Salesforce.com Soars As It Counts On AI

Salesforce.com (NYSE: CRM) delivered another stellar performance in the last quarter. But the company couldn’t deliver a promising outlook for the coming quarter. Despite that, the market is pleased with the company and its stock has soared to record high levels.

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Salesforce’s Financials

Salesforce’s second quarter revenues grew 27% over the year to $3.28 billion, above analyst projection of $3.23 billion. Adjusted EPS of $0.71 was also ahead of the market’s expected earnings of $0.47 per share. Unearned revenue, which includes future billings, grew 24% to $5.88 billion, ahead of the market’s expectations of a 23% growth. It ended the quarter with a net profit of $299 million, compared with a profit of $17.7 million a year ago.

By segment, Subscription and support revenues grew 28% to $3.06 billion. Professional Services and Other revenues climbed 14% to $221 million. Sales Cloud grew 12.7% over the year to surpass the $1 billion threshold in quarterly revenues for the first time this quarter.

During the quarter, the Salesforce platform grew 32% and including MuleSoft, it grew 54%.

For the current quarter, Salesforce forecast revenues of $3.355-$3.365 billion with an adjusted EPS of $0.49-$0.50. The market was looking for revenues of $3.35 billion for the quarter with an EPS of $0.53.

Salesforce expects to end the year with revenues of $13.13-$13.18 billion with an EPS of $2.50-$2.52. It had earlier forecast the full year revenues at $13.08-$13.13 billion. Salesforce is still on track to generate $23 billion in revenues by fiscal 2022. The market expected Salesforce to post $13.13 billion in revenues with an EPS of $2.31 for the year.

Salesforce also announced the promotion of Keith Block as the co-CEO. Prior to the announcement, Block had served as the president and chief operating officer. Analysts believe that the position may work out well for Salesforce since both the co-CEOs have complementary skill sets. Benioff is one of the best evangelists in tech, while Block has a proven history with operations.