Salesforce’s Billings Growth Bodes Well For The Future

Last week, Salesforce (NYSE:CRM) announced strong third quarter earnings, beating market expectations for revenue and earnings per share (EPS). In addition, the company released strong guidance for the fourth quarter and the full fiscal year, setting its sights on $10 billion in annual revenue, which it expects to achieve by January 2018.

Salesforce’s revenue of $2.14 billion for the quarter was comfortably ahead of the market’s expectations of $2.13 billion. Moreover, the company’s deferred revenue rose 23% over the same period last year to $3.5 billion, indicating healthy future business opportunities. In the wake of the positive growth trend, it is important to focus on the company’s billings, measured by adding subscription revenues and changes in deferred revenue. Due to the nature of its business, the company recognizes revenue as the service is delivered irrespective of the term of the deal. The remaining amount is accounted as deferred revenue, which is realized as revenue as and when the services are delivered.

The growth in revenue, billings and deferred revenue indicate that the company is constantly expanding, which bodes well for the future. Its growth isn’t overly reliant on any one aspect of its business, which further brightens up its long-term prospects.

See our complete analysis for Salesforce

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