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Cloud Giant Salesforce Slides on Earnings Miss, Weak Guidance

Madeleine Johnson

Salesforce.com Inc. CRM just released its fourth quarter fiscal 2017 earnings results, posting earnings, before non-recurring items, of 2 cents per share and revenues of $2.29 billion. Currently, CRM is a #2 (Buy) on the Zacks Rank, and is down 3.44% to $78.50 per share in trading shortly after its earnings report was released.

Missed earnings estimates. The company reported earnings of 2 cents per share, lagging behind the Zacks Consensus Estimate of 4 cents per share. This number excludes 9 cents from non-recurring items.

Beats revenue estimates. The company saw revenue figures of $2.29 billion, just edging past our consensus estimate of $2.272 billion and increasing 27% year-over-year.

In Q4, subscription and support revenues were $2.11 billion, an increase of 25% year-over-year. Professional services and other revenues were $183 million, an increase of 45% year-over-year.

Deferred revenue on the balance sheet, as of January 31, 2017, was $5.54 billion, an increase of 29% year-over-year, and 29% in constant currency.

Looking ahead, Salesforce expects revenue in the range of $2.34 billion to $2.35 billion, an increasing of 22% to 23% year-over-year for the first quarter of 2018. Operating cash flow growth is projected to be 20% to 21% year-over-year for full-year 2018.

“Salesforce continues to deliver incredible innovation and unprecedented customer success,” said Marc Benioff, chairman and CEO, Salesforce. “We led the industry as the first to bring cloud, social and mobile to CRM, and now with our latest release we are making artificial intelligence available to millions of Salesforce users with Einstein.”

Here’s a graph that looks at Salesforce’s price, consensus, and EPS surprise:

Salesforce.com Inc Price, Consensus and EPS Surprise

Salesforce.com Inc Price, Consensus and EPS Surprise | Salesforce.com Inc Quote

Salesforce.com is the market and technology leader in on-demand business services. The company's Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. The Salesforce Platform, the world's first on- demand platform, enables customers, developers and partners to build powerful, new, on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise.

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