OK Start to the Fiscal YearFor any other company, I would be happy with the results that Salesforce produced. On balance, though, this company is still generating gaudy growth numbers, including 28% and 29% surges in revenue and subscription revenue this quarter, respectively. The problem is, good growth (top line) numbers haven't trickled to the bottom line, which is what killed the dot-com era.
. What's more, this is a story about performance relative to expectations. To that end, I wasn't particularly impressed with numbers that arrived as expected. This is even though professional services and other revenue totaled $50 million and grew 25% year-over-year. After all, with a forward P/E that presumes excellence, it will take more than meeting the Street's long-term growth expectations to command respect. Management also spoke favorably about its "billings" or "unbilled deferred revenue." These represent future billings under the company's subscription agreements that have not been invoiced. In other words, "billings" represents revenue that is contracted, but not yet invoiced and is off the balance sheet. This is an important metric in the software services/cloud subscription model that gauges the company's ability to generate recurring revenue. In the quarter, billings grew 33% to $1.67 billion. While this number is indeed impressive and speaks to Salesforce's strong market-share growth, investors have to remember that this figure is not always "direct," since it includes existing customer renewals and longer invoice durations. Therefore, it doesn't reflect the company's organic billings growth.