By Salvador Rodriguez
(Reuters) - Salesforce.com Inc (NYSE:CRM) posted a quarterly profit that narrowly beat analysts' estimates as it invested heavily to fend off competition in the cloud-based software sector.
Shares of the company fell 1 percent after the bell on Tuesday after closing at $92.95 on the New York Stock Exchange.
The San Francisco-based tech giant's net income grew to $241 million, or 33 cents per share, from $170 million, or 24 cents per share, a year earlier.
Analysts were expecting net income of $229 million for the quarter.
The company also reported deferred revenue - a key metric for the subscription-based software business - of $4.82 billion for the quarter, up 26 percent on the year, beating expected revenue of $4.69 billion, according to financial and data analytics firm FactSet.
Revenue from Sales Cloud, the company's flagship product, rose 17.4 percent to $886.4 million, while total revenue jumped 25.8 percent to $2.6 billion.
"Salesforce's growth is impressive," said Joe Tenebruso, analyst for Motley Fool. "There aren't many businesses that sizes that are growing so rapidly."
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 (NYSE:ORCL) and Microsoft Corp (NASDAQ:MSFT).
"In the next few years, it's going to be a tough battle in the cloud," said Tom Taulli, InvestorPlace.com analyst. "Salesforce has done a great job so far, but the competition has gotten better."
Total operating costs rose 19.7 percent to $1.84 million in the second quarter ended July 31.
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.