Why salesforce.com Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of salesforce.com (NYSE: CRM  ) set a new all-time high after rising more than 14% during Friday's trading following the cloud-based CRM solution specialist's release of better-than-expected fiscal 2014 second-quarter results.

So what: Quarterly revenue rose 31% year over year to $957 million, while GAAP earnings came in at $0.12 per share, benefiting from a $129 million partial release of the company's tax valuation allowance. Meanwhile, non-GAAP earnings came in at $0.09 per share. For reference, analysts were only expecting earnings of $0.07 per share on sales of $939 million.

Now what: Salesforce also initiated third-quarter revenue guidance of between $1.050 billion and $1.055 billion, and raised its full-year fiscal 2014 revenue guidance to a range from $4 billion to $4.025 billion. Analysts, by contrast, were looking for average third-quarter revenue of $1.04 billion and full-year sales of $3.99 billion.

Chairman and CEO Marc Benioff chimed in to say, "Salesforce.com continues to be the fastest growing software company of its size with year-over-year growth of more than 30% in revenue, deferred revenue, and operating cash flow. I'm delighted to announce that just four years after delivering our first $1 billion revenue year, we are now poised to deliver our first $1 billion revenue quarter in the third quarter of fiscal 2014."

To be sure, investors can't help but be pleased with this continued strong growth. As long as the cloud-based company's momentum holds, even near all-time highs there doesn't seem to be much to slow its rise going forward.

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Read/Post Comments (3) | Recommend This Article (3)

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  • Report this Comment On August 30, 2013, at 4:19 PM, MFMotleyStool wrote:

    The writer should look at the actual earnings release before posting this fluff. Here's just a few things to consider. Earnings estimates were quietly reduced for the reported quarter and the next two. As a result the $.12 estimate was reduced to $.07 over the last 90 days, so $.09 is a beat but not really a beat. Additionally, without the aid of an unusual $133.4M tax credit, the company actually lost $56.4M. Finally, while topline growth is still strong expenses again grew faster this quarter than revenue.

    Add to that very aggressive accounting and BUYER BEWARE!

  • Report this Comment On August 30, 2013, at 4:45 PM, Raphael1990 wrote:

    CRM is the fastest growing NPO I know.

  • Report this Comment On September 02, 2013, at 9:53 PM, BRAD127 wrote:

    What is with salesforce.com N-(CRM)? They lost $0.07/ share in the last quarter If you do the math and look past their questionable accounting. Their book value is around $11 with half of that as good will.The reported strong sales incude the free trials of the product being booked as income. With over 1/2 billion shares out, is this a big pump and dump? Look at the insider sales.

    talk soon

    BRAD127

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