According to Gartner, worldwide spending on customer experience and relationship management (CRM) software grew 15.6% to reach $48.2 billion in 2018. Salesforce (NYSE:CRM), which is the leader in the CRM market with 19.5% share, recently reported a strong quarter and raised its forecast following its recent acquisitions.

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Salesforce’s Financials

Salesforce’s second quarter revenues grew 22% over the year to $4 billion, ahead of analyst estimates of $3.95 billion. Adjusted EPS was $0.66, compared with the Street’s forecast of $0.47 for the quarter.

By segment, Subscription and Support revenues grew 22% to $3.75 billion. Professional Services and Other revenues grew 14% to $2552 million.

Within the Subscription segment, revenue from Sales Cloud grew 12.5% to $1.13 billion, Service Cloud gew 22% to $1.09 billion and Marketing and Commerce Cloud grew 36% to $616 million.

By region, revenue from Americas grew 20.4% to $2.82 billion, Europe grew 25% to 786 million, and Asia Pacific grew 25.8% to $395 million.

Cash generated from operations for the second quarter was $436 million, down 5%. Total cash, cash equivalents and marketable securities at the end of the second quarter was $6.04 billion.

For the third quarter, Salesforce forecast revenues of $4.44-$4.45 billion with an adjusted EPS of $0.65-$0.66. The market was looking for revenues of $3.93 billion with an adjusted EPS of $0.63. Salesforce raised its FY2020 guidance to revenue of $16.75-$16.9 billion from a range of $16.1-$16.25 billion. This raised estimate includes revenue of $550 million to $600 million from the acquisition of Tableau, $200 million from the purchase of Salesforce.org earlier this year and $25 million from the most recent acquisition of ClickSoftware. Adjusted EPS for the full year is expected to be $2.82-$2.84, down from the previous guidance of $2.88-$2.90. The Street has forecast revenues of $16.86 billion with an EPS of $2.85 for the year.

Salesforce’s Recent Acquisitions

Early last month, Salesforce announced its plans to acquire field service company ClickSoftware for $1.35 billion in a cash and stock deal. The acquisition is expected to improve the Salesforce Field Service Lightning offering for mobile workforces launched in 2016. Founded in 1997, Israel-based ClickSoftware has over 15,400 customers including Bosch, Deutsche Telecom, Ericsson, and Unisys. It has an estimated annual revenue of $213 million.

Salesforce recently closed the $15.3 billion acquisition of Tableau in an all stock deal, the largest deal in its history. Founded in 2003, Tableau had recently reported quarterly revenues of $282.5 million and non GAAP net income of $2 million. Tableau had forecast revenues of $1.34-$1.40 billion for the year with an EPS of $1.58-$1.85.

Tableau, with a healthy portfolio of 86,000 customers, is expected to improve the analytics capabilities of Salesforce Customer 360, enabling its customers to accelerate innovation and make smarter decisions across every part of their business. By including Tableau’s capabilities in Customer 360, Salesforce believes that it will be able to provide companies with a complete view of their customers across every touchpoint including sales, service, and marketing. Together with Einstein, the Tableau acquisition is expected to enable Salesforce to offer a complete AI-powered analytics platform.

I think this is a bold addition by Salesforce to mark its emphasis on the Analytics segment. Microsoft, Oracle, and SAP sell their BI offerings to the enterprise customer as part of a bundle and have managed to make deep inroads into the market. Tableau has been a fast growing threat to them, and with Salesforce’s might, it becomes a bigger competitor.

Additionally, Salesforce also acknowledges the importance of a hybrid offering and Tableau’s addition will help it build its presence into that environment. This is not the first hybrid player that Salesforce has acquired in the recent past. Last year, it had acquired MuleSoft, a hybrid API management service provider, for $6.5 billion.

Its stock is trading at $151.07 with a market capitalization of $132.5 billion. It had touched a record high of $167.57 earlier in April. It hit a 52-week low of $113.60 in December last year.