Salesforce Q1 Earnings Just Beat Expectations, Forecasts Strong Growth


Salesforce.com reported slightly better-than-expected first-quarter earnings Tuesday as company executives touted the success of mobility applications built on its platform and its newly adopted philosophy of tailoring enterprise solutions to specific industries.

CEO Marc Benioff told investors on the earnings call Tuesday that in a quarter in which the company celebrated “a very important birthday for us,” revenue from its enterprise cloud business rose above $1.2 billion, more than 37 percent higher than the same quarter of the previous year, and just a penny per share above expectations.

Deferred revenue was $2.32 billion, a 34 percent gain year over year. The company also generated $473 million in cash in the first fiscal quarter, a gain of 67 percent from the first quarter of 2013.

Salesforce.com recently celebrated its 15th year of business, an occasion Benioff told investors “was an opportunity to look back at how we’ve shaped this new world of enterprise software.”

Benioff said it was amazing to think that Salesforce became the world leader in enterprise cloud computing “in just 15 short years.”

The strong financial results and pipeline of new business, Benioff said, allowed the company to upgrade its full fiscal year 2015 guidance by $40 million, to between $5.30 billion and $5.34 billion.

Benioff talked about the revolution in mobility that was driving much of the company’s new business, using as an example an actual user: himself.

 “Today, I run my business from my phone. I could never have imagined that just a few years ago,” the CEO said.

The number and popularity of custom mobility applications built on the Salesforce1 platform, which the company has heavily invested in over the past few years, “has far exceeded our wildest dreams,” Benioff said.

“As a user myself, I can tell you how it dramatically changed how I work,” he said of the mobility apps.

Salesforce President Keith Block said the company is also implementing a multipronged plan to change its relationship with customers by focusing on industry-specific solutions

“It really starts with our focus on industries,” Block said. Feedback from Salesforce.com customers makes clear “how important it is to speak the language of industries,” he added.

Salesforce.com only committed to tailoring its enterprise cloud products to specific industries about half a year ago, Block said. But it’s thanks to that change in focus that the company started to see traction in revenue in last year’s fourth quarter—gains that continued into the quarter that just closed.

Creating industry-specific solutions will allow the company to achieve greater mind share and drive future revenue, Block said.

Salesforce.com shares were trading up just below 0.9 percent in after-hours trading.

PUBLISHED MAY 20, 2014

 

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