In the first quarter of its fiscal 2015, Salesforce turned in earnings that beat expectations. Revenue for the period totaled $1.23 billion, of which $1.15 billion came from “subscription and support,” and $79 million from “professional services.” Total revenue was up 37 period compared to the year-ago period.
Investors expected Salesforce to report $1.21 billion in revenue.
Salesforce also beat non-GAAP earnings-per-share predictions, bringing in an adjusted $0.11 per share in the quarter. The street had expected $0.10 in non-GAAP EPS. On a GAAP basis, Salesforce lost $0.16 per share.
Shall we reconcile? Here’s the company’s verbiage detailing the difference between its GAAP and non-GAAP earnings per share:
The company’s non-GAAP results exclude the effects of $131 million in stock-based compensation expense, $44 million in amortization of purchased intangibles, $11 million in net non-cash interest expense related to the company’s convertible senior notes, and $9 million related to the loss on conversions of our convertible 0.75% senior notes, due 2015, and is based on a projected long-term non-GAAP tax rate of 36.5%.
It’s up to you to decide how you want to weigh non-cash costs that are commonly stripped from the EPS figures of quickly growing technology companies.
Salesforce rose after reporting its earnings around 3 percent in after-hours trading, but has since receded to a more modest 0.6 percent gain. Salesforce ended the quarter with cash and equivalents of $1.53 billion. The company is worth around $32.3 billion.
The company expects its fiscal second quarter to include revenue of $1.285 to $1.29 billion, GAAP earnings per share of $0.13 to $0.12, and non-GAAP earnings per share of $0.11 to $0.12.
Looking further ahead, the company raised its full-fiscal-year revenue guidance from $5.25 billion to $5.30 billion, to $5.30 billion to $5.34 billion.
(A short aside: Why do non-cash costs matter? Dilution has a cost, and so entirely discounting stock-based compensations as an expense is a neat way to move employee pay off of profit, and thus boost earnings per share. But it’s still a cost!)