back to article What's 'amazing', cloudy and splattered in red ink? It's quarterly Salesforce results time

Just when you’d thought Salesforce had quit its habit of posting quarterly losses, the biz swung back into the red during its first quarter of 2017/18 - on the back of bumper growth. The biz posted a net loss of $9.2m (£7m) for the quarter, compared with profit of $38.7m (£29.8m) for the three months ended April 2016. However …

Let me guess.....beat and raise. House of cards.

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Accounting

"deferred revenue for the quarter – the cash it has in the pipeline"

Not exactly. They actually have the cash, but recognizing the cash as revenue means they have to deliver the service first. Typically deferred revenue is the result of yearly pre-payments. So if someone pays you $120/year for a service, you have $120 in cash at the beginning of the year. But you can only report $12/mo in revenue, and only as the service is actually provided.

Too much deferred revenue can be a problem, because it is a liability towards the customer. If the customer can wiggle out of the contract, or something happens that prevents the service from being delivered, the money can no longer be recognized as revenue, and has to be given back to the customer.

Deferred revenue may also indicate desperate pricing measures. LIke pay for one year, and get one year free. This is basically borrowing money from your customers. But you won't recognize any revenue in the second year, and you probably spent all of the cash you received to provide the services in the first year.

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Re: Accounting

Good comments but your maths is as fragile as Salesforce's accounting.

$120/year = $10 month :-)

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