Salesforce Revenue Surges As Growth Continues For CRM Leader
Salesforce revenue surged in its first fiscal quarter as the CRM leader worked to integrate recently acquired technologies, especially the MuleSoft integration platform, that it expects to drive future growth.
Its latest quarter, which ended April 30, saw sales above $3 billion for 25 percent year-over-year growth. And Salesforce has $20.4 billion of future revenue already under contract, making it unlikely the pace of expansion will slow anytime soon, CEO Marc Benioff told investors on an earnings call.
Benioff said his company, now above a $12 billion run rate, is well on its way to surpassing the $20 billion annual revenue milestone at a record pace for a software company.
"We think we're going to get there faster than we could have imagined," Benioff said. The company also reported net income of $344 million for the quarter.
Salesforce pleased investors by not only beating on revenue, but also raising guidance for the next quarter to $3.22 billion-$3.23 billion. Salesforce shares, which closed at $126.88 on Tuesday, advanced roughly 4 percent in after-hours trading.
Last month, Salesforce closed its $6.5 billion deal for MuleSoft. The Integration Cloud that will stem from that buy will help win market share in the coming years, the CEO said.
"Integration has never been more strategic," Benioff told investors, citing CEOs who complain to him that their data is "locked in legacy systems."
The MuleSoft integration platform enables customers to connect all their data across public cloud, private cloud, on-premises systems and devices.
The process of bringing MuleSoft's business operations under Salesforce's roof, and transforming the technology into the Salesforce Integration Cloud, is under way, COO Keith Block said.
MuleSoft is so important to future growth because "many of our customers are using multiple public clouds," Benioff said.
To address that reality, Salesforce focused in the past on building an open system, with API accessibility and its AppExchange marketplace.
But "it has become more important for our customers to have and rely on an integration cloud," to deliver a single view to the customer, he said.
Artificial intelligence will be another important contributor to future gains in a market expected to reach $125 billion within a few years.
Salesforce's Einstein platform now delivers nearly 2 billion predictions a day—a number that's doubled in the last quarter.
"This is the most strategic technology for our customers," Benioff said of AI.
MuleSoft will augment Einstein, making more data available to the AI engine for analysis and insights.
The process of integrating MuleSoft's technology starts with consultations with customers on their integration strategies, Block said.
While Integration Cloud will be a rare Salesforce product that extends into private infrastructure, Salesforce isn't planning on using the platform as a springboard into a more hybrid posture.
"We're still 100 percent public cloud. I don’t see that changing," Benioff said.
At the same time, the nature of integration requires an architecture that runs partly on-premises, and Salesforce doesn't shy away from that.
"If customers need different architectures to unlock innovation, we'll go there," Block said.
Salesforce is committed to maintaining the neutrality of MuleSoft's platform, he said.
Benioff noted Salesforce, like its customers, has a multi-cloud strategy. It maintains its own proprietary data centers, while also partnering with mega-cloud providers Amazon Web Services, Google Cloud and IBM.
"Great alliances," Benioff said, "give us even more capability to deliver highly flexible execution environment for the customer."
Salesforce is also busy integrating CloudCraze into Commerce Cloud, ramping that e-commerce platform with B2B capabilities, he said.