Salesforce has reported a cracking quarter and financial year, but also revealed growth is slowing.
Fourth quarter revenue exceeded estimates by $30m to total $2.85 billion, up 24 per cent year-over-year. Full-year revenue was $10.48 billion, up 25 per cent. Both numbers are a point or two down on the same figures from last year. Gross profit was $7.7bn, which translated to between 33 and 34 cents per share.
The company predicted growth would continue to be strong, but also to slow a little: 2019 revenue is projected to be $12.6 billion to $12.65 billion, an increase of 20 to 21 points.
There's plenty of good news too: unbilled deferred revenue ended the quarter at around $13.3 billion, up 48 per cent compared to FY 2017's 27 per cent. Executives said that's a sign that customers are committing to bigger, longer, deals and said the company has doubled its number of $20 million relationships in a year.
All those sales have created another problem: how to pay all the sales commissions that fall due without eroding margins.
The company's Sales Cloud now has an annual run rate of $3.7bn, ahead of Service Cloud at $3.1bn and "Platform and Other" at $2.1bn. Marketing and Commerce Cloud grew 33 per cent and hit annual run rate of nearly $1.6 billion. It'll need to keep growing at that pace, or faster, to haul in rivals like Adobe in a fast-growing field.
Marc Benioff told investors the company now has $20bn annual revenues in its sights and said US economic conditions will help Salesforce get there faster than any other software company. "Every CEO is using the positive economic environment, but also the domestic tax cuts as ways to accelerate their digital transformations," he said.
US tax cuts will help too: the company said it's lowered its long term projected non-GAAP tax rate from 34.5 per cent to 21.5 per cent. Benioff was also bullish about the company's "Einstein" AI tool, saying it's now producing a billion insights a day and is seen as a value-add by customers. ®