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Last night, (NYSE: CRM  ) delivered another strong quarter, as expected.

The company put up second-quarter revenue of $546 million, a 38% year-over-year jump, and non-GAAP earnings per share of $0.30. Revenue easily beat the expectation of $528.8 million, with EPS coming in on target with the $0.30 estimate. Third-quarter revenue guided higher than the Street was looking for, with the company projecting between $568 million and $570 million.

All the right numbers are going in the right direction. Net paying customers rose by a quarterly record of roughly 6,300 to 104,000. Deferred revenue increased by 37% to $935 million. Cash flow from operations increased 9% to $83 million. This stock is a growth machine.

When reported on a GAAP basis, the company reported a net loss of $0.03, but I'm not overly concerned with this figure. The company continues its trend of heavy stock-based compensation expenses, but I agree with Fool Anders Bylund that it's a nonissue when you step back and look at the bigger-picture numbers.

Despite having a strong start to 2011 and reaching an all-time high of $160 a month ago, the recent market selloff has brought down to negative territory for the year. Tech stocks took it particularly bad yesterday after NetApp (Nasdaq: NTAP  ) missed revenue and warned of soft IT spending, with particular weakness in U.S. government sales amidst the whole debt-ceiling debacle. And although started the day strong, its downward trajectory continued throughout the day. Other cloud-computing plays like Qlik Technology (Nasdaq: QLIK  ) and NetSuite (NYSE: N  ) also saw heavy sell-offs after noon.

I think the market is presenting a buying opportunity here to pick up shares at nearly a 30% discount to the all-time high set a month ago. The stock has pulled back far more than the broader market for no reason specific to If you decide against picking up shares while you still can, the very least you can do is add to your Watchlist.

Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Qlik Technologies. Various Motley Fool newsletter services have recommended buying shares of and Qlik Technologies and shorting Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (4)

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.

  • Report this Comment On August 21, 2011, at 6:21 PM, chitobiose wrote:

    Interesting how the astronomical P/E ratio of CRM is not mentioned in the article.

  • Report this Comment On August 21, 2011, at 11:32 PM, prginww wrote:

    I can grow like mad as well if I sell dollars for 80 cents. SFDC is under so much pressure by MS pricing it’s funny.

    SFDC should be trading around $30 not $130.

  • Report this Comment On August 22, 2011, at 12:50 PM, TheLastYetti21 wrote:

    This is a laughable article. The author states "When reported on a GAAP basis, the company reported a net loss of $0.03, but I'm not overly concerned with this figure. The company continues its trend of heavy stock-based compensation expenses, but I agree with Fool Anders Bylund that it's a nonissue when you step back and look at the bigger-picture numbers".

    I guess actual earnings of the company aren't a concern to the author as long as they can use clever accounting to make them look like they are growing. News flash: GAAP earnings are what the investors actually get. CRM is growing revenue impressively without a doubt, but their EPS are declining and the guided negative EPS for this fiscal year. Good luck getting long here, with a nosebleed valuation on CRM and a high beta play in a downtrending market.

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Evan Niu

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.

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