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. 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 . 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Zendesk's Products Help Increase Average Deal Size . Shopify Focuses on Social Commerce . Pure Storage Expansion into Hybrid Cloud Fueled by Portworx Acquisition . Salesforce Leverages Mulesoft and Tableau Acquisitions Successfully . Workday Gearing up for Post Pandemic IT Spend Increase . Veeva Pushing Forth to $3 Billion by 2025 . Anaplan Expands Vertical Offerings . Analysis of Palo Alto's Bridgeview Acquisition . Nutanix Expands Government Vertical Offerings . Okta Expanding Government Sector Capabilities . Analysis of Splunk's TruStar Acquisition . Smartsheet Remains Focused on Integrations . Five9's Partnerships Translating to Product Innovations . DocuSign Sees Digital Signature Trends Here to Stay . Market Leader Tenable Leverages Acquisitions for Growth . Analysis of Zscaler's Recent Two Acquisitions . Analysis of Rapid7's Velocidex Acquisition . Dropbox Expands in International eSignature Market . MongoDB Rides High on Five Years of Atlas . 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How can Atlassian Amplify its Robust Growth? . Analysis of Microsoft's Three More Acquisitions After Nuance . Twilio Focuses on Customer Engagement . Analysis of Amazon's MGM Acquisition . Guidewire Focuses on Building its Partner Network . Momentive, Formerly SurveyMonkey, Adds Analytics to Offerings . Zendesk Should Look at Acquisitions . HubSpot Continues to Grow its App Marketplace . Is Alteryx Being Acquired? . Shopify Continues to Woo Developers . DigitalOcean Expands Partnership with MongoDB . Analysis of Qualys' TotalCloud Acquisition . Pure Storage Experimenting with Pricing Models . Palo Alto Networks Expands Security Capabilities . RingCentral Cashing in on the Hybrid Work Environment . Splunk Tackles Decelerating Growth with Product Upgrades . MongoDB's Atlas Capabilities Expand to the Government Sector . Analysis of Bill.com's Invoice2Go Acquisition . DocuSign Banks on Agreement Cloud . Smartsheet's Expanding Use Cases . Analysis of Salesforce's Servicetrace Acquisition . Zscaler Focuses on Federal Agencies . Coupa Launches PaaS Strategy . Analysis of BlackLine’s Kyriba Partnership . PagerDuty's Expanding Integration Portfolio . Analysis of Tenable's Accurics Acquisition . Upstart’s Improving AI Algorithm in FinTech Consumer Lending . Analysis of C3.ai's Growing Partnerships . Analysis of Veeva's Learnaboutgmp Acquisition . Analysis of Adobe's Frame.io Acquisition . Snowflake Focuses on the Financial Services Sector . CrowdStrike Expands Government Offerings . Zoom Focuses on Expanding Reseller Offerings . Dropbox Focuses on Content Creators with New Product . Analysis of Okta's atSpoke Acquisition . Sumo Logic Leverages Red Hat Marketplace . Analysis of Dynatrace's SpectX Acquisition . Tuya Prepares to Address the Chip Shortage . Analysis of Appian's Lana Labs Acquisition . Analysis of Qualtrics's $1.125B Clarabridge Acquisition . Fastly Addresses Latency Issues for Developers . Alarm.com Leverages AI for Growth . Analysis of IBM's Rego Acquisition . Analysis of Unity's Parsec Acquisition . UiPath Envisions Advanced ML Capabilities . Microsoft Teams Lags Far Behind Zoom . Analysis of ServiceNow's Gekkobrain Acquisition . Google Attempts to Gain Ground in Cloud and AI . Atlassian Expands Beyond IT Offerings . Amazon Addresses Margin Pressures Through Product Upgrades . Twilio Leverages Segment Platform for Product Expansion . Shopify Expands PaaS Integrations . Analysis of Zendesk's $4.1B Momentive Acquisition . HubSpot Becomes a Stickier Platform . Analysis of Alteryx's Acquisitions . Wix Focuses on Fitness Services Providers . Pure Storage Partners with Microsoft Azure to Address Chip Shortage Concerns . Analysis of Salesforce's LevelJump Acquisition . Qualys Expands Solutions to Address Ransomware . Veeva Eyes Data Cloud . Splunk Expands Partner Capabilities . Coupa Continues to Build on its PaaS . MongoDB Focuses on Winning Government Contracts . DocuSign Targets $50B Market Opportunity in Agreement Cloud . Smartsheet Focuses on PaaS Growth . C3.ai Expands Enterprise and Public Sector Presence