Salesforce's Q2: Nine key questions

The second half outlook will be the primary focus following Salesforce's second quarter results. A sales reorg, early traction from an Oracle partnership and the future of the company's market cloud are top issues.
Written by Larry Dignan, Contributor

Salesforce.com is expected to report a largely in line second quarter, but much of the focus will revolve around the company's second half, sales efforts and overall strategy around a partnership with Oracle and potential for its marketing cloud.

Is the Oracle-Salesforce bromance starting to pay off?

Wall Street is expecting Salesforce to report second quarter earnings of 7 cents a share on revenue of $939.2 million.

Among the notable items in the quarter that will be used to gauge Salesforce's second half.

  • How's demand shaping up going forward? Workday's results show a secular rise in cloud software. However, Salesforce is bigger and may see the sales cycles get longer just like Oracle and SAP have seen.
  • Piper Jaffray analyst Mark Murphy recently interviewed 11 cogs in the Salesforce ecosystem and the consensus is that Service Cloud is landing big deals in the 8-figure range. How far can Service Cloud carry the company?
  • How is the integration and execution going with the Salesforce-Oracle partnership? Murphy's homework indicates that the sales friction has been minimal. Salesforce has been incentivizing sales of Oracle HCM to go along with the company's wares.
  • What's the innovation picture? The general theme for Salesforce right now is that it has enough categories and products to sell. The focus now is to gain share and grow. Will that focus on sales growth hurt bets on the future?
  • How about that sales reorg? Salesforce brought in Keith Block, an Oracle alum, to be president and vice chairman. The goal: Bring a specialized enterprise sales model to the company so it can focus on industries. JMP Securities analyst Patrick Walravens noted that Block is bringing in more sales talent.
  • How's ExactTarget and Salesforce's marketing cloud doing? Salesforce could turn into a Marketo killer, but early word is that the marketing cloud needs some features. Salesforce may be a year or so away from really working the ExactTarget deal. The general consensus is that marketing cloud hasn't been so hot.
  • Can Salesforce run with its marketing cloud development window? Oppenheimer analyst Brian Schwartz said:

We think salesforce.com has probably a 12-18 month window before the other large software vendors (Oracle, SAP, IBM, Adobe) complete their suites of marketing products in a SaaS-based architecture and alter the evolution of marketing software being consumed mostly from a marketplace full of best-of-breed point vendors to software being consumed predominantly from a few, large suite vendors.

  • What's the health of the Force.com ecosystem and are third party software vendors creating a virtuous cycle for Salesforce? Salesforce has stepped up its developer outreach.


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