Salesforce Marc Benioff Dreamforce

Salesforce.com co-founder and CEO Marc Benioff has been a vocal proponent of cloud computing for more than a decade. Credit: Salesforce.com.

Shares of Salesforce.com, Inc. (NYSE:CRM) stock entered the month up about 16% year-to-date. Will the gains continue, or are tougher times ahead? A lot depends on how well the business performs. Here's a closer look at what analysts expect to see when the cloud computing specialist reports third-quarter earnings on November 19:

Q3 Estimates
Revenue
YoY Growth
EPS
YoY Growth

Low estimate

$1,356.1 million

26%

$0.12

33.3%

High estimate

$1,388 million

28.9%

$0.14

55.6%

S&P CAPITAL IQ CONSENSUS

$1,371.13 mil.

27.4%

$0.13

44.4%

Source: S&P Capital IQ.

A one penny beat should be in order, given Salesforce's history of success playing Wall Street's expectations game:

Earnings History
Q3 2013
Q4 2013
Q1 2014
Q2 2014

Consensus

$0.09

$0.06

$0.10

$0.12

Actual

$0.09

$0.07

$0.11

$0.13

DIFFERENCE

$0.00

$0.01

$0.01

$0.01

Source: S&P Capital IQ.

Looking at the overall business, I'm watching for momentum in each of these three areas:

1. A rich pipeline of deferred revenue and billings. An industrywide shift to cloud computing suggests strong gains in deferred revenue and billings as well as recognizable revenue. Salesforce has a history of delivering exactly that. In Q2, deferred revenue grew 31% to $2.4 billion while the total of booked business rose 32% to $7.4 billion. Similar gains this time around would push total bookings to $9.3 billion. Getting past that -- or even within spitting distance of $10 billion -- would be a major win.

2. Turning commitments into cash. A year ago, the company introduced its unifying Salesforce1 platform for better engaging mobile users and improving usage across customer sites. Investors hoping the new system would also make it easier for Salesforce to collect short-term checks while filling its long-term backlog were rewarded in Q2 when accounts receivable grew just 16.5% as revenue zoomed 37.8%, according to data supplied by S&P Capital IQ. Has Salesforce found the key to turning commitments into cash? Look for Benioff to address revenue versus receivables in the earnings call. Also, be sure to check in on cash from operations, which has grown faster than receivables in each of the last two quarters.

3. A growing ecosystem of apps and developers. At its height, Microsoft did everything it could to entice developers to write more code for the Windows platform. Salesforce's opportunity to do that is its annual Dreamforce conference in San Francisco. An estimated 135,000 attended this year, tens of thousands of whom had to be software developers. How is this startling level of engagement translating into new and useful apps for the Salesforce platform? Look for Benioff to address that in the earnings call.

Salesforce.com reports Q3 results Wednesday, November 19 after the market closes; check back here then for our take on the report. And in the meantime, leave a comment to let us know what you're expecting, and what you think of Salesforce stock at current prices.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Salesforce.com at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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