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Salesforce Q3 Beats Forecasts - Guides Up

November 22, 2017

Salesforce reported results for its fiscal third quarter ended October 31, 2017.

Revenue: Total third quarter revenue was $2.68 billion, an increase of 25% year-over-year, and 23% in constant currency. Subscription and support revenues were $2.49 billion, an increase of 25% year-over-year. Professional services and other revenues were $194 million, an increase of 20% year-over-year.

Earnings per Share: Third quarter GAAP diluted earnings per share was $0.07, and non-GAAP diluted earnings per share was $0.39.

Investors sought 34 cents in earnings per share, excluding items, and $2.79 billion in revenue for the quarter.

Cash: Cash generated from operations for the third quarter was $126 million, a decrease of 18% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at $3.63 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of October 31, 2017 was $4.39 billion, an increase of 26% year-over-year, and 24% in constant currency. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the third quarter at approximately $11.5 billion, up 34% year-over-year.

"Salesforce delivered a record third quarter, and we're on a path to exceed $20 billion faster than any enterprise software company in history," said Marc Benioff, chairman and CEO, Salesforce. "With this phenomenal growth, we are building a company for the ages, creating value for our Trailblazers our customers, employees, investors and communities while helping make the world a better place for decades to come."

As of November 21, 2017, the company is initiating revenue, earnings per share, and deferred revenue guidance for its fourth quarter of fiscal year 2018. In addition, the company is raising its full fiscal year 2018 revenue and earnings per share guidance, and maintaining its operating cash flow guidance, previously provided on August 22, 2017. The company is also confirming its full fiscal year 2019 revenue guidance, previously provided on November 6, 2017.

Q4 FY18 Guidance: Revenue is projected to be $2.801 billion to $2.811 billion, an increase of 22% to 23% year-over-year.

GAAP diluted earnings per share is projected to be $0.03 to $0.04, while non-GAAP diluted earnings per share is projected to be $0.32 to $0.33.

On balance sheet deferred revenue growth is projected to be 19% to 20% year-over-year.

Full Year FY18 Guidance: Revenue is projected to be $10.43 billion to $10.44 billion, an increase of 24% year-over-year.

GAAP diluted earnings per share is projected to be $0.12 to $0.13, while non-GAAP diluted earnings per share is projected to be $1.32 to $1.33.

Operating cash flow growth is projected to be 20% to 21% year-over-year.

Full Year FY19 Guidance: Revenue is projected to be $12.45 billion to $12.50 billion, an increase of 19% to 20% year-over-year. The company plans on providing its expectations for FY19 GAAP EPS, non-GAAP EPS, and operating cash flow when it announces its fourth quarter and full fiscal year 2018 results in February 2018.

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