Salesforce reports 27 percent rise in quarterly revenue

(Reuters) – Salesforce.com Inc forecast current-quarter profit below analysts’ estimates on Wednesday, as the cloud-software maker invests heavily to boost sales and fend off rising competition.

FILE PHOTO: The Salesforce logo is pictured on a building in San Francisco, California, U.S. October 12, 2016. REUTERS/Lily Jamali/File Photo

The company’s shares fell 1.3 percent in trading after the bell.

The company forecast third-quarter profit between 49 cents and 50 cents per share, and revenue of $3.36 billion to $3.37 billion.

Analysts on average were expecting a profit of 54 cents and revenue of $3.35 billion, according to Thomson Reuters I/B/E/S.

San Francisco-based Salesforce has been reaping the benefits of a trend where companies are increasingly turning to cloud-based services, but faces stiff competition from Microsoft’s Dynamics 365, which competes with Saleforce’s flagship Sales Cloud offering, and from Oracle.

Salesforce has been boosting its research and development expenditure, as well as marketing and sales, sending its operating expenses up 27 percent to $2.32 billion in the second quarter.

Revenue in the company’s flagship product, Sales Cloud, rose 12.7 percent to $1 billion, generating more than $1 billion in a quarter for the first time.

The company’s unearned revenue, a key metric used to measure future business for subscription-based software vendors, rose 24 percent to $5.88 billion. Analysts on average expected $5.91 billion, according to financial and data analytics firm FactSet.

Excluding items, the company earned 71 cents per share.

Net income rose to $299 million, or 39 cents per share, in the second quarter ended July 31, from $46 million, or 6 cents per share, a year earlier.

Total revenue rose to $3.28 billion from $2.58 billion.

Reporting by Arjun Panchadar in Bengaluru; Editing by Sriraj Kalluvila

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