Salesforce Rises After Billings Growth Tops Analyst’s Estimates
Salesforce.com Inc. (CRM), the largest seller of online customer-management software, gained the most in more than three months after the company reported an acceleration in its billings, a harbinger of sales growth.
The amount Salesforce invoiced its customers grew 57 percent in the period from a year earlier, topping the 31 percent predicted by Brent Thill, an analyst at UBS AG in San Francisco. Billings rose 29 percent in the third quarter.
Chief Executive Officer Marc Benioff has landed large corporate contracts and added new tools that handle customer support and analyze social-media postings. Salesforce’s variety of products, which run on personal computers, iPads and smartphones, provide customers with enough flexibility that they keep buying more, Thill said. Some rival software is suited to handling only certain tasks.
“What’s really driving this is that Salesforce has a platform of multiple products that customers don’t get dead- ended by,” said Thill, who recommends buying the shares. “The customers I talk to buy it because they don’t get caught in a cul-de-sac.”
Salesforce gained 7.9 percent to $142.16 at 9:54 a.m. New York time. Earlier the shares touched $146.26 for the biggest intraday percentage gain since Nov. 19.
Excluding some costs, profit was 43 cents a share in the fourth quarter, San Francisco-based Salesforce said in a statement yesterday. Analysts had predicted 40 cents, according to data compiled by Bloomberg. Sales climbed 38 percent to $631.9 million, beating the $624.1 million estimate.
Salesforce closed a contract worth more than $100 million in recent weeks with a large insurer, Benioff said during a conference call with analysts yesterday. It also signed fourth- quarter deals with Hewlett-Packard Co. (HPQ), Bayerische Motoren Werke AG, AT&T Inc. and Sony Corp., he said.
“We are becoming a trusted adviser” to companies adding social media and mobile computing to their operations, Benioff said. “In that process, deals are getting bigger.”
First-quarter revenue will be $673 million to $678 million, Salesforce said. Analysts had projected $663.5 million on average. Earnings will be 33 cents to 34 cents a share, excluding some items, compared with a 36-cent estimate.
The company also raised its revenue forecast for fiscal 2013 to $2.92 billion to $2.95 billion. Analysts had predicted $2.91 billion. Earnings excluding some items will be $1.58 to $1.62 a share, compared with a $1.63 estimate.
The company’s net loss attributable to common shareholders was $4.08 million, or 3 cents a share, in the fourth quarter, which ended Jan. 31. That compared with net income of $10.9 million, or 8 cents, a year earlier. Higher marketing and research spending weighed on the results.
Salesforce is facing increasing competition in the market for business applications delivered through cloud computing, which stores customers’ data on remote servers. The approach provides users with automatic upgrades to new versions in exchange for monthly or annual subscription fees.
Oracle Corp. agreed this month to buy Taleo Corp., a maker of online human resources software, for about $1.9 billion, marking its second Web software acquisition in less than four months. In October, Oracle said it would buy RightNow Technologies Inc. for $1.5 billion.
In December, SAP AG agreed to buy SuccessFactors Inc. for $3.4 billion. SuccessFactors’ online software for managing employees’ performance has more than 3,500 customers and 15 million users.
Benioff played down the threat of those deals yesterday. SuccessFactors could get lost inside SAP, he said. And Oracle’s cloud-computing acquisitions could confuse customers who buy its traditional applications, Benioff said.
Salesforce also is confronting a challenge from startups. Workday Inc., whose online software handles tasks like payroll and human resources, plans to file for an initial public offering later this year.
Salesforce may need to tap additional new markets as growth slows for customer-relationship programs, said Pat Walravens, an analyst at JMP Securities LLC in San Francisco. To help it branch out, Salesforce acquired human-resources software maker Rypple in December for an undisclosed amount.
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