Salesforce says revenue growth to cool in 2017

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Salesforce said on Tuesday that it was on track to break through the $10bn revenue barrier this year, as it unveiled figures that showed it grew slightly faster than Wall Street expected in its most recent quarter.

The forecast pointed to a slowdown from 2016 that would take revenue growth at the largest cloud applications software company down to 21-22 per cent in 2017, from 26 per cent in 2016.

Speaking in an interview ahead of a call with analysts, however, Mark Hawkins, chief financial officer, said that the company was growing faster than any other software company of its size, and had raised the top end of its revenue guidance range for 2017, to $10.2bn.

Shares in the company, which had jumped 20 per cent this year on a broader rally among so-called software-as-a-service stocks, slipped 3.5 per cent in after-market trading, despite quarterly earnings that topped analysts’ forecasts.

Mr Hawkins also predicted a further 150 basis point increase in its pro forma operating profit margin for this year, after raising the margin by 400 basis points over the last three years. Salesforce has put more emphasis on profits in recent years as pressure has grown for it to bring more of the benefits of its scale to the bottom line, though the company’s CFO said growth remained its main priority.

Revenue for the three months to the end of January rose by 27 per cent to $2.29bn, with a net loss, based on standard accounting practices, of 7 cents. On the non-GAAP basis the company prefers to be judged — and which most analysts use to assess it — Salesforce reported a profit of 28 cents, higher than the 19 cents forecast by analysts.

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