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Salesforce posts solid Q4, surpasses $10B in annual sales

The CRM giant beat market expectations for earnings and revenue.

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Salesforce reported its fourth quarter financial result on Wednesday, posting strong sales and marginally beating market expectations. Salesforce also slightly raised its fiscal year 2019 guidance.

The CRM giant posted adjusted earnings per share of 35 cents, compared with an EPS of 28 cents a year prior. Revenue came to $2.85 billion, up 24 percent year over year from $2.29 billion.

Wall Street was looking for 34 cents a share on $2.81 billion in revenue.

For the full fiscal year 2018, Salesforce reported revenue of $10.48 billion, up 25 percent year-over-year.

"We had an outstanding quarter of growth that propelled Salesforce over the $10 billion revenue milestone for the year," Marc Benioff, chairman and CEO, said in a statement. "No other enterprise software company has achieved this scale faster than Salesforce."

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Meanwhile, Salesforce ended the quarter with around $13.3 billion in unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet.

After surpassing $10 billion in annual revenue, the next milestone is to reach $20 billion in annual sales, Benioff said on a Wednesday conference call. "When you have $20 billion already on and off the balance sheet, we're a huge step on the way there," he said.

In Q4, subscription and support revenues came to $2.66 billion, an increase of 26 percent year over year. Within that category, the Sales Cloud pulled in revenue of $931.8 million. Service Cloud checked in with sales of $789.3 million.

Professional services and other revenues hit $196 million in Q4, an increase of 7 percent year over year.

For the full fiscal year 2018, subscription and support revenues came to $9.71 billion. Specifically, Sales Cloud revenue came to $3.55 billion, while Service Cloud sales reached $2.88 billion.

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The strong performance in Q4 can be attributed in part to the recent federal tax cuts, Benioff said, which have enabled companies to invest more in their digital transformations.

"Every CEO is thinking about their digital transformation," he said. "Every digital transformation begins and ends with the customer."

For the first quarter of fiscal 2019, Salesforce is predicting revenue between $2.925 billion and $2.935 billion. Its outlook for Q1 EPS is 43 or 44 cents.

The company is raising its full fiscal 2019 revenue guidance by $150 million, projecting revenue between $12.6 billion and $12.65 billion.

Salesforce on Wednesday also touted a milestone for its artificial intelligence platform Einstein, which is now delivering more than one billion AI-powered predictions a day. Einstein's automated machine learning framework creates personalized AI models and predictions for each customer.