What Could Be Next For Salesforce?

Photo credit:  Seesmic.com/Flickr.com.

Salesforce.com (NYSE: CRM) continues to stun the market with a performance that outpaces all expectations. The market was so pleased with Salesforce’s recently reported results that the stock reported the biggest climb in the last two years. Post the result announcement, its stock climbed 9.5%, the most intraday growth recorded in the stock since 2016.

Salesforce’s Financials

Salesforce’s third quarter revenues grew an impressive 26% over the year to $3.39 billion, above analyst projection of $3.37 billion. Adjusted EPS of $0.61 was significantly ahead of the market’s expected earnings of $0.59 per share and recorded a remarkable 56% growth over the previous year’s $0.39 per share.

By segment, revenues at Subscription and Support accounted for 93% of the revenues and grew 16% over the year to $3.17 billion. Professional Services and Other revenues brought in the remaining 7% and grew 15% over the year to $224 million.

Within the segment, Sales Cloud revenues grew 11% to $1.02 billion. Revenues from Service Cloud, which is among its fastest growing businesses, grew 24% to $917 million. Marketing & Commerce Cloud recorded a 37% growth to $489 million. Salesforce’s Platform and other revenues grew 51% to $742 million. Mulesoft helped bring in $105 million in revenues for Salesforce.

Among other metrics, Salesforce’s unearned revenue, business that has been booked, but not delivered, grew 25% to $5.4 billion. Remaining performance obligation, which represents future revenue that’s under contract but not yet recognized, grew 34% to $21.2 billion.

For the current quarter, Salesforce expects to deliver $3.551-$3.561 billion in revenues with Non-GAAP earnings of $0.54-$0.55. The Street was looking for revenues of $3.53 billion and an EPS of $0.57.

Salesforce now expects to end the current year with revenues of $13.23-$13.24 billion, compared with an earlier forecast of $13.125-$13.175 billion. It is projecting fiscal 2019 earnings at $2.60-$2.61. The company issued revenue guidance for fiscal 2020 at $15.9-$16 billion, compared with the market’s forecast of $15.83 billion. It maintained its forecast of reaching revenues of $21-$23 billion by the year 2022.

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Disclaimer: More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion ...

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