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Salesforce Beats Estimates, on Track to Hit $8 Billion in 2017

Salesforce's subscription business gives CEO Marc Benioff a high degree of confidence in next year's results.


Shares of cloud software provider rose after hours after the company delivered quarterly results that bested the estimates of analysts and said revenue is expected to top $8 billion in its next fiscal year.

Salesforce posted earnings per share of 21 cents, beating the consensus view of analysts by two cents. Revenue was $1.7 billion, up 24 percent versus the year-ago period, and in line with expectations. Deferred revenue, a measure of services the company has promised to deliver but for which it hasn’t yet been paid, was $2.85 billion, up 28 percent.

Shares rose by $4.23, or more than 5 percent, in after-hours trading to $81.50 after the results were announced.

The company said it expects revenue of about $1.8 billion for the current quarter ending in January, in line with expectations. It expects full-year sales to come in at $6.65 billion and to rise as high as $8.1 billion in the fiscal year ending in January 2017. Both forecasts are in line with expectations.

The confidence in that number comes from the fact that Salesforce delivers its software as a subscription, so there’s a lot of visibility into what’s expected. In addition to deferred revenue, the company said there’s $6.7 billion worth of unbilled revenue that’s not yet reflected on the balance sheet

Keith Block, Salesforce’s president and vice-chairman, said the growth of the business was driven largely by international expansion and new products aimed at specific industries including health care and financial services. “We’re seeing a shift in the agenda of the CEOs we talk to. They want to grow, but they can no longer just cut costs to get there,” he said. “The message that we’re bringing them is resonating.”

In an interview with CNBC, CEO Marc Benioff cited deals with Intel, GE and engineering firm AECOM as important during the quarter.

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