Salesforce delivered strong results as it continues to benefit from customer-centric digital transformation projects and said it will deliver revenue of $15.9 billion to $16 billion in the fiscal year ahead. What's unclear is whether Salesforce's fourth quarter outlook is enough.
The financial results from Salesforce were closely watched for the outlook as Wall Street has become skittish about cloud and technology giants.
Salesforce reported third quarter earnings of 13 cents a share with non-GAAP earnings of 61 cents a share on revenue of $3.39 billion, up 26 percent from a year ago. A market-to-market adjustment for strategic investments boosted non-GAAP earnings by 6 cents a share. Excluding that gain, non-GAAP earnings would have been 56 cents a share.
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Wall Street was expecting Salesforce to report third quarter non-GAAP earnings of 50 cents a share on revenue of $3.36 billion.
As for the outlook, Salesforce said its fourth quarter revenue will be between $3.55 billion and $3.56 billion with non-GAAP earnings of 54 cents a share to 55 cents a share.
For the fourth quarter, Wall Street was expecting Salesforce to report non-GAAP earnings of 57 cents a share on revenue of $3.52 billion. For fiscal 2019, Salesforce projected revenue between $13.23 billion and $13.24 billion with non-GAAP earnings of $2.60 a share to $2.61 a share.
Salesforce also initiated fiscal 2020 guidance with revenue between $15.9 billion and $16 billion.
On a conference call with analysts, Salesforce co-CEO Keith Block noted that the company is seeing a higher level of engagement with CXOs looking at digital transformation. He said:
Every company in the world has a mandate to digitally transform its business. We continue to see this in Q3 with strong performances across every industry, every market segment and every geography. We grew 25% in the Americas, 26% in APAC and 31% in EMEA in constant currency. In Q3, a number of deals generating more than $1 million was up 46% over last year, and the number of $20 million-plus relationships we have continues to grow significantly. In the quarter, we renewed and expanded a 9-figure relationship with one of the largest financial services institutions in the world.
Block added that multi-cloud sales are also picking up.
Marc Benioff, co-CEO and chairman, talked up Einstein, a key upsell opportunity for Salesforce, and said artificial intelligence was being added throughout the portfolio. Benioff said: "All of our products getting smarter having Einstein built-in and Einstein is at the heart of the Customer Success Platform."
The company said its Sales Cloud continued to be the biggest revenue generator with third quarter revenue of $1.02 billion. Americas revenue was 71 percent of the total sales pie in the third quarter.