Salesforce.com forecasts lower-than-expected Q1 profit; shares fall

By Rishika Sadam and Stephen Nellis

(Reuters) - Salesforce.com Inc (NYSE: CRM) raised its revenue forecast for its full fiscal year to slightly above analysts expectations but lowered its outlook for its next quarter to a lower-than-expected profit, sending its shares down 2 percent in extended trading on Tuesday.

The company said it expects first-quarter adjusted profit of 25 cents to 26 cents per share. Analysts were expecting a profit of 30 cents per share, according to Thomson Reuters I/B/E/S.

Chief Financial Officer Mark Hawkins told investors on a conference call that the mixed outlook resulted from more customers booking large deals in the company's fourth quarter, resulting in a steeper drop off in the first quarter.

"Seasonality continues to deep," Hawkins said.

The company has been focusing on acquisitions and partnerships to bolster its services and gain market share amid stiff competition from Microsoft Corp (NASDAQ: MSFT) and Oracle Corp (NYSE: ORCL).

Revenues for Salesforce's core sales software increased 13.3 percent to $3 billion, a faster rise than in recent years and surprise to analysts who considered it the oldest and therefore least likely revenue growth driver among the firm's product lines. Analysts attributed the expansion to new features in the product such as recommendations for who salespeople should call next and a growing overall market for sales software.

"We think there’s plenty of growth opportunity ahead," said Steve Koenig, an analyst with Wedbush.

Salesforce is working on broadening its services portfolio to keep its existing users. As part of its efforts the company launched its artificial intelligence platform Einstein in October.

The company raised its full-year revenue guidance slightly to $10.15 billion to $10.20 billion, up from its previous range of $10.1 billion to $10.15 billion. Thomson Reuters I/B/E/S expected revenues of $10.16 billion.

Salesforce, which is considered as a barometer for cloud-computing, reported a better-than-expected profit and revenue for the fourth quarter helped by strong demand for its cloud-based sales and marketing software services.

The company's net loss widened to $51.4 million, or 7 cents per share, in the quarter ended Jan. 31, from a loss of $25.5 million, or 4 cents per share, a year earlier.

Excluding items, the company earned 28 cents per share. Revenue rose 26.8 percent to $2.29 billion.

Analysts on an average had expected a profit of 25 cents on revenue of $2.28 billion.

Up to Tuesday's close at $81.35, the company's stock had risen nearly 20 percent in the past 12 months.

(Reporting by Rishika Sadam in Bengaluru; Editing by Shounak Dasgupta)

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