Deferred revenue, a key metric for subscription-based software businesses, rose 23 percent to $3.50 billion in the third quarter. Analysts on average had expected deferred revenue of $3.42 billion. For the current quarter, Salesforce said it expected revenue of $2.27 billion to $2.28 billion, above analysts’ average estimate of $2.24 billion.
Revenue rose 25.3 percent to $2.14 billion. Analysts had expected revenue of $2.12 billion. Chief Executive Officer Marc Benioff said that Salesforce was expecting to deliver its first $10 billion-year during our fiscal year 2018.
The more optimistic predictions were due to closing deals for its cloud-based sales and marketing software with several new major customers.
Salesforce has consistently reported double-digit growth in recent quarters as companies shift to cheaper and easier cloud-based products, but it is facing growing competition from Oracle and Microsoft.
The results marked a sharp reversal from the previous quarter, when a lighter-than-expected revenue forecast prompted concerns about slowing growth. But this quarter the company closed large deals with customers including Citigroup and Amazon to help it get back on track.
Benioff wants to broaden the company’s cloud offerings through new features, especially focusing on artificial intelligence.
The company, which launched its artificial intelligence platform Einstein this year, has made several acquisitions to build up its machine learning and big data analysis power.
However, competition between Microsoft and Salesforce is now intensifying and Microsoft’s Dynamics product is taking business from Salesforce among mid-sized customers. Microsoft also this summer launched a direct competitor to Salesforce’s AppExchange for business software.