Salesforce Revenue May Top Some Estimates on Marketing ToolsAaron Ricadela
Salesforce.com Inc., the biggest maker of customer-management software, forecast fiscal fourth-quarter revenue that may exceed some analysts’ estimates as acquisitions helped boost sales of marketing tools.
Sales in the period ending in January will be $1.12 billion to $1.13 billion, the company said yesterday in a statement. On average, analysts projected revenue of $1.12 billion, according to data compiled by Bloomberg. Profit before certain items will be 5 cents to 6 cents a share, Salesforce said, compared with an average prediction of 7 cents.
Chief Executive Officer Marc Benioff, who is hosting the company’s Dreamforce customer conference in San Francisco this week, has spent more than $3 billion to purchase marketing-software companies, including ExactTarget Inc. for $2.42 billion in July. Salesforce shares have surged 27 percent since its prior earnings report in August on optimism the new products would bolster revenue and bookings.
“It’s a good outlook,” said Israel Hernandez, an analyst at MKM partners LLC, who has a buy rating on Salesforce. “The stock has had a massive run this quarter and expectations were running hot through this week because of Dreamforce.”
The shares of Salesforce fell 5 percent to $52.74 at the close in New York. The stock is up 25 percent this year, compared with an 18 percent gain in the Standard & Poor’s 500 Information Technology Index.
Salesforce competes with Microsoft Corp., Oracle Corp. and SAP AG in the $20.7 billion market for technology that lets companies manage their customers, while adding newer tools for marketing and client support.
Benioff told analysts in a conference call that he and Vice Chairman Keith Block, the company’s recently hired head of sales and a longtime Oracle executive, had refocused Salesforce on cross-selling its products to buyers in sales, marketing and customer service departments. Benioff had earlier marketed his products as “social enterprise” tools for companies marketing through Facebook Inc. and Twitter Inc.
“It was a little tricky to find that buyer,” the CEO said. “We got a lot more focused.”
In the third quarter, which ended Oct. 31, revenue rose 36 percent from a year earlier to $1.08 billion, topping analysts’ average estimate of $1.05 billion. Profit excluding some items was 9 cents a share, matching the average projection.
The company’s net loss, which included stock-based compensation costs, amortization and interest expenses, narrowed to $124.4 million, or 21 cents a share. The company is spending heavily on sales and marketing, with those costs forming 54 percent of revenue in the quarter.
Sales for the next fiscal year, which ends in January 2015, will be $5.15 billion to $5.2 billion, Salesforce said.
Salesforce yesterday also unveiled an updated version of its mobile software, seeking to ensure that clients and partners can use more features of the company’s sales, marketing and customer-service programs.
The new product, called Salesforce1, will make it easier for businesses to customize Salesforce.com’s services for smartphones and tablets, the San Francisco-based company said in a statement yesterday. Applications developers will also get new tools to tap into the platform.
Benioff said the company’s mobile applications are now running the way he wants after the company revamped them several times.
“I don’t use a laptop anymore,” he said. “I don’t even use an iPad. I just use this iPhone 5 and I run the company from that.”
By tapping into Salesforce1, note-taking software maker Evernote Corp., online-storage provider Dropbox Inc. and professional network LinkedIn Corp. will also be able to ensure that their content and services can be more readily viewed by Salesforce.com users, Kendall Collins, executive vice president of products, said in an interview.
“Salesforce1 will fundamentally replace all of our mobile applications,” Collins said, adding that the tools will be immediately available for Apple Inc.’s iOS and Google Inc.’s Android mobile operating systems. “It effectively is now our flagship mobile app.”
At a press conference today, Benioff said the company had “acquired enough for now” and is focusing on selling to specific industries to gain market share.
“We’ve really been tempering our desire to acquire,” he said.
The CEO said he’s betting heavily on the success of Salesforce1 for mobile devices and considered its predecessor, Salesforce Touch, “a failed component of our strategy.”
Separately, Salesforce and Hewlett-Packard Co. announced a partnership to let Salesforce’s largest customers buy additional computing power for their software using Hewlett-Packard gear and running inside Salesforce’s data centers.
Andrew Schmitt, a spokesman for Salesforce, also said the company has acquired application development startup Cloudconnect, whose website said Salesforce will use the technology in conjunction with its Heroku programming tools.