Investopedia: Salesforce.com - High Octane Growth With A Price To Match

Nothing frustrates a value analyst more than a breakaway growth stock that keeps posting excellent results and a seemingly bullet-proof valuation. Salesforce.com (NYSE:CRM) offers growth investors a choice not unknown to those who enjoy a good adult beverage or two - quality does not come cheap. So the question for investors is whether they are comfortable paying single-malt prices for a story that does not have that kind of age just yet. 

A Hot End to a Great Year
The sea change that is cloud computing is not stopping, and neither is CRM's growth. Revenue rose about 29% this quarter with 9% sequential growth - beating the average estimate, though not exceeding the highest estimates out there. The company also announced that billings grew 36%, while the year-end customer count was 27% higher and the company's deferred revenue was 33% higher.

CRM's profitability performance is more mixed. Gross profit rose 27% for the quarter, but the company significantly ramped up expenses across the operating spectrum. Even investors who buy the notion that stock compensation expense is not a "real" expense (the main difference between the company's GAAP and non-GAAP operating income figures) have to contend with the reality that operating income fell on a year-over-year basis. Granted, spending on R&D and sales may very well help further the company's competitive edge, and the company's trailing cash flow is not problematic, but this is what passes for a black mark on CRM's performance these days. 



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