Posted on Tuesday, Jun 1st 2021
Salesforce (NYSE: CRM) recently announced its first quarter results that continued to surpass market expectations. It launched several upgrades recently that focused on adding data analytics capabilities for its product portfolio pushed by its Mulesoft and Tableau acquisitions.
Salesforce’s revenues for the first quarter grew 20% to $5.96 billion, above analyst estimates of $5.89 billion. Adjusted earnings of $1.21 per share was also better than the market’s forecast of $0.88 per share.
By segment, Subscription and support revenues grew 21% to $5.54 billion, and Professional services and other revenues grew 47.24% to $427 million.
For the second quarter, Salesforce forecast revenues of $6.22-$6.23 billion with an EPS of $0.91-$0.92. Analysts forecast revenue of $6.14 billion and an EPS of $0.87. Salesforce expects to end the current fiscal year with revenues of $25.65-$25.75 billion and an EPS of $3.79-$3.81. Analysts forecast revenues of $25.7 billion and an EPS of $3.44 for the year. Salesforce’s projected revenue contribution from Slack fell by $100 million to $500 million for the year as a result of a delay in deal closure. The deal is now expected to close toward the end of the second quarter. Salesforce had announced its acquisition of Slack in December 2020 for $27.7 billion.
Salesforce’s Expanding Analytics Tools
Salesforce has been expanding its product line-up across the entire portfolio. It added services that deliver advanced analytics to businesses, helping them make decisions faster. For MuleSoft, Salesforce announced a new release of Anypoint Platform with DataGraph. The release will help developers instantly discover, access, and serve data from multiple existing APIs with a single query, without writing any additional code. Customers across industries will be able to create seamless digital experiences faster. As the number of apps and systems used within an organization continues to grow, integration becomes even more complex and slows down the business. Anypoint DataGraph allows organizations to compose data faster, by consuming data from multiple APIs with just a single GraphQL query.
Similarly, for Tableau, Salesforce introduced Business Science, a new class of AI-powered analytics that enables business users and analysts to make smarter decisions faster. Business Science will help organizations get access to data, simplified model creation, predictions, what-if scenarios, forecasting, and other analytical methods without the need to code. Tableau’s Einstein Discovery update will help Salesforce customers gain insights and understand patterns across millions of rows of data in minutes, without requiring sophisticated data models.
Salesforce has seen significant growth from both its acquisitions of MuleSoft and Tableau. It reported a 49% growth in MuleSoft revenues over the year and an impressive 38% growth for Tableau. These two services are also featuring extensively in its large deals. MuleSoft was included in five of the top 10 deals in the quarter, and Tableau was in eight of the top 10, revealing how Salesforce has been successful in integrating these acquisitions in its strategic business model. Salesforce had acquired Mulesfoft for $6.5 billion in 2018 and Tableau for $15.7 billion in 2019.
Salesforce’s stock is trading at $238.10 with a market capitalization of $219.58 billion. It had touched a record high of $284.50 in August last year. The stock fell to a 52-week low of $167.00 in June last year.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.