Posted on Monday, Sep 13th 2021
Salesforce (NYSE: CRM) recently announced its second quarter results that continued to surpass market expectations. The company recently announced the acquisition of a Germany-based player to enter into the RPA market.
Salesforce’s revenues for the second quarter grew 20% to $6.34 billion, above analyst estimates of $6.33 billion. Adjusted earnings of $1.48 per share was also better than the market’s forecast of $0.93 per share.
By segment, Subscription and Support revenues grew 22% to $5.91 billion, Professional Services and Other revenues grew 37% to $426 million.
For the third quarter, Salesforce forecast revenues of $6.78-$6.79 billion and an EPS of $0.91-$0.92. The market was looking for Q3 revenue of $6.8 billion and an EPS of $0.92. Salesforce expects to end the current fiscal year with revenues of $26.6-$26.3 billion and an EPS of $4.36-$4.38. The market was looking for revenues of $26.31 billion for the year with an EPS of $4.40.
Salesforce’s Expanding Offerings
Salesforce recently announced the launch of new AI-powered workflows and contact center innovations in its Service Cloud. The workflows are aimed at creating effortless experiences for service agents and their customers by providing customer service teams with the ability to predict, route, and solve customer needs. The contact center innovations also include capabilities for video, chat, voice, and workforce engagement to deliver improved experiences for both customers and service teams. According to its reports, 78% of customers need to contact customer care centers multiple times to resolve issues. Not only does that create brand image issues, but it also results in additional resource requirements for the organizations. By offering the customer care agents a platform that automates repetitive and low-value tasks, Salesforce is hoping to address some of these issues.
Earlier this quarter, Salesforce also announced the acquisition of Robotic Process Automation (RPA) player Servicetrace for an undisclosed sum.
The RPA industry has been in the news lately especially since
UIPath announced its $1.34 billion IPO. Analysts believe that RPA is more suited to legacy operations, and the acquisition could help Salesforce deliver an offering that helps bridge the gap between older on-premise tools and modern cloud software. Germany-based Servicetrace was founded in 2004. It has been privately held so far and boasts of clients like Fujitsu, Siemens, Merck, and Deutsche Telekom.
Salesforce plans to integrate Servicetrace with Mulesoft.
Salesforce had acquired MuleSoft for an estimated $6.5 billion in 2018. MuleSoft itself is a low-code platform that uses templates and connectors for scalable integration. With the addition of Servicetrace, MuleSoft will be able to deliver integration, API management, and RPA platform to further enrich Salesforce Customer 360. The new RPA capabilities will also help enable end-to-end workflow automation across any system.
Meanwhile, Salesforce’s stock is trading at $257.20 with a market capitalization of $251.8 billion. It had touched a record high of $275.22 in August. The stock fell to a 52-week low of $201.51 in March.
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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Smartsheet Focuses on PaaS Growth . C3.ai Expands Enterprise and Public Sector Presence