Salesforce.com Q4 sales forecast bolstered by ExactTarget

Reuters

* Q4 sales forecast slightly better than consensus

* ExactTarget acquisition going smoothly, sales goal lifted

* Shares trading near all-time highs

By Gerry Shih

SAN FRANCISCO, Nov 18 (Reuters) - Salesforce.com Inc forecast fourth-quarter revenue to come in slightly better thananalysts' projections, helped by a strong performance by newlyacquired email marketing firm ExactTarget.

The San Francisco-based cloud computing company paid $2.5billion in June for ExactTarget, its most expensive acquisitionto date and a sum that has invited scrutiny from investors.

But Salesforce executives Monday said they had raisedExactTarget's estimated revenue for the year from roughly $140million to $180 million, alleviating concerns about the deal.

Brian Schwartz, an analyst at Oppenheimer and Co, saidExactTarget's new revenue forecasts topped his own projectionsby $20 million.

"They're starting to execute on their marketing strategy,"Schwartz said. "They have traction in there."

For the fourth quarter ending Jan. 31, Salesforce predictedrevenue of between $1.12 billion and $1.13 billion, versus $1.12billion expected by analysts.

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

Chief Executive Marc Benioff has roughly quadrupled top-linesales in four years and its shares are trading near all-timehighs.

Much like Amazon.com Inc's chief executive JeffBezos, Benioff, who founded Salesforce in 1999, has for yearsshrugged off calls from Wall Street to turn a bigger profit byarguing that it was more important to re-invest earnings togobble up market share.

GETTING THE RIGHT BALANCE

For the quarter ended Oct. 31, Salesforce said revenue rose36 percent to $1.08 billion, narrowly beating Wall Streetexpectations, as its core sales software business held firm.

Excluding certain items, it earned 9 cents per share in the third quarter, in line with a Thomson Reuters I/B/E/S analystconsensus.

Salesforce's unbilled deferred revenue, a critical measureof contracts that have been closed with business customers butremain off-balance sheet, rose to $4.2 billion, up 40 percentfrom a year earlier.

Total operating expenses rose 38 percent from a year prior.

For the fourth quarter, Salesforce said it expects to earn 5cents or 6 cents per share, slightly below the 7 cents expected.

Benioff said Monday that he would seek to balance "growthand profitability" but stressed that he would not jeopardize hiscompany's "outrageous" pace of revenue expansion.

"We've got that balance right," he said. "There's more wecan do on profitability and we're absolutely committed to that.The only time that gets slowed down is when we acquire somethingor do one of these hiring surges."

The company's shares closed down 3.1 percent, or $1.80, at$55.51 on Monday, after reaching an all-time closing high of$57.87 on Friday. In after-hours trade on Monday, the sharesdipped less than 1 percent.

DREAMFORCE

Salesforce this week kicked off its annual Dreamforceconference held in San Francisco. At this year's conference,which had roughly 130,000 registered attendees, Benioff isexpected to showcase "Salesforce 1," a comprehensive softwareplatform that ties together its various products in sales,marketing, customer service, as well as third-party apps.

The company will also release an application programminginterface (API) for hardware makers, which will allow them toconnect their products to Salesforce's customer service softwareso they can be alerted when a product breaks down.

Salesforce also announced on Monday a new partnership withHewlett-Packard Co, saying it would begin selling itssoftware on HP's enterprise business hardware units.

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