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Cloud Stocks: Einstein and Open-Source Platform Lead the Charge for Salesforce

Posted on Friday, Jun 7th 2019

According to an IDC report published earlier this year, Salesforce.com (NYSE: CRM) remained the largest CRM services provider for the sixth year in a row and increased its 2018 market share by more percentage points than the rest of the top 15 CRM vendors combined. Here is the infographic from IDC that reveals Salesforce’s might.

Salesforce’s Financials

Salesforce’s first quarter revenues grew 24% over the year to $3.74 billion, above analyst projection of $3.6 billion. The impressive growth was attributed to a 11% gain on cloud-based revenues that came in at $1.1 billion for the quarter. Adjusted EPS grew 26% to $0.93, compared with the Street’s forecast of $0.63 for the quarter.

By segment, Subscription and Support revenues rose 24% to $3.5 billion. Professional Services and Other revenues climbed 23% to $241 million. Within the segments, Sales Cloud revenues grew 11% to $1.07 billion with revenues from Service Cloud growing 20% to $1.02 billion and revenues from Marketing & Commerce Cloud growing 33% to $561 million.

For the current quarter, Salesforce forecast revenues of $3.94-$3.95 billion with an adjusted EPS of $0.46-$0.47. The market was looking for revenues of $3.93 billion with an adjusted EPS of $0.63. Salesforce expects to end the current year with revenues of $16.1-$16.25 billion and an adjusted EPS of $2.88-$2.90. The Street had forecast revenues of $16.13 billion with an EPS of $2.64 for the year.

Salesforce’s Einstein Focus

During the quarter, Salesforce continued to focus on emerging technologies to drive growth. It expanded its new services on its AI offering Einstein, which will allow users, regardless of their technical skill, to build custom AI powered apps with just a few clicks. It expanded Einstein capabilities across its entire product line and made Einstein Voice and Einstein Vision capabilities available to every Salesforce app.

Earlier this month, it announced Einstein Analytics for Financial Services, a customizable analytics solution that provides AI-augmented business intelligence for wealth advisors, retail bankers, and managers. Einstein Analytics for Financial Services delivers a customized CRM experience for financial institutions providing them with access to AI-powered insights and recommendations tailored to their role and their customers. It integrates data from Financial Services Cloud and other data sources so that users can gain access to actionable insights and predictive guidance. The solution will offer pre-built industry-specific templates such as client financial goals, deposits and fees to enable front-line wealth advisors and retail bankers to begin using analytics immediately. It will also provide access to users to build custom analytics apps and connect to external data sources to get a full view of their book of business.

Salesforce.Org Acquisition

Salesforce’s earnings outlook for the current quarter has been impacted by the acquisition of its non-pofit arm Salesforce.org. Salesforce.org was a reseller for Salesforce software and services focused on the not-for-profit sector. Salesforce announced plans to acquire the entity for $300 million and integrate it with a larger, new nonprofit and education vertical. By integrating the two entities, Salesforce will continue to honor and grow its philanthropic offering. It will extend those services by continuing to provide free and highly discounted software to nonprofits and education institutions around the world and investing in local communities through employee volunteering and strategic grants.

But the acquisition has resulted in a one-time accounting charge of $200 million based on the accounting standard that addresses accounting for the settlement of preexisting relationships between an acquirer and a target company. The write-down pertains to the loss that Salesforce needs to recognize for its pre-existing contractual relationship such as the reseller agreement with Salesforce.org.

Meanwhile, Salesforce continues full speed ahead on its platform strategy. Earlier last month, it announced that it open sourced Lightning Web Components, its JavaScript framework that simplifies the ability to build apps on the Lightning Platform. Salesforce believes that by open-sourcing Lightning Web Components, it will be able to drive innovation on the platform and developer teams will be able to recruit from larger talent pools to code and iterate on apps. The open-source Lightning Web Components will allow developers to build applications on any platform, using the tools and open languages of their choice.

Salesforce is not new to the benefits of a well-defined platform strategy. Its platform has been used by companies like Veeva and Vlocity to build industry-focused applications. Salesforce should look at acquiring companies like Vlocity to add to its vertical-focused offerings – a move that could not only help drive revenues, but making meaningful inroads into key verticals.

Its stock is trading at $159.31 with a market capitalization of $123.4 billion. It had touched a record high of $167.57 earlier this April. The stock has climbed from the 52-week low of $113.60 that it had fallen to in December last year when most tech stocks had taken a beating.

Photo Credit: Open Grid Scheduler / Grid Engine /Flickr.com

This segment is a part in the series : Cloud Stocks


. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Alarm.com Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions
. New Relic Focuses on PaaS
. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
. Proofpoint Acquiring Even Amidst Crisis
. BlackLine Looks Solid At The Face of Covid-19
. GoDaddy Continues to Acquire
. Qualys Expands Cloud Offerings to Soar to New Highs
. Zendesk Struggling Amidst the Downturn
. Alteryx Bounces Back Despite Low Outlook
. Palo Alto Networks Continues to Acquire
. Workday Extends its PaaS Strategy
. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
. Paycom Confident Under Current Conditions
. DocuSign Soars to Record Highs
. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
. AppFolio Improves Offerings for Current Conditions
. SurveyMonkey Should Get Into PaaS
. Model N Soars to a Record High
. Appian Focuses on RPA for Growth
. Slack Beefs up its Portfolio
. Coupa Expands into Treasury Services

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