Salesforce (CRM) CFO Smith Urges Analysts to Try Another Valuation Metric
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Rating Summary:
48 Buy, 20 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Salesforce.com (NYSE: CRM) Chief Financial Officer Graham Smith is getting angry with analysts, and wants them to change their analyzing ways.
Short of storming out of a Robert W. Baird & Co. tech conference held Tuesday, Smith explained analysis using the deferred bookings method contained a lot of "noise."
Salesforce shares fell 10 percent from $135 ahead of its quarterly earnings report, and to about $110 Tuesday. Despite strong numbers, analysts were concerned about a metric Salesforce does not report: billings.
According to Dow Jones, analysts calculate a synthetic billings number. Dow notes, "analysts add the revenue listed on the income statement to the change in deferred revenue on the balance sheet to arrive at calculated billings."
And Smith is still urging analysts to reconsider the practice. Because of the timing of billings and when certain revenue is recognized, models can be off, Smith contends.
"If you know enough about our subscription model, clearly Q4 is influenced by new business in Q3," said Smith. "And if you think about it, we raised our guidance for Q4. Well, how could we raise guidance for Q4 if we had doubts about Q3."
Short of storming out of a Robert W. Baird & Co. tech conference held Tuesday, Smith explained analysis using the deferred bookings method contained a lot of "noise."
Salesforce shares fell 10 percent from $135 ahead of its quarterly earnings report, and to about $110 Tuesday. Despite strong numbers, analysts were concerned about a metric Salesforce does not report: billings.
According to Dow Jones, analysts calculate a synthetic billings number. Dow notes, "analysts add the revenue listed on the income statement to the change in deferred revenue on the balance sheet to arrive at calculated billings."
And Smith is still urging analysts to reconsider the practice. Because of the timing of billings and when certain revenue is recognized, models can be off, Smith contends.
"If you know enough about our subscription model, clearly Q4 is influenced by new business in Q3," said Smith. "And if you think about it, we raised our guidance for Q4. Well, how could we raise guidance for Q4 if we had doubts about Q3."
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