Salesforce delivers above Q4 targets, ups outlook

The CRM giant now expects revenue to increase 22 percent to between $8.08 billion to $8.12 billion. The company's stock jumped seven percent after hours.
Written by Natalie Gagliordi, Contributor

Salesforce raised its revenue outlook for fiscal 2017 as part of the company's fourth quarter financial results. The CRM giant now expects revenue to increase 22 percent to between $8.08 billion and $8.12 billion.

Salesforce CEO Marc Benioff called the strong guidance "unprecedented growth for a company of our size and scale." The company's stock jumped seven percent after hours.

As for the rest of Q4, Salesforce reported non-GAAP earnings of 19 cents per share on revenue of $1.81 billion, up 25 percent year-over-year (statement).

Wall Street was looking for earnings of 19 cents per share with revenue of $1.79 billion.

Subscription and support revenues increased 25 percent annually to $1.68 billion. Professional services and other revenues totaled $127 million, up 28 percent year-over-year.

For fiscal year 2016, total revenue was $6.67 billion, or 75 cents a share.

For the current quarter, analysts are looking for earnings of 21 cents a share on revenue of $1.86 billion.

Salesforce responded with a revenue range of $1.88 billion to $1.89 billion with earnings between 23 and 24 cents per share.

Here are the key takeaways from the Salesforce conference call following earnings:

  • There were 600 deals worth more than 7 figures in fiscal 2016.
  • Salesforce is landing renewals from big customers and growing wallet share. Keith Block, the company's operating chief, cited Unilever and Charles Schwab as big wins.
  • Enterprise and SMB sales were strong as were geographies. "This is the best quarter we've ever seen. We would never expect to see every product group and every geography and every sector of our business exceed our expectations, but that's what we saw," said Benioff.
  • Salesforce had a nine-figure deal in the quarter. Block added that those large deals revolve around digital transformation and boardroom-level deals.
  • Benioff said the upcoming fiscal year could be a tipping point for Salesforce's Wave analytics platform. "We have been demonstrating internally here a number of core Wave applications including our sales application built on Wave, service Wave, marketing wave, and we couldn't be more excited to be in the analytics business," said Benioff.
  • Salesforce is increasingly pitching CEOs. "I can just probably rattle off dozens of CEOs that we constantly interact with and collaborate with," he said. "I think that's why we are really selling more enterprise software than Oracle or SAP in the applications area."

So far it's already been a busy Q1 for the CRM company. Salesforce kicked off February with the appointment of a new COO, naming Oracle vet Keith Block to take over for George Hu. Weeks later Salesforce announced it had acquired PredictionIO, a small startup behind the machine learning server of the same name.

At a pre-Super Bowl powwow with media and analysts, Benioff outlined the CRM giant's game plan for the next year, with metadata platform Lightning taking center stage.

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