Salesforce (CRM) reported earnings and sold off after hours on conservative guidance, but it seemed okay to me.
Revenue was up 25% to $2.04 billion
Earnings were 24 cents, up from 19 cents. (Nonsense GAAP earnings were 33 cents).
Cash from operations was $251 million, but total cash was down a little because of a large acquisition of Demandware.
The key though to why this company is misunderstood is that they have all this deferred revenue that the accounting system keeps them from counting yet towards earnings. They have both
deferred revenue of $3.8 billion (up 26% yoy)
unbilled deferred revenue of $8.0 billion (up 29% yoy, which is under firm contract but not yet billed).
Now think about that: they have total deferred revenue, billed and unbilled, of $11.8 billion, while their reported revenue for the quarter was just $2.0 billion. That means that they have almost SIX TIMES as much in total deferred revenue that they haven’t been allowed to count yet, as the revenue that they WERE allowed to count for the quarter. And this was a record quarter for reported revenue (as all their quarters are), not a small quarter. Twelve month trailing revenue is $7.5 billion, and their total deferred revenue is more than one and a half times that.
They have four clouds. Their legacy cloud, which is biggest is growing slowly, while the smaller more rapidly growing clouds will continue to reduce its importance.
Sales Cloud (legacy) 37% of revenue growing 13% Service Cloud 28% of revenue growing 29% App Cloud & other 17% of revenue growing 43% Marketing Cloud 10% of revenue growing 28%
They raised full year guidance.
Conference Call – They were extremely positive.
Salesforce continues to be the fastest growing top ten software company in the world, and last week Forbes ranked us as one of the most innovative companies in the world for the sixth year in a row, and has named Salesforce as The Innovator of the Decade.
Salesforce Einstein is AI for everyone. It’s going to democratize artificial intelligence. It’s going to make every company and every employee smarter, faster and more productive.
At our Dreamforce conference you will see how we are delivering Salesforce Einstein, and we are going to have some great new products like Sales Cloud Einstein, and Service Cloud Einstein, Marketing Cloud Einstein. We are going to have our Analytics Cloud Einstein, and many other AI capabilities in all of our clouds and our customers will be able to build their own AI capabilities using Einstein extensions and Heroku. This is going to be a huge differentiator and growth driver going forward as it puts us well ahead of our CRM competition once again. Salesforce Einstein is also a perfect example of how we have been able to combine organic innovation with some amazing acquisitions.
A few deals slipped at the end of the quarter. As far as these deals that slipped, in my experience some of these deals will close in the next quarter or the next quarter, or the next quarter. None of these deals are going away. None of these deals have been lost.
Looks okay to me. I added a tiny bit in the pre-market.
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