Salesforce.com (CRM, Financial) delivered a rock-solid performance in the second-quarter of 2015, driven by successful integration of its recently acquired ExactTarget’s product and services that helped the company to beat analysts’ estimates on both the top as well as bottom lines. In addition, Salesforce.com was pleased to observe a solid annual growth of 37% to $1.23 billion in its subscription and support division during the second-quarter as it rolled over more programs and services online, which are largely accessed through cloud computing network. These online accesses are creating a competitive advantage over its peers such as Oracle (ORCL) and SAP (SAP) who are seeing relatively a slow growth movement in their cloud computing networks.
Results and more
The San Francisco-based company during the second-quarter reported revenue of $1.36 billion, a rise of 38% from $957 million in the second quarter last year, beating the average analysts’ forecasts of $1.29 billion for the quarter. Also, its Non GAAP net earnings for the second-quarter came in at $0.13 per share beating the consensus $0.12 earnings per share expected for the quarter.
Looking ahead, the company for the third-quarter 2015 sees earnings of $0.12 to $0.13 per shares on the revenue of $1.36 to $1.37 billion that match the analysts’ estimates of $0.13 earnings per share on the revenue of $1.37 billion, considering the end point of the given guidance. Moreover, the Cloud computing giant has raised its full year guidance by approximately $30 million and remains on the track to deliver about 125 to 150 basis points improvement in its operating margin for the full year.
Guidance and strategies
Salesforce.com now expects its full year revenue to be in the range of $5.34 billion to $5.37 billion and its earnings per share is forecasted to range between $0.50 per share to $0.52 per share for the full year, which is in line with average analysts’ expectations of $0.51 earnings per share on the revenue of $5.34 billion. The company has raised its yearly guidance by approximately $170 million since it announced fiscal 2015 guidance in November last year that should certainly excite investors and shareholders, who intend to benefit from the stock.
Salesforce.com continues to enlarge its market of customer management software with some potential acquisition and partnerships such as RelatelQ, a data management company, ExactTarget, an email marketing provider and recently entered into fruitful partnership with Microsoft (MSFT) that should drive growth for its cloud computing online services and programs.
Microsoft and Salesforce.com are working actively to together develop business software products for enterprise businesses. Salesforce.com also plans to announce various new cloud offerings such as new version of its already existing salesforce1 at its Dreamforce, a conference that is scheduled to be held in October 2014.
More traction expected
Salesforce1 cloud solutions are gaining tremendous traction in the market as it offers incredible platform to its clients to run their business on their electronic gadgets such as mobile, smartphone and tablets. Salesforce1 also facilitates the number one platform for developing mobile applications. In fact, the company is observing remarkable growth in its customer base with its ISVs that helps the developers to build and deploy any app on Android, on iPhone, on iPad, on any tablet.
These solutions have been ranked number one solutions with innovative world-class enterprise capabilities in the mobile segment and should drive its growth going forward with new version of salesforce1 just around the corner. Salesforce.com enjoys one of the largest ecosystems with about 1.7 million developers who are exploiting its leading edge cloud infrastructure as the company has moved approximately 2000 mobile apps to its Salesforce1 solutions.
In addition, the company has recently unveiled ‘Service Cloud SOS’ under its customer service and support division that facilitates customized and personalized customer service within any mobile apps. Also, this customized service will enable the clients, customers and enterprises to develop their own mayday button that should assist building incredible capabilities in their own apps. This mayday button will be right to their customer service and support center.
Improving solutions
Besides, its marketing solutions are also gaining tractions as it time to times rolls over new updates. It recently launched a major update to its Salesforce Journey Builder that will enable the clients to customize or optimize the one-to-one interactions across multiple channels. Its Service Cloud SOS was ranked number one by IDC last month, while its digital marketing solutions were rated one of the top most solutions by Sera magazines last month.
Meanwhile, the company is seeing a resurrected atmosphere in its wearable segment as more and more customers are buying its wearables at a healthy rate. To sustain this momentum Salesforce.com has recently launched new Salesforce wear initiatives for its enterprise infrastructure. The company leads the wearable market and looks solid with the acquisition of RelatelQ that continues to integrate its expertise of advance machine enterprise and data science to its core platforms should drive growth for its wearable markets going forward.
Apart from these strategic moves, the company has also announced recently that it remains on track to inaugurate multiple data centers in Canada and Germany that should strengthen its cloud and national security in those regions. Salesforce.com has opened various new offices in Europe this year so far in an effort to expand its international business platform. The company is seeing improved business momentum across the world. It has solid growth of 36% in Europe while Asia accounted for 27% growth during the second-quarter. Further, the company expects similar trends in the second half of the year in Europe and making couple of potential planned investments in data centers that should certainly help the company to accelerate its growth momentum.
Conclusion
The company looks solid due to various potential investments and strategic partnerships that should fuel up its profitability in the coming years. The analysts have estimated CAGR of 28.17%, which is quite higher than average industry CAGR of 14.97% for the next five years, with current year CAGR of 48.60 % and 36.50% for the next year indicate both short as well as long term prospects for the stock. The company has total debt of $2.35 billion, which is well mixed by most measures, while its operating cash flow stands at 1.13 billion with free cash flow of 1.09 billion.
