Technology Guidance Will Not Thrill Investors

Source: Inc. Inc. (NYSE: CRM) reported third-quarter fiscal 2015 results after the markets closed Wednesday. The customer relationship management software company posted adjusted diluted earnings per share (EPS) of $0.14 on revenues of $1.38 billion. In the third quarter of 2014, reported EPS of $0.09 on revenues of $1.08 billion. The Thomson Reuters estimates for the third quarter called for EPS of $0.13 and $1.37 billion in revenue.

On a GAAP basis, the company posted an EPS loss of $0.06, which includes $139 million in stock-based compensation, $16 million in gains on sales of land and $10 million in non-cash interest expense that includes a loss on conversion of certain senior notes.

The company guided fourth-quarter revenues to a range of $1.436 billion to $1.441 billion, an increase of 25% to 26% above the fourth quarter a year ago. GAAP loss per share is estimated in a range of $0.09 to $0.10 and adjusted EPS is estimated at $0.13 to $0.14. The consensus estimates call for EPS of $0.15 on revenues of $1.45 billion.

For the full 2015 fiscal year, estimates a GAAP loss of $0.41 to $0.42 and adjusted EPS of $0.51 to $0.52 on revenues of $5.365 to $5.37 billion. The consensus estimate calls for EPS of $0.52 on revenues of $5.37 billion.

The company also guided fiscal year 2016 revenues in the range of $6.45 billion to $6.5 billion, a rise of 20% to 21% year-over-year. The estimate includes a headwind of $125 million to $150 million in foreign exchange rates. The consensus estimate was looking for $6.659 billion. said it would provide per share guidance when it announces fourth-quarter and full-year results in February 2015.

Fourth-quarter EPS guidance is a little light and so is the revenue estimate. The high end of the company’s full-year guidance is equal to the consensus estimates, and that will also weigh on the stock price in the after-hours session and Thursday’s regular trading session. Even the slight shortfall on the fiscal year 2016 revenue will count against the stock.

Shares closed at $61.02 Wednesday and slipped about 3.3% in after-hours trading to $58.95, in a 52-week range of $48.18 to $67.00. Thomson Reuters had a consensus analyst price target of around $69.60 before the report.

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