Salesforce.com Inc. (NYSE: CRM) shares rose in extended trading on Tuesday after the cloud software Company gave a promising outlook for sales in the current quarter and forecast growth ahead in the coming fiscal year.
Revenue in the period, driven by expansion in the Sales Cloud and Service Cloud segments, jumped 26% from a year earlier to USD 3.39 Billion, ahead of analysts’ estimates of USD 3.37 Billion. The Company expects revenue for the coming fiscal year to reach about USD 16 Billion. Co-Chief Executive Officer Marc Benioff said in a press release that Salesforce would become the fastest enterprise software company to reach the USD 16 Billion annual revenue milestone.
Overall, Salesforce reported a profit of USD 105 Million, or 13 cents per share, compared with USD 107 Million, or 14 cents per share, in the same period a year ago. The San Francisco Company earned an adjusted profit of 61 cents per share, ahead of analysts’ expectations of 50 cents per share.
Even after blowing past USD 10 Billion in annual revenue, Salesforce continues to grow well above 20% a year by providing a broader suite of products to sales, marketing and services departments at companies that are moving from traditional software to the cloud.
“I don’t think the company’s ever been stronger or been in a better position,” Benioff told CNBC. “And the reason why is every company that we’re dealing with is going through a huge digital transformation and every digital transformation begins and ends with the customer.”
Salesforce is also investing in artificial intelligence and analytics tools to help customers make better use of their data. That led to a 22% increase in research and development costs in the quarter to USD 481 Million, while sales and marketing costs rose 36% to USD 1.59 Billion.
Salesforce’s USD 6.5 Billion acquisition of MuleSoft Inc., which closed in May, added USD 128 Million in revenue in the latest quarter. The deal was aimed at helping customers tap data from older computer systems as they move to the cloud. Best known for its customer-management technology, Salesforce has been branching into other sectors through acquisitions.
“We believe that MULE is significantly outperforming expectations in both the quarter and the year and is already ahead of annual targets with another full quarter left to go,” Alex Zukin, an analyst at Piper Jaffray, wrote in a report last week. Zukin has an “overweight” rating and a USD 160 price target on the stock.
For the current fiscal year, Salesforce now expects revenue to come in between USD 13.23 Billion and USD 13.24 Billion compared with between USD 13.13 Billion and USD 13.18 Billion previously. The forecast for adjusted per-share earnings was raised to between USD 2.60 and USD 2.61 from between USD 2.50 and USD 2.52.