In its fiscal 2015 third quarter, Salesforce reported revenue of $1.383 billion, non-GAAP earnings per share of $0.14, a GAAP net loss of $38.92 million, and a GAAP loss per share of $0.06. Analysts had expected $0.13 in adjusted profit on revenue of $1.371 billion.
The percentage of its revenue that came from recurring, subscription sources — a key metric for any SaaS business — totaled 93 percent for the firm, unchanged from the year-ago quarter.
The company’s GAAP losses were down steeply year-over-year, when the company lost $124.434 million, or $0.21 per share. For the period, Salesforce’s total revenue rose 29 percent compared to its year-ago quarter.
For its current fiscal fourth quarter, Salesforce expects revenue of $1.436 billion to $1.441 billion. Those figures would push the company’s revenue up between 25 and 26 percent on a year-over-year basis.
Salesforce expects its revenue growth to slip further in its rapidly-approaching fiscal 2016, during which it expects to generate top line of $6.45 billion to $6.50 billion, which according to the firm will represent growth of around 20 to 21 percent compared to the preceding fiscal year.
That Salesforce is seeing slowing percentage growth is not surprising. The law of large numbers drags harder every time you increase your revenue compared to a prior-year quarter. Salesforce’s predicted full-year 20 to 21 percent growth doesn’t appear to have greatly enthused investors — its shares are off after-hours, after all — but I don’t think that the number is too soft either. Analysts had expected a few hundred million more for its fiscal 2016.
The company had cash and equivalents of $1.83 billion at the end of its fiscal third quarter.
Salesforce has been extremely busy this quarter making a flurry of announcements around their mega Dreamforce user conference. The big news was the long awaited analytics product called Wave. In addition, Salesforce announced that they were extending the partnership with Microsoft announced last Spring and there was a major overhaul and rebranding of the mobile app development program, which is now called Salesforce 1 Lightning. They also gave their core CRM tool a refresh and added an interactive live customer service feature.
AOL (owner of TechCrunch) this morning reported its earnings for Q3, a mixed result that saw it beating estimates on sales but only matching on earnings, and missing on operating income (OIBDA) as the company continues with its turnaround strategy based around more savvy ad technology in the face of Google domination of market share, and display sales, and works through sales declines as a result of shuttered brands like Patch. AOL Platforms, where its ad tech business resides, was actually the only division that saw a rise in revenues over a year ago, up 44%.
The company reported revenues of $626.8 million, EPS of $0.52 and adjusted operating income of $121.8 million. Analysts were expecting sales of $623 million, EPS of $0.52 and OIBDA of $125 million.
Display sales on AOL properties actually slightly declined, to $141.5 million from $141.9 million a year ago (AOL rounds that to 0% change). AOL says the flat number was impacted by the disappearance of $10 million in sales revenue as a result of “disposed or shuttered brands,” which includes Patch, the company’s ill-fated hyperlocal content and ad network which was “spun out” in January this year to Hale Global. Without the absence of that recurring revenue, it calculates that the remaining business actually grew 7%.
Search ads on AOL properties was up 3% to $97.9 million.
Meanwhile, third-party platform sales continue to grow fast, up 44%, and is by far its biggest sales stream now, at $215.1 million this quarter.
“In Q3, AOL continued its strong growth in consumer traffic, revenue and profitability across its portfolio of assets,” said Tim Armstrong, AOL Chairman and CEO, in a statement. “AOL is a leader in global content, video, mobile, and programmatic advertising and is positioned directly at the center of the most disruptive changes happening online and offline in culture and code.”
Indeed, breaking out how different segments performed, AOL is still seeing a big rise in AOL Platfroms, which are up 44% to $271.9 million in revenues. Membership, which includes all that dial-up revenue that people like to joke about in our modern age of broadband and mobile Internet, is the second-highest segment at $196.7 million, although that was down by 4% over last year. The Brand Group was down by 3%.
AOL took only a 0.9% share of the $120 billion worldwide digital ad market in 2013, according to eMarketer, and it is expected to maintain that same market share this year as digital ad spending globally increases to $140.7 billion.
AOL has been in the news of late in the context of Yahoo, and calls by some in the investment community for the two companies to combine forces into a single entity. No mention of that in the earnings report, of course, but it will be interesting to see whether anyone brings this up during the call later today.
Update: During this morning’s analyst call, executives expanded on the strategy behind shutting down some AOL properties — after all, the earnings report said that closing those properties was the reason for the company’s flat display revenue.
“We’re narrowing our focus to bigger brands — bigger global brands that can really scale and be open and make an impact in mobile,” said CFO Karen Dykstra. There will be a transition period with some “revenue disruption,” but ultimately, she said this will lead to “healthier margins and healthier revenue within the brand group.”
Asked how MapQuest fits into that strategy, Armstrong said it’s “a big asset,” though he added that it’s “a sneaker asset,” meaning that it’s valuable but doesn’t get a lot of outside attention.
Additional reporting by Anthony Ha