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Salesforce Tops Wall Street Estimates on Strong Demand

November 21, 2017, 9:45 PM UTC reported better-than-expected quarterly profit and revenue, helped by strong demand for its cloud-based sales and marketing software.

Demand for cloud-based services is soaring as companies look to take advantage of such offerings due to lower costs and high level of scalability.

Revenue from Sales Cloud, the company’s flagship product, rose 16.8% to $906.5 million.

Salesforce has boosted spending on research and development as well as marketing and sales in the face of intense competition from companies such as Oracle and Microsoft.

The company’s deferred revenue, a key-metric for subscription-based software businesses, rose 26% to $4.39 billion, beating analysts’ average expectations of $4.18 billion, according to financial and data analytics firm FactSet.

The company said it expected current-quarter adjusted profit of 32 cents to 33 cents per share and revenue of $2.80 billion to $2.81 billion.

Analysts on average were expecting a profit of 34 cents per share on revenue of $2.79 billion for the quarter, according to Thomson Reuters I/B/E/S.

Shares in the company fell 1.8% to 106.85 in after-hours trading.

Net income was $51.4 million, or 7 cents per share, in the third quarter ended Oct. 31, compared with a loss of $37.3 million, or 5 cents per share, a year earlier.

On an adjusted basis, the company earned 39 cents per share, beating analysts’ average estimate of 37 cents per share.

Revenue rose to $2.68 billion from $2.14 billion. Analysts were expecting revenue of $2.65 billion.