The Cloud

Salesforce Beats Earnings Estimates

CEO Marc Benioff said the cloud platform company would reach its annual sales goal of $20 billion “faster than imagined.”
William SprouseMay 30, 2018
Salesforce Beats Earnings Estimates

Customer-relationship management software maker Salesforce reported revenue of $3.01 billion for the first quarter, beating analyst expectations, according to Thomson Reuters. The company said revenue was up 25% year-over-year, and cash generated from operations was $1.47 billion, up 19% year over year.

“Our relentless focus on customer success is yielding incredible results, including delivering nearly two billion AI predictions per day with Einstein,” Chairman and Chief Executive Marc Benioff said.

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Einstein is a layer of artificial intelligence built into Salesforce that delivers predictions and recommendations based on the client’s business processes and customer data.

The company reported that revenue from subscription and support fees, from which it gets almost all of its sales, was $2.81 billion, up 27% year-over-year. It said it expected revenue of $3.22 to $3.23 billion for the second quarter. Analysts had been expecting guidance of $3.11 billion.

Salesforce’s share price has risen 24% this year.

In a conference call, Benioff said the company would reach its annual sales goal of $20 billion “faster than imagined.”

Salesforce CFO Mark Hawkins

In March, Salesforce announced it was buying MuleSoft in a $6.5 billion deal. MuleSoft’s platform helps Fortune 500 companies stitch together disparate software applications, data, and devices.

Chief Financial Officer Mark Hawkins said MuleSoft will produce $315 million in additional revenue in the current fiscal year.

“We’re pleased with this, especially post-close,” Hawkins said.

“We signed several deals, including the largest transaction in the history of the company, and the biggest public-sector deal,” Chief Operating Officer Keith Block said in an interview with Bloomberg.

(The public sector client is the U.S. Department of Agriculture, whose Farm Service Agency will use the cloud platform to help inform customers on local and regional initiatives that could grow their farming and ranching operations.)

Internationally, Salesforce said it would invest $2.2 billion in its French business and $2 billion in Canadian operations over the next five years.

“The company continues to land larger, multi-cloud deals, which should help support upside to current estimates,’’ Bhavan Suri and Sarah Shizas, analysts at William Blair & Co., wrote in a note before the earnings release.