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Salesforce Revenue Up 36 Percent, Gets Closer to Profitability

By Chris Preimesberger     Feedback

Salesforce also announced a cloud-computing partnership with Hewlett-Packard, which will create a multi-tenant cloud product called Salesforce Superpod.

Salesforce.com may be the first enterprise cloud computing company to deliver a $1 billion quarter, but as surprising as it seems, it's still not breaking into profitability.

For the third fiscal quarter that ended Oct. 31, Salesforce reported that its revenue rose a solid 36 percent to $1.08 billion, exceeding Wall Street expectations. Excluding certain items, it amounted to 9 cents per share in the third quarter, which was in line with a Thomson Reuters analyst consensus.

For the quarter, Salesforce.com reported a loss of $124.4 million, or 21 cents a share, compared with $220.3 million, or 39 cents a share, a year ago.

CEO and Chairman Marc Benioff said on the conference call to analysts and journalists that Salesforce benefited by the acquisition of ExactTarget, which closed in July. Salesforce paid $2.5 billion for ExactTarget, its most expensive acquisition to date and one that incurred scrutiny from some investors.

Benioff said the company had raised ExactTarget's estimated revenue for the year from roughly $140 million to $180 million. ExactTarget provides digital marketing software for the Fortune 500 and small businesses through email marketing, social media marketing and other methods.

Professional services and other revenues were $72 million, an increase of 50 percent year-over-year.

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The San Francisco-based cloud service company's unbilled deferred revenue, an important measure of contracts that have been closed with business customers but remain off the balance sheet, rose to $4.2 billion, up 40 percent from a year earlier.

The company's outlook is rosy. For the fourth quarter ending Jan. 31, Salesforce predicted revenue of between $1.12 billion and $1.13 billion, versus $1.12 billion expected by analysts.

It expects fiscal 2014 sales to come in between $4.05 billion to $4.06 billion. It also projected 2015 sales of between $5.15 billion and $5.2 billion, in line with analysts' estimates of $5.2 billion.

The company's shares closed down 3.1 percent, or $1.80, at $55.51 on Nov. 18, after reaching an all-time closing high of $57.87 at the end of the previous week. In after-hours trade on Nov. 18, the shares dipped less than 1 percent.

Salesforce on Nov. 18 also announced a cloud-computing partnership with Hewlett-Packard, which will create a multi-tenant cloud product called Salesforce Superpod. It will be powered by HP's software and managed within Salesforce's data centers, Benioff said.

The product will be available for an additional fee to Salesforce's biggest customers, and HP is looking to be the first customer deployed on it, according to the companies.

This article was originally published on November 19, 2013
Originally published on eWeek.
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