Salesforce’s Quarterly Sales Jump on Corporate Spending

(Bloomberg) -- Salesforce.com Inc., the top maker of cloud-based customer-relations software, posted a strong gain in quarterly sales and boosted its forecast for annual revenue, a sign businesses have accelerated spending and are buying a broader array of products added through acquisitions.

In the second quarter, which ended in July, revenue rose 23% to $6.34 billion, the San Francisco-based company said Wednesday in a statement. The average analyst prediction was $6.24 billion. Profit rose to $1.48 a share, topping the average estimate of 92 cents. Sales in the current fiscal year will be as much as $26.3 billion, while analysts on average were projecting $26 billion.

Spending on technology software is picking up as companies restart plans and projects halted by the pandemic, boosting demand for Salesforce’s programs that manage relationships with customers and handle other business tasks. Chief Executive Officer Marc Benioff’s acquisition strategy is also paying off, with more customers augmenting their Salesforce contracts by scooping up products from recently added companies such as data-visualization software maker Tableau and MuleSoft, which connects applications.

“People are starting to spend again, particularly in high-tech,” said Pat Walravens, an analyst at JMP Securities. “There is this point of view of, ‘Covid is not over but we have to begin reinvesting in the initiatives that differentiate us.’”

The spread of the delta variant of Covid-19 hasn’t derailed spending, but has convinced companies they need to update and expand their use of technology, Salesforce President and Chief Operating Officer Bret Taylor said. 

“With the delta variant it’s made it more obvious that this all-digital, work-anywhere environment is something we are going to be in for a while,” Taylor said in an interview. “We are not shutting down the economy. We’re investing; companies are investing.” Taylor also noted that nine of the company’s 10 biggest deals last quarter included products from Tableau and eight included those from MuleSoft. 

Profit in the fiscal third quarter, excluding certain items, will be 91 cents to 92 cents a share, Salesforce said. Analysts on average projected 83 cents, according to data compiled by Bloomberg. Revenue will be as much as $6.79 billion, compared with an estimate of $6.66 billion.

Shares of Salesforce rose 1.7% in extended trading after closing at $260.85 in New York. The stock has gained 17% this year.

Salesforce last month completed the acquisition of Slack Technologies Inc. for $27.7 billion, a deal meant to fuel sales growth of more than 25% a year. The transaction gave Benioff another product to hawk to customers -- a popular enterprise chat program that’s been used to help employees communicate and collaborate, especially during the pandemic. Still, Slack faces increasing competition from Microsoft Corp.’s rival Teams program, and it fell behind companies like Zoom Video Communications Inc. at providing videoconferencing software early in the lockdowns.

The company is scaling back plans for the in-person portion of its Dreamforce conference in September, Taylor said, and will provide more details in an update tomorrow. Salesforce does still plan to have “hundreds” attend the Dreamforce keynote in San Francisco in person. In May, the company announced plans to have thousands attending the show in San Francisco, New York, London and Paris, a sign of optimism at a time when regions seemed to be emerging from the pandemic.