Salesforce.com Delivers Robust Growth
On Aug. 29, salesforce.com (NYSE: CRM) reported fiscal 2019 second-quarter results. The enterprise software giant is enjoying a strong growth in revenue and profits, boosted by recent acquisitions.
Salesforce.com results: The raw numbers
What happened with Salesforce.com this quarter?
Even as a $150 billion company, Salesforce shows no signs of slowing down. Revenue jumped 27% year over year to $3.3 billion, fueled by robust growth across Salesforce's business lines and geographic segments.
Sales cloud revenue rose 13% to $1 billion, while service cloud revenue leapt 27% to $0.9 billion. Marketing and commerce cloud revenue climbed 37% to $0.5 billion, while platform and other revenue surged 54% to $0.7 billion. Moreover, revenue in Salesforce's Americas, EMEA (Europe, the Middle East and Africa), and APAC (Asia Pacific) segments increased 25%, 35%, and 29%, respectively.
Better still, Salesforce growth should remain robust in the quarters ahead. Unearned revenue -- essentially business that's been booked but not yet fulfilled -- rose 24% to $5.9 billion. And remaining performance obligation, which represents future revenue that's under contract but not yet recognized, increased 36% to $21 billion.
Salesforce's results are being boosted by its recent acquisition of leading application integration platform MuleSoft. Co-CEO Keith Block had this to say regarding MuleSoft's impact during a conference call with analysts:
Chairman and co-CEO Marc Benioff added:
In all, MuleSoft contributed $122 million in revenue in the second quarter.
Salesforce is also growing more profitable as its revenue base expands. Non-GAAP (generally accepted accounting principles) operating margins improved by almost 1.8 percentage points year over year to 17.8%, as non-GAAP operating income -- which excludes stock-based compensation expense -- rose 41% to $585 million.
All told, non-GAAP earnings per share soared 98% to $0.71.
Salesforce once again raised its full-year financial forecast, which now includes:
- Revenue of $13.125 billion to $13.175 billion, up from a previous estimate of $13.075 billion to $13.125 billion, and signifying year-over-year growth of 25%
- Non-GAAP EPS of $2.50 to $2.52, up from $2.29 to $2.31
For the third quarter, Salesforce expects revenue to rise 25%, to between $3.355 billion and $3.365 billion. The company is also guiding for third-quarter non-GAAP EPS of $0.49 to $0.50. Unearned revenue, meanwhile, is projected to increase by about 20%.
"With this strong quarter, we're well on our way to our next milestone of $23 billion in revenue in FY22," added Block.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Salesforce.com. The Motley Fool has a disclosure policy.