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Salesforce Tops Q3 Forecasts

November 29, 2018

Salesforce reported results for its fiscal third quarter ended October 31, 2018.

The CRM company noted non-GAAP diluted EPS of 61 cents per share, while analysts were expecting 50 cents per share. Total revenue was up 26 percent to $3.39 billion, more than expectations of $3.37 billion.

Salesforce guided fourth quarter profit of between 54 cents and 55 cents per share, on revenue of $3.55 billion to $3.56 billion. Wall Street was expecting a profit of 57 cents and revenue of $3.52 billion.

The firm expects full-year 2020 revenue between $15.90 billion and $16 billion. Investors were looking for revenue of only $15.83 billion..

"Given the strength of this quarter's results and the incredible customer demand we are seeing, we are again raising our FY19 revenue guidance and initiating our full year fiscal 2020 revenue guidance at $16 billion at the high end of the range," said Keith Block, co-CEO, Salesforce. "Companies across every industry, in every geography have a mandate to digitally transform their businesses and are turning to Salesforce as a strategic partner."

"I'm thrilled that Salesforce will be the fastest enterprise software company in history to reach $16 billion in revenue," said Marc Benioff, chairman and co-CEO, Salesforce. "I would like to thank all of our Ohana who make everything we do possible."

Salesforce delivered the following results for its fiscal third quarter:

Revenue: Total third quarter revenue was $3.39 billion, an increase of 26% year-over-year, and 26% in constant currency. Subscription and support revenues were $3.17 billion, an increase of 26% year-over-year. Professional services and other revenues were $224 million, an increase of 15% year-over-year.

Earnings per Share: Third quarter GAAP diluted earnings per share was $0.13, and non-GAAP diluted earnings per share was $0.61. Mark-to-market accounting of the company's strategic investments, required by ASU 2016-01, benefited GAAP diluted earnings per share by $0.07 and non-GAAP diluted earnings per share by $0.06.

Cash: Cash generated from operations for the third quarter was $143 million, an increase of 14% year-over-year. Total cash, cash equivalents and marketable securities ended the third quarter at $3.45 billion.

Unearned Revenue: Unearned revenue on the balance sheet as of October 31, 2018 was $5.38 billion, an increase of 25% year-over-year, and 26% in constant currency.

Remaining Performance Obligation: Remaining performance obligation, representing future revenues that are under contract but have not yet been recognized, ended the third quarter at approximately $21.2 billion, an increase of 34% year-over-year. This includes approximately $300 million related to the remaining performance obligation from MuleSoft. Current remaining performance obligation, which represents the future revenues under contract expected to be recognized over the next 12 months, ended the third quarter at approximately $10.0 billion, an increase of 27% year-over-year.

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