Salesforce handily topped second quarter targets and raised its revenue outlook for fiscal 2021.
The software-as-a-software firm, best known for its CRM and Service Clouds, has expanded into new markets with its Work.com suite. CEO Marc Benioff said the company had one of the best quarters in its history and is positioned to emerge stronger in the COVID-19 pandemic downturn.
Salesforce reported second quarter earnings of $2.85 a share and $1.44 non-GAAP. Revenue was $5.15 billion, up 29% from a year ago. The company said it had to make mark-to-market adjustments on its strategic investments and that boosted earnings non-GAAP earnings by 58 cents a share.
Wall Street was expecting Salesforce to report second quarter revenue of $4.9 billion with non-GAAP earnings of 67 cents a share.
As for the outlook, Salesforce projected revenue of $5.24 billion to $5.25 billion with non-GAAP earnings of 73 cents a share to 74 cents a share. Analysts were modeling Salesforce to deliver revenue of $5.01 billion with non-GAAP earnings of 77 cents a share.
For fiscal 2021, Salesforce projected revenue of $20.7 billion to $20.8 billion with non-GAAP earnings of $3.72 a share to $3.74 a share. Wall Street was expecting fiscal 2021 non-GAAP earnings of $2.96 a share on revenue of $20.7 billion.
Overall, cloud-based and digital companies have outperformed the broader market and have proven resilient to economic turbulence.
On a conference call with analysts, Benioff cited a large implementation at AT&T to 35,000 users and growing as well as a deal with PayPal. He also noted that Work.com is seeing traction.
Another incredible victory in the quarter has really been Work.com. I don't think there's a product that we've ever built faster, but it's never been more successful, more rapidly. And you look at so many success stories, public sector organizations and enterprises today, in the middle of this pandemic, everyone needs contact tracing, they need to ship scheduling. Everybody needs workforce command center try to bring everyone back safely.
CFO Mark Hawkins said:
Both the company and our customers navigated the crisis better than our guidance assumed. While our performance in Q2 leaves us optimistic about the future, it is important to note that we remain mindful of how the pandemic may continue to impact our customers and our community.
Key figures for the second quarter:
- Subscription and support revenue for the second quarter checked in at $4.84 billion.
- Sales Cloud revenue was $1.28 billion, up from $1.13 billion a year ago.
- Service Cloud revenue was $1.3 billion, up from $1.09 billion.
- Salesforce Platform and Other revenue was $1.51 billion, up from $912 million, largely due to the acquisition of Tableau.
- Marketing and Commerce Cloud revenue was $746 million, up from $616 million.
- Research and development costs were $898 million in the second quarter, up from $607 million a year ago.
- Marketing and sales expenses surged to $2.27 billion, up from $1.82 billion in the second quarter a year ago.
- 70% of Salesforce revenue is in the Americas with 21% in Europe and 9% in Asia Pacific.
- Salesforce, CVS Health combine return-to-work solutions
- Salesforce intros new toolset for customer feedback management
- Salesforce rolls out new Marketing Cloud features, Datorama integration with Tableau
- Salesforce launches Salesforce Anywhere, app that embeds collaboration, data across platforms
- Salesforce, Siemens partner for new suite of touch-free tech for the workplace
- Salesforce adds Einstein recommendations to Trailhead, bolsters developer productivity tools
- Salesforce launches new Work.com products for post-coronavirus planning