) reported first-quarter fiscal 2014 adjusted loss per share of 7
cents, wider than the Zacks Consensus Estimate of 1 cent loss per
Revenues in the quarter were $892.6 million, up 28.3% from the
year-ago quarter. The quarter's result was also higher than the
company's guidance range of $882 million to $887 million. During
the reported quarter, the company witnessed continued demand
across all of its cloud solutions supported by a decline in the
Among its business segments, the company witnessed
Subscription and Support revenues of $842.0 million, an increase
of 28.5% on a year-over-year basis. Moreover, Professional
Services and Other revenues were $50.0 million, an increase of
25.3% on a year-over-year basis.
Geographically, the company witnessed revenue growth of 30.0%
in the Americas to a range of $631 million. Moreover, revenues
from Europe grew 38.0% year-over-year to $163.0 million, while
the revenues from Asia increased 7.0% in dollars to $99.0
Gross profit expanded 25.7% year over year to $683.6 million.
Gross margin was 76.6%, down 160 basis points from the year-ago
Total operating expenses rose 28.6% year over year to $728.2
million on the back of a 39.2% rise in research and development
(R&D) expenses, a 26.1% increase in sales and marketing
expense and a 27.7% rise in general and administrative (G&A)
expenses. Continuous increase in research activity to come up
with new and innovative products have resulted in the increase in
the R&D expenses. Moreover, the company has increased its
salesforce to improve its product penetration.
Operating loss of $44.5 million during the quarter was wider
than the year-ago quarter's loss of $22.2 million. Operating loss
margin was 4.9% versus 3.2% in the prior-year quarter.
GAAP net loss in the quarter was $67.7 million or 12 cents per
share compared with net loss of $19.5 million or 4 cents in the
comparable quarter last year. Excluding special items but
including stock-based compensation expenses, adjusted net loss
was 7 cents per share compared with a loss of 1 cent in the
Balance Sheet & Cash Flow
Salesforce.com ended the quarter with cash and cash
equivalents of $2.1 billion, up from $867.6 million in the prior
quarter. Accounts receivable declined to $502.6 million from
$872.6 million in the prior quarter. Total deferred revenue in
the quarter was $1.67 billion, down from $1.79 billion in the
Cash from operating activities was $283.2 million compared
with $281.6 million in the prior quarter.
For the second quarter of 2014, the company expects revenues
to be in the range of $931.0 million to $936.0 million. The
company expects GAAP net loss per share is expected to be in the
range of $0.07 to $0.06. Apart from this, the company also
expects non-GAAP earnings per share in the range of 11 cents to
12 cents.The company expects the second-quarter CapEx as a
percentage of revenue to be approximately 11.0%.
The company expects full fiscal year 2014 revenue to be in the
range of $3.835 billion to $3.875 billion. GAAP net loss per
share is expected to be in the range of ($0.33) to ($0.31) while
diluted non-GAAP EPS is expected to be in the range of $0.47 to
Salesforce.com reported modest first-quarter 2014 results.
Loss per share was wider than the Zacks Consensus Estimate, while
revenue up on a year over year basis. The company has provided
decent second-quarter guidance.
Moreover, the higher number of new deal wins was encouraging
and so were the geographical contributions. Overall, the
company's diverse cloud offerings and a better spending prospect
projection by Gartner are positive.
Although, the company is growing reasonably in the cloud
market, growth prospects have been rationalized to a considerable
extent by the renewed focus of tech giants such as
) in the cloud space.
However, continued weakness in Europe, currency headwinds,
continued operating margin contraction, economic challenges in
Japan and stiff competition from its peers keep us concerned.
Salesforce has a Zacks Rank #3 (Hold).
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