Salesforce Sees Revenue Gains Despite Early Worries

Salesforce.com Inc. posted a 26% jump in deferred revenue for its fiscal first quarter, easing concerns after the company provided a lukewarm forecast for billings three months ago.

Since Salesforce relies on subscriptions of its web-based, on-demand software used by business customers, deferred revenue is a strong indicator of the company's prospects. Deferred revenue, which consists primarily of billings received in advance for subscription services, totaled $5.04 billion in the quarter.

The San Francisco-based business software company surprised Wall Street three months ago, forecasting first-quarter deferred revenue growth of 22% to 23%, a sign that billings growth wouldn't be as robust as some analysts expected. In the year-earlier quarter, deferred revenue grew 31%.

After the company announced first-quarter results Thursday, shares fell 1% to $87 in recent after-hours trading.

Revenue from Sales Cloud, the company's sales-force automation business, rose 15% to $829.6 million. Salesforce is facing increased competition in the business from Microsoft, which some analysts believe is luring small and midsize customers with aggressive pricing.

Salesforce's Service Cloud business, which provides technology to help businesses run customer-service operations, generated 651.2 million in revenue, a 21% gain. That business is facing increasing competition from ServiceNow Inc.

And revenue from Marketing Cloud, the company's offering to manage customers' email and advertising campaigns, which was bolstered by the July acquisition of Demandware Inc., grew 56% to $289 million.

Salesforce posted a loss of $9.2 million, or a penny a share, for the quarter ended April 30, compared with a profit of $38.8 million, or 6 cents a share, a year ago.

Excluding the impact of items such as amortization and stock-based compensation, adjusted earnings rose to 28 cents from 24 cents a year earlier. Revenue gained 25% to $2.39 billion.

Analysts surveyed by S&P Global Market Intelligence expected Salesforce to report adjusted earnings of 26 cents a share on revenue of $2.35 billion.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

May 18, 2017 16:47 ET (20:47 GMT)