Salesforce’s profit narrowly beats as costs rise

(Reuters) – Inc reported a quarterly profit that edged past analysts’ estimates as it continued to invest heavily to fend off competition.

The cloud-based software maker has boosted spending on research and development as well as marketing and sales as it faces intense competition from companies including Oracle Corp and Microsoft Corp.

Total operating costs rose 19.7 percent to $1.84 million in the second quarter ended July 31.

Revenue from Sales Cloud, the company’s flagship product, rose 17.4 percent to $886.4 billion, while total revenue rose 25.8 percent to $2.56 billion.

The company’s deferred revenue, a key-metric for subscription-based software businesses, rose 26 percent to $4.82 billion.

Analysts on average had expected revenue of $4.69 billion, according to financial and data analytics firm FactSet.

Salesforce’s net income fell to $17.7 million, or 2 cents per share, in the latest quarter from $229.6 million, or 33 cents per share, a year earlier.

On an adjusted basis, the company earned 33 cents per share.

Analysts on average had expected a profit of 32 cents and revenue of $2.51 billion, according to Thomson Reuters I/B/E/S.

Shares of the company fell 1.5 percent after the bell on Tuesday.

Reporting by Laharee Chatterjee in Bengaluru; Editing by Anil D’Silva

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