Salesforce (CRM  ) shares were 5% lower following Q3 results which came in above expectations but fell short in terms of guidance. However, there was more focus on the company's acquisition of Slack (WORK  ) at a value of $27.7 billion which became official on the conference call.

Inside the Numbers

In the third quarter, Salesforce earned $1.15 per share which was well-above analysts' expectations of $0.75 per share. Revenue came in higher as well at $5.42 billion vs expectations of $5.2 billion. Revenue was 20% higher than the previous year, while earnings increased by 30%. However, there was a slight deceleration from last quarter's 29% revenue growth.

In terms of breakdown, Salesforce's Sales Cloud, helps companies keep track of current and potential customers, accounted for $1.3 billion in revenue which was a 12% increase. Service Cloud generated $1.4 billion in revenue which is a 21% increase. The other category which includes Tableau accounted for $1.6 billion in revenue.

Despite such strong performance shares were lower as guidance came in softer than expected. The company sees Q4 earnings per share of $0.73 to $0.74, while analysts were expecting $0.86 per share. In terms of revenue. Salesforce projects between $5.665 billion and $5.675 billion which were slightly above estimates of $5.52 billion.

The company's full-year guidance for next year was above expectations. It expects $25.45 billion and $25.55 billion which includes an additional $600 million from Slack. This is basically a 20% increase in revenue from this year and was above expectations of $24.5 billion in revenue.

Stock Price Outlook

Last quarter, Salesforce's stock jumped 25% to new highs. Since then, the stock has trended lower and given back the bulk of these gains. This quarter also marked Salesforce's entry into the Dow Jones Industrial Average (DIA  ). Another development was that the company's CFO, Mark Hawkins, announced his retirement after six years of service.

Salesforce remains 45% higher YTD which compares favorably to the S&P 500's (SPY  ) 15% gain. Looking forward, the stock looks attractive on a relative basis. It remains attractively priced despite having more growth potential than the vast majority of stocks.

From a technical perspective, the stock is offering a good risk/reward, following its three-month-long consolidation. The company seems to be shifting from a provider of CRM software to improve sales to a complete provider of cloud-based, enterprise software which will help it compete with Microsoft (MSFT  ).