Salesforce.com (CRM) is trading up to new all-time highs today after reporting strong Q4 (Jan) results/guidance last night. In case you're not familiar with CRM, the company offers cloud-based enterprise software with a focus on customer relationship management (hence the ticker CRM). Salesforce is number one today in CRM, which is the fastest growing segment of the enterprise software industry.
Its overall goal is to help its customers transform by empowering them to connect with their customers in new ways. It platform includes sales force automation, customer service and support, marketing automation, digital commerce, community management, analytics, application development, Internet of Things (IoT) integration and collaborative productivity tools. Here are some of its cloud service offerings:
- Sales Cloud: This was CRM's first offering and continues to be the largest contributor to revenue. It enables companies to store data, monitor leads, forecast opportunities, gain insights etc. Customers use Sales Cloud to grow their sales pipelines, improve sales productivity, simplify complex business processes and close more deals.
- Service Cloud: This is CRM's second largest contributor to revenue. It enables companies to deliver smarter, faster and more personalized customer service and support. Customers use the Service Cloud to connect their service agents with customers anytime and anywhere, on popular devices and across multiple channels — phone, email, chat, live video, SMS, self-service web portals, social networks etc. In addition, Service Cloud also offers a field service platform that enables companies to connect agents, dispatchers and mobile employees through one centralized platform, through which they can track and manage jobs in real-time.
- Marketing Cloud: This enables companies to optimize one-to-one customer interactions across email, mobile, social, web and connected products. With the Marketing Cloud, customer data can also be integrated with the Sales Cloud and Service Cloud in the form of leads, contacts and customer service cases to give companies a complete view of their customers.
- Commerce Cloud: This empowers brands to deliver a comprehensive digital commerce experience across web, mobile, social and store. It also offers mobile-first point-of-sale and store operations capabilities that increase store personnel effectiveness, connecting the physical and digital commerce experiences.
- Community Cloud: This allows companies to engage and collaborate directly with groups of people by giving them access to relevant information, apps and experts.
- IoT Cloud: This enables companies to harness the power behind billions of connected devices to derive new levels of customer insights. With those insights, companies can sell, service and market to their customers in smarter, more personalized ways.
Turning to the Q4 (Jan) results, non-GAAP EPS rose 25% YoY to $0.35, which was above prior guidance of $0.32-0.33. Revenue rose 24.3% year/year to $2.85 bln, above prior guidance of $2.80-2.81 bln. Subscription and support revenue grew 26% YoY to $2.66 bln while Professional services revenue grew 7% to $196 mln.
The guidance was quite strong as well as CRM expects Q1 (Apr) non-GAAP EPS of $0.43-0.44 and revenue of $2.925-2.935 bln. Both are above market expectations and the EPS guidance is well above market expectations. For all of FY19, CRM expects non-GAAP EPS of $2.02-2.04 and revenue of $12.60-12.65 bln. Both are also above market expectations with EPS being well ahead.
On the call last night, CRM said it's seeing accelerating demand and strong execution coming from every industry and every region and every cloud across all of its customer segments. More than ever, CEOs are coming to Salesforce because CRM fuels their growth/transformation. Of note, CRM says its strategic relationships are deeper than ever. In fact, CRM has nearly twice as many $20+ mln relationships than it did just one year ago. Of note, to get a sense of how quickly they are growing, CRM closed more new business in Q4 this year than it did in the entire fiscal year of 2014. That is just four short years ago and CRM says it speaks volumes to the momentum that it now has in the market. CRM is closing more big deals every quarter.
In sum, this was another strong earnings report for CRM, capping off an impressive year when it hit $10 bln in annual sales for the first time. No other enterprise software company has achieved this scale faster than CRM and management wants to be the fastest to $20 bln as well. The company seems to be clicking on all cylinders right now as demand is robust.