Source: Salesforce
Last week cloud-based CRM company Salesforce (NYSE: CRM) was thankful for a strong third quarter for its fiscal year 2018 for the period ended October 31, 2017. The company reported record Q3 revenue of $2.68 billion, a 25 percent increase year-over-year. Salesforce also reported deferred revenue of $4.39 billion, a 26 percent increase year-over-year, and unbilled deferred revenue of approximately $11.5 billion, a 34 percent increase year-over-year.
‘Salesforce delivered a record third quarter, and we’re on a path to exceed $20 billion faster than any enterprise software company in history,’ said Salesforce chairman and CEO Marc Benioff in a press release. ‘With this phenomenal growth, we are building a company for the ages, creating value for our Trailblazers – our customers, employees, investors and communities – while helping make the world a better place for decades to come.’
Other financial highlights included:
- Subscription and support revenues were $2.49 billion, a 25 percent increase year-over-year.
- Professional services and other revenues were $194 million, a 20 percent increase year-over-year.
- Subscription and support revenues now account for 92.9 percent of total revenue.
- Deferred revenue was $4.39 billion, a 26 percent increase year-over-year.
- Unbilled deferred revenue, which is revenue that has been contracted but not yet billed or recorded on the balance sheet, was $11.5 billion, a 34 percent increase.
- Total cash, cash equivalents and marketable securities were valued at $3.63 billion at the end of the third quarter.
- Net income was $51.39 million
- GAAP diluted earnings per share for Q3 FY 2018 was $0.07.
The majority of Salesforce revenue continues to come from the Americas. Percentage of revenue by geographic region is broken down as follows:
|
Americas |
72% |
|
Europe |
18% |
|
Asia Pacific |
10% |
In a November 21 earnings call, Benioff reiterated the strong quarter in his comments:
Source: Salesforce
‘I’m especially proud that Fortune magazine just ranked Salesforce #1 on its inaugural Future 50 list of companies best positioned for breakout growth,’ Benioff said. ‘In fact, as the fastest growing enterprise software company ever to reach $10 billion, we are now targeting to grow the company organically to more than $20 billion by fiscal year ’22, and we plan to do that, to be the fastest enterprise software company ever to get to $20 billion.’
During the call, Benioff also announced that Bret Taylor would be become Salesforce president and chief product officer, and Alex Dayon would be promoted to president and chief strategy officer.
‘Both of these tremendous executives are now reporting directly to me and are really a critical part of our management team,’ Benioff said. ‘And in these new roles, Bret is going to drive our product vision, design, development, go-to-market strategy, and Alex is going to lead strategic initiatives, working more closely with our customers on product direction and transformation.’
Based on strong third quarter results, Salesforce raised its full year 2018 revenue guidance to between $10.43 billion and $10.44 billion, and GAAP diluted earnings per share of $0.12 to $0.13. The company projected fourth quarter revenue between $2.801 billion to $2.811 billion, an increase of 22 percent to 23 percent year-over-year, and GAAP diluted earnings per share between $0.03 to $0.04. The company reconfirmed its guidance for full year fiscal 2019 revenue between $12.45 billion and $12.50 billion.
Though there was an initial bump of $1.65 per share in Salesforce’s stock price on the day of the earnings report, the company’s stock price was $107.15 per share on Friday, November 24 at 3:24 p.m. Eastern.
Source: Google Finance
Insider Take:
As Motley Fool points out, artificial intelligence is critical to Salesforce’s growth, particularly through features it is launching within its Einstein product. Salesforce has also been strong in providing clients with new, rapidly evolving products and services. This means meeting the needs of specific industries, including pharmaceuticals in which Salesforce now has 16 of the 20 largest pharmaceutical companies as customers. Having revised its guidance once again, it is clear Salesforce is on an upward trajectory that is showing no signs of slowing down. It will be exciting to see what fiscal year 2019 brings for Salesforce and its customers.
