Salesforce, Workday Sales Grow as Cloud Software Shines

Silicon Valley's cloudy outlook for software grew stronger in 2014, as Salesforce and Workday sales continued to pile up, and investors bet Wednesday that the growth will continue in 2015 and beyond.

Salesforce, a pioneer in software-as-a-service offerings, topped $5 billion in annual revenues for the first time thanks to a fourth quarter that exactly matched analysts' expectations for both adjusted profits and revenues, according to Thomson Reuters calculations. The San Francisco company reported a quarterly loss of $65.8 million, or 10 cents a share, on sales of $1.44 billion in its fourth quarter, which stretched to Jan. 31; after adjusting for stock-based compensation and other costs, Salesforce said profits were 14 cents a share.

"Salesforce reached $5 billion in annual revenue faster than any other enterprise software company and now it's our goal to be the fastest to reach $10 billion," CEO Marc Benioff said in Wednesday's announcement.

Workday reported a loss of $59.5 million, or 32 cents a share, on sales of $226.3 million; after adjustments, the Pleasanton company reported losses of 6 cents a share. Workday was projected for a loss of 6 cents a share on sales of $222.9 million.

For the year, Salesforce revenues gained 32 percent from 2013 and Workday sales increased 68 percent, but investors don't seem to think growth is set to curtail. Salesforce roared more than 10 percent higher in late trading Wednesday, topping its record high of $67, after closing with a 1.5 percent advance at $62.87. Workday moved higher than $95 after adding 1 percent to $93.94 in the regular session.

FBR Capital Markets analyst Samad Samana contends that cloud software still has opportunity for growth, as the SaaS model -- which allows customers to access software products online -- only accounts for about 10 percent to 15 percent of global software spending.

"These companies...

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