(Reuters) - Salesforce.com Inc forecast current-quarter revenue and profit below analysts’ estimates on Monday, as the cloud software maker battles intensifying competition from Oracle and Microsoft, sending its shares down 3 percent.
Salesforce remained the leader in the worldwide customer relationship management market in the first half of 2018, but rivals have stepped up efforts to capture more market share of the fast-growing business.
Microsoft Corp's customer relationship management and enterprise resource planning service, Dynamics 365, grew 51 percent in the company's latest reported quarter here. Salesforce's Germany rival SAP added muscle to its CRM software offerings in November with its $8 billion deal for Qualtrics International.
Salesforce forecast first-quarter profit between 60 cents and 61 cents per share and revenue between $3.67 billion and $3.68 billion. Analysts on average were expecting a profit of 63 cents per share and revenue of $3.70 billion, according to IBES data from Refinitiv.
Some analysts, however, said the weak forecast was conservative.
“The Q1 revenue and earnings guide probably leaves enough room for Salesforce to beat the prior consensus estimates handily,” Wedbush analyst Steve Koenig said.
Salesforce, which completed its $5.90 billion acquisition of MuleSoft in May last year, said the U.S. software maker contributed $181 million to total revenue in the reported quarter.
“MuleSoft revenue is a bit more seasonal than our core products and can experience sequential revenue declines from Q4 to Q1,” Chief Financial Officer Mark Hawkins said on a post earnings call with analysts.
The company also forecast full-year 2020 profit between $2.74 and $2.76 per share and revenue between $15.95 billion and $16.05 billion, while analysts were expecting a profit of $2.75 per share on revenue of $15.99 billion.
The weak forecasts overshadowed fourth-quarter revenue and profit beats.
Excluding items, the company earned 70 cents per share, while analysts on average had expected 55 cents.
Total revenue rose 26 percent to $3.60 billion, beating analysts’ average estimate of $3.56 billion, according to IBES data from Refinitiv.
Salesforce has been spending heavily on research and development as well as marketing and sales. The company’s total operating expenses jumped 32 percent to $2.52 billion.
Revenue from the company’s flagship product, Sales Cloud, rose 11.1 percent to $1.05 billion.
The company’s deferred revenue, which measures future business for subscription-based software vendors, rose about 22 percent to $8.56 billion. Analysts on average had expected $8.23 billion, according to financial and data analytics firm FactSet.
The company’s shares, which have gained nearly 16 percent this year, were trading at $153.30 in extended trading.
Reporting by Akanksha Rana in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel