings of $0.05 to $0.07 a share and non-GAAP profits of $1.27 to $1.29.
The other key metric for Salesforce is its deferred revenue. This is revenue under contract but either not billed yet, or billed but not yet received. Salesforce is a subscription business, meaning revenue is not recognized when a customer signs a contract but only after the service is delivered or paid for.
Salesforce's deferred revenue as of April 30 was $5.04 billion, which was up 26% year-over-year. And unbilled deferred revenue, representing business that is contracted but unbilled and off the balance sheet, tallied approximately $9.6 billion at the end of the quarter, which was up 26% year-over-year.
That latter amount includes about $450 million related to unbilled deferred revenue from Demandware. Salesforce bought Demandware for $2.8 billion in June, 2016.
Investors, however, are not terribly impressed. The stock is flat in after-hours trading, down just under 1%.
Here's the full press release.
Salesforce Announces Fiscal 2018 First Quarter Results
Raises FY18 Revenue Guidance to $10.25 Billion to $10.30 Billion
- First Quarter Revenue of $2.39 Billion, up 25% Year-Over-Year, 25% in Constant Currency
- First Quarter Operating Cash Flow of $1.23 Billion, up 17% Year-Over-Year
- Deferred Revenue of $5.04 Billion, up 26% Year-Over-Year, 27% in Constant Currency
- Unbilled Deferred Revenue of Approximately $9.6 Billion, up 26% Year-Over-Year
- Initiates Second Quarter Revenue Guidance of $2.51 Billion to $2.52 Billion
- Raises FY18 GAAP Earnings Per Share Guidance to $0.06 to $0.08
- Raises FY18 Non-GAAP Earnings Per Share Guidance to $1.28 to $1.30
SAN FRANCISCO, Calif. - May 18, 2017 - Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its fiscal first quarter ended April 30, 2017.
"With our outstanding first quarter results, we are thrilled to be raising our fiscal 2018 revenue guidance by $100 million and raising our GAAP and non-GAAP earnings per share expectations for the year," said Marc Benioff, chairman and CEO, Salesforce. "Salesforce has once again been named the CRM market leader, and we continue to grow our share in CRM -- the fastest growing enterprise software market."
Salesforce delivered the following results for its fiscal first quarter 2018:
Revenue: Total Q1 revenue was $2.39 billion, an increase of 25% year-over-year, and 25% in constant currency. Subscription and support revenues were $2.2 billion, an increase of 24% year-over-year. Professional services and other revenues were $187 million, an increase of 32% year-over-year.
Earnings per Share: Q1 GAAP loss per share was ($0.01), and non-GAAP diluted earnings per share was $0.28.
Cash: Cash generated from operations for the first quarter was $1.23 billion, an increase of 17% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at $3.22 billion.
Deferred Revenue: Deferred revenue on the balance sheet as of April 30, 2017 was $5.04 billion, an increase of 26% year-over-year, and 27% in constant currency. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the first quarter at approximately $9.6 billion, up 26% year-over-year. This includes approximately $450 million related to unbilled deferred revenue from Demandware.
As of May 18, 2017, the company is initiating revenue, earnings per share, and deferred revenue guidance for its second quarter of fiscal year 2018. In addition, the company is raising its full fiscal year 2018 revenue and earnings per share guidance, and maintaining its operating cash flow guidance, previously provided on February 28, 2017.
Q2 FY18 Guidance: Revenue is projected to be approximately $2.51 billion to $2.52 billion, an increase of 23% to 24% year-over-year.
GAAP diluted earnings per share is projected to be $0.00 to $0.01, while non-GAAP diluted earnings per share is projected to be $0.31 to $0.32.
On balance sheet deferred revenue growth is projected to be approximately 22% year-over-year.
Full Year FY18 Guidance: Revenue is projected to be approximately $10.25 billion to $10.30 billion, an increase of 22% to 23% year-over-year.
GAAP diluted earnings per share is projected to be $0.06 to $0.08, while non-GAAP diluted earnings per share is projected to be $1.28 to $1.30.
Operating cash flow growth is projected to be 20% to 21% year-over-year.