Salesforce.com, inc. (NYSE:CRM) is one tech company with a high valuation which keeps defying forecasts. The company currently trades at a ratio of close to 200x EV/EBITDA. However, investors (or speculators) seem to be willing to pay as the company beats forecasts. The company just reported earnings and beat on the top line and bottom line. However, shares are down close to 6% after hours as analysts were disappointed with increased costs. Additionally, analysts were concerned that the company lowered its guidence for Q3.  Large tech companies like Oracle are now moving into the cloud space, proving competition in the CRM area.  Oracle Corporation (NASDAQ:ORCL) has already septn $1 billion on cloud computing. Seth Klarman’s Baupost Group revealed a surprisingly large stake in Oracle Corporation (NASDAQ:ORCL) in the hedge fund’s most recent 13-F filling with the SEC.

Salesforce.com inc

Barclays PLC (ADR) (NYSE:BCS)’s notes much of this in a report which the firm just issued on Salesforce.

Salesforce.com, inc. (NYSE:CRM) delivered, as mostly expected, another strong quarter with better revenue, EPS and operating cash flow, and in-line billings growth and deferred revenue (see table below). The company raised revenue and EPS guidance for the full year; at the high end EPS ($1.48-1.51) it is now reaching current consensus. Given its large size the company continues to grow at very impressive rates, but given the high expectations going into the quarter and recent strong share price performance, we are not sure the shares can push higher meaningfully in the short term as the forward looking items (namely billigs growth) were not better than consensus.

salesforce.com, inc. (NYSE:CRM) continues to grow at a high rate (+34% revenue growth in Q2) and is also improving its cash generation with operating cash flow ($136m) up 64% YoY, ahead of consensus of $123m. However, billings of 734m, up about 30%, were in line with expectations and grew 30%, including the small benefit from the push toward annual billings, which could be below the recently increased expectations. The company is guiding now for revenue of $3.025-3.035bn (was $2.99-3.025bn), which compares to consensus of $3.02bn. Q3 EPS guidance of $0.31-0.32 is slightly below consensus of $0.35 but revenue gudiance is above ($773-777m vs $772m); the company has a history of conservative guidance. Off-balance sheet backlog was up significantly YoY and is now at 2.8bn (was 2.7bn in Q1).

Why investors are willing to pay such a high premium for a company which faces large competition from big players still remains a mystery to most value investors.

Disclosure: No position in any companies mentioned