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Deal delays and exchange rate woes batter Salesforce

Going soft in the USA

Salesforce has blamed currency fluctuations and deferred deals in the US for hitting its business.

The cloudy CRM provider on Wednesday reported revenue growth of 25 per cent year on year to $2.04bn for Q2, turning a year-ago $852m loss into a $229m profit. Income per dilute share was $0.33, compared to $0.00.

Deferred revenue – the money such firms receive ahead of subscription – was up 26 per cent, to $3.82bn.

However, the firm reckoned that unstable exchange rates during the three months to July 31 created an “FX headwind” of $41m on its deferred revenue.

It’s the largest quarter-on-quarter deferred revenue headwind Salesforce had ever experience.

Business for Salesforce in the US also slowed down in July – a fact that is bleeding into its now-underway third quarter.

Accordingly, Salesforce now expects its third-quarter performance to slip below that of the second quarter.

Revenue growth of between 23 and 24 per cent is projected, translating at between $2.11bn and 2.12bn for the period.

The culprit was bogeyman of US business speak “softness” – this time in the US.

Sales chief and chief operating officer Keith Block promised Wall Streeters listening in to the quarterly call that deals which had slipped would be signed, at some point in the future.

“As far as these deals that slipped, again, typical of my experience, some of these deals will close in the next quarter or the next quarter, or the next quarter. None of these deals are going away. None of these deals have been lost. They may take different shapes and sized and forms but all of these deals are very very much in play,” Block said.

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