The FINANCIAL — Salesforce.com Inc., the largest maker of online customer-management software, fell the most in more than three years after customer billings missed some analysts' estimates, a sign future revenue growth may slow.
Billings rose 29 per cent in the fiscal third quarter from a year earlier, said Pat Walravens, an analyst at JMP Securities LLC, who has an "outperform" rating on the shares. That missed his 33 per cent growth estimate. The figure is seen as a benchmark of momentum at the company, whose shares had climbed more than 10 per cent in the past six weeks before Friday.
"Salesforce.com guided revenue up and did everything it could to convince investors that the tone of business remains strong," Walravens said in a research note Friday. "Investors should consider using this pull-back as a buying opportunity."
Chief executive officer Marc Benioff has been hiring sales staff and stepping up the pace of acquisitions in a bid to widen the company's lead in cloud computing, which lets customers rent software delivered over the Web rather than install it on their own machines. The moves are squeezing profit margins, and the lack of payoff in billings disappointed investors.Salesforce dropped 10 per cent to $113.43 at the close for the biggest decline since October 15, 2008. The shares have lost 14 per cent this year.
On a conference call with analysts, Benioff said he expects growth to accelerate next year. He also said tracking deferred revenue, a component of billings, isn't the best way to monitor the company's health. Salesforce has bought businesses such as Radian6 Technologies Inc. and Heroku Inc. that don't contribute to its deferred revenue account.Excluding certain costs, profit will be 39 cents to 40 cents a share in the current quarter, which ends in January, the company said. Analysts on average had estimated earnings of 40 cents, according to Bloomberg data. Revenue will be $620 million to $624 million, topping the $609.4 million projection.
For fiscal 2013, Salesforce said revenue will be $2.88 billion to $2.92 billion. The average estimate of analysts is $2.78 billion.Salesforce's operating margin, excluding some items, narrowed to 11 per cent in the third quarter, down 4 percentage points from a year ago, chief financial officer Graham Smith said on the call. The company is spending more on sales, marketing, research and data-centre capacity, he said.Weakness in the consulting business contributed to the missed billings number in the third quarter, he said. Billings could reaccelerate in the current period, he said.
For the third quarter, which ended October 31, Salesforce posted a loss of $3.76 million, or 3 cents a share.
Sales rose 36 per cent to $584.3 million. Before certain items, profit was 34 cents, the company said. Analysts on average estimated profit of 31 cents and revenue of $571.4 million.
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