Salesforce's stock went crazy in after-hours trading the company reported its year-end earnings. As we write this, the stock is up 11% to a new all-time high of $69.80.
Salesforce posted a good year, meeting analysts' high expectations exactly — it grew top-line revenue 32% to $5.37 billion and non-GAAP EPS to 14 cents.
But that's not what made investors so bullish.
CEO Marc Benioff promised that Salesforce would hit about $6.5 billion in revenue by the end of its 2016 fiscal year, while growing growing non-GAAP profits to $0.67 to $0.69 per share.
More importantly, he promised that $6 billion was just a speed bump on the way to $10 billion.
He promised that the 15-year-old Salesforce will be the fastest software company in history to hit $10 billion.
He didn't say exactly when the magic $10 billion year will happen, but he did point out the reason he knew it would, and soon: Salesforce already has $9 billion of revenue under contract right now.
It has deferred revenue of $3.32 billion on its books — that's money that has been billed to customers, but not yet collected. It also has another another $5.7 billion of unbilled revenue (not on its balance sheets) that it's counting on from long-term contracts.
All of that obviously won't be collected next year, or possibly even in the next two years. Most large enterprise software contracts are for at least three years, and 2015 was a standout year for signing million-to-billion deals.
Top sales guy Keith Block said on a conference call to analysts that the company signed "550 7- and 8-digit" deals 2014 fiscal year, 100 more than last year and not only are the number of the deals growing, but the average size of them.
Benioff emphasized:
This is the fastest software company to reach $5 billion and in 90 days, we're going to be on the phone with you talking about the fastest software company to reach $6 billion. And if you look at our deferred revenue of $9 billion of booked business on and off the balance sheet, you can just straight line out – my dream is crystal clear to be the first one in the cloud, and the fastest software company, to $10 billion.
