5 Shares Are Sizzling: What You Need to Know

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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 cloud-computing poster child (NYSE: CRM  ) rose more than 10% early today and remain up 3% as of this writing thanks to better-than-expected fourth-quarter results and signs of accelerating adoption of its various platform services.

So what: Revenue grew 29% to $457 million. Non-GAAP profit inched up just a penny, to $0.31 a share. Analysts were expecting $453.24 million and $0.26, respectively.

Now what: As the guy who pitched to our Motley Fool Rule Breakers members, I'm glad to see enjoying revenue and cash flow growth. I also like that deferred revenue grew 33% to $935 million, suggesting customers are making bigger subscription commitments to the underlying platform and add-ons such as Chatter. This is serious growth, and well above what peer NetSuite (NYSE: N  ) is delivering right now.

And yet I'm troubled by's options largesse. The company excluded $0.30 a share pre-tax worth of stock-based compensation costs into its non-GAAP profit calculation. To understand how massive that is, add $0.13 in taxes to's $0.31 per share profit. That's $0.44 in non-GAAP pre-tax profit, right? At $0.30 a share, more than 68% of's pre-tax, non-GAAP profit was a magic trick, the result of pretending that doling out options to management and staff costs shareholders nothing. That's tough to swallow.

Interested in more info on Add it to your watchlist. is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool's disclosure policy is at least 10% better than other disclosure policies.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1448754, ~/Articles/ArticleHandler.aspx, 12/1/2015 6:54:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

Today's Market

updated Moments ago Sponsored by:
DOW 17,888.35 168.43 0.95%
S&P 500 2,102.63 22.22 1.07%
NASD 5,156.31 47.64 0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/1/2015 4:01 PM
CRM $81.01 Up +1.32 +1.66% CAPS Rating: **
N $85.68 Up +0.28 +0.33%
NetSuite CAPS Rating: **