Business-software provider Salesforce.com Inc. posted record quarterly sales and raised its full-year guidance, showcasing the sustained appetite for cloud-computing services during the coronavirus pandemic.
Enterprises have been accelerating their shift to digital processes during the health crisis, fueling investor enthusiasm for companies that enable the transition. Several startups are trying to capture this momentum and are making plans to tap public markets.
San Francisco-based Salesforce on Tuesday said sales grew 29% to $5.15 billion in the most recent quarter, beating Wall Street’s expectation of $4.87 billion in revenue, according to analysts surveyed by FactSet. Salesforce said it generated a $2.85 per-share profit, in part based on accounting adjustments.
Starting next week, Salesforce’s stock will be one of the 30 making up the Dow Jones Industrial Average. The stock is being added in part to help offset the effects of Apple Inc.’s planned four-to-one stock split that would have given the information-technology sector a smaller representation in blue chip index.
Cloud-computing was already one of the hottest areas in tech before the pandemic, and that momentum has largely remained as businesses have shifted to remote-work and as people stuck at home live more of their daily lives online. The demand has helped lift shares of the biggest cloud infrastructure providers. Shares in e-commerce giant Amazon.com Inc., the No. 1 cloud infrastructure provider, are up more than 80% this year, and rival Microsoft Corp.’s stock is around 37% higher.
The pandemic hasn’t been entirely a financial boon for cloud-services providers, with some customers having to cut spending or struggling to make payments as they deal with the wider economic effects of Covid-19.
Salesforce, however, lifted its full-year outlook on Tuesday after cutting expectations in the previous quarter when it said it had to provide payment relief to some customers. The company said it expects sales in the current financial year that runs through the end of January to increase to between $20.7 billion and $20.8 billion. It previously cut its outlook to around $20 billion in sales from as high as $21.1 billion.
Salesforce’s stock has risen more than 30% this year and was up more than 12% in after-hours trading following the results.
Salesforce also has tried to parlay the pandemic into new business opportunities. The company launched a set of tools, called Work.com, designed to help organizations safely go back to the office, though the company itself has said it won’t recall workers until at least the middle of next year. Part of Work.com’s suite of tools includes a contract-tracing application for employers to keep track of employees who are showing symptoms of Covid-19.
Salesforce said it expects to generate $5.24 billion to $5.25 billion in sales in the current quarter, above the $5.02 billion analysts’ forecast.