By Akanksha Rana
(Reuters) - Salesforce.com Inc (NYSE:CRM) easily beat analysts' estimates for quarterly earnings and forecast 2020 revenue above expectations on Tuesday, as more companies turn to its cloud-based services.
The company's shares rose 8 percent in extended trading, set to add to their about 25 percent gain this year. Salesforce's results are expected to support other cloud computing stocks, which took a knock earlier this month on concerns of peaking demand.
Salesforce remained the worldwide customer relationship management market leader in the first half of 2018 with a 20.3 percent share of total revenue, according to research firm IDC, but is facing rising competition from Microsoft Corp (NASDAQ:MSFT), Oracle (NYSE:ORCL) and SAP.
San Francisco-based Salesforce said it expects full-year 2020 revenue between $15.90 billion and $16 billion. Analysts were expecting $15.83 billion, according to IBES data from Refinitiv.
"(The company) guided for revenue above consensus estimates for next year, which is the first time they have done that in three years," said Alex Zukin, an analyst with Piper Jaffray & Co.
The 2020 forecast puts the company on track to meet its long-term target of delivering revenue between $21 billion and $23 billion annually by 2022.
Salesforce also said that during the third quarter ended Oct. 31 the number of deals generating more than $1 million jumped 46 percent from a year earlier. Co-Chief Executive Officer Keith Block said on the company's conference call with analysts that the company renewed and expanded a nine-figure relationship with one of the largest financial services institutions in the world.
Company executives also voiced confidence about global economic growth, and Chief Financial Officer Mark Hawkins said that despite the recent tax cuts, they continue to see aggressive investments.
Salesforce forecast fourth-quarter profit that fell below analyst expectations. It forecast profit of 54 cents to 55 cents per share, on revenue of $3.55 billion to $3.56 billion.
Analysts on average were expecting a profit of 57 cents and revenue of $3.52 billion.
"The magnitude of the third-quarter beat was so big and more than offsets the (Q4) guidance," said Scott Berg, an analyst at Needham & Co.
Revenue in the company's flagship product, Sales Cloud, rose nearly 11 percent to $1.02 billion.
Unearned revenue, which helps measure future business for subscription-based software vendors, rose about 25 percent to $5.38 billion, topping analysts estimates of $5.20 billion, according to financial and data analytics firm FactSet.
Excluding items, the company earned 61 cents per share, while analysts were expecting 50 cents.
Net income fell to $105 million, or 13 cents per share, in the third quarter, from $107 million, or 14 cents per share, a year earlier.
Total revenue rose 26 percent to $3.39 billion, beating analysts' average estimate of $3.37 billion.
Shares of fellow cloud computing firm Workday Inc were up about 3 percent in extended trading.
