A Look Back and Ahead for Salesforce.com & Others' Earnings

Indie Research

During earnings season, BullMarket.com publishes a comprehensive 20- to 30-page Earnings Preview report for the week ahead each Friday.

Salesforce.com (NYSE: CRM - News), one of the stocks in its preview, is set to report earnings on Thursday February 23rd after the bell. Analysts are looking for EPS of 40 cents on revenue of $622.85 million. Next year, they are looking for EPS of $1.62 on revenue of $2.91 billion.

Looking back to last quarter, the cloud-based provider of productivity and customer relationship management software reported better-than-expected third-quarter results, but it also warned that it might fall short of Wall Street's EPS expectations in the current quarter and its billings were shy of estimates. Its outlook for 2013 revenue, on the other hand, was well above the Street view.

The company projected its Q4 revenues would be in the range of $620-$624 million, which would be an increase of around 33% at the midpoint, and its adjusted EPS would fall in the range of 39-40 cents per share. The analyst consensus was for the company to report 40 cents of adjusted EPS. Analysts

were projecting about $610 million in revenue.

Salesforce reported total billings of $567 million, up 29% year over year, but that was below the $586 million Street consensus. Salesforce recognizes revenue over the life of subscriptions to its services while billings reflect the new business pipeline.

The company reported a GAAP net loss of -$3.8 million for the August-October quarter, equal to -3 cents per share, which was an improvement from a year- earlier net loss of -$21.0 million, or -15 cents per share. It projected a loss of -5 to -6 cents per share on a GAAP basis in Q4.

Sales totaled $584 million, up 36% from $429 million last year and well ahead of the $569 million Street consensus.

Excluding non-cash and one-time items such as stock-option expenses, Salesforce said it earned 34 cents per share, which topped the Wall Street consensus estimate of 31 cents.

Breaking down the Q3 results, revenue from the Americas grew by 36% to $397 million. Revenue from Europe grew by 36% (29% on a constant currencies basis) to $104 million, while Asian revenue of $83 million was up 39% as reported and 31% ex currencies. Roughly 94% of its revenue was from subscriptions to its various products, with the remainder from services.

The company's operating cash flow totaled $129 million during the quarter, up 74% from last year. Year-to-date cash flow from operations was up approximately 20% over the first nine months last year.

Salesforce.com's stock would fall -10% the next session after its earnings report, and would be down -18% over the next month.

In its earnings previews, in addition to reviewing last quarter's earnings, BullMarket.com looks at historical earnings data and EPS trends; examines past investor reactions to earnings in various contexts; gives options activity analysis; gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points; and also offers long-term investment analysis.

In its latest earnings preview, BullMarket.com looks at several other popular stocks in addition to Salesforce.com, including Dell (Nasdaq: DELL - News), Intuit (Nasdaq: INTU - News), Monster Beverage (Nasdaq: MNST - News), Hewlett-Packard (NYSE: HPQ - News), First Solar (Nasdaq: FSLR - News), Skullcandy (Nasdaq: SKUL - News), Deckers Outdoor (Nasdaq: DECK - News), Target (NYSE: TGT - News) and Wal-Mart (NYSE: WMT - News).

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