Salesforce.com Sees a Path to $30 Billion in Revenue
Salesforce.com (NYSE: CRM) reported fiscal 2019 fourth-quarter results on March 4. The tech giant surpassed $13 billion in annual revenue faster than any other enterprise software company in history, and management expects to double revenue once again by 2023.
Salesforce.com results: The raw numbers
Metric | Q4 2019 | Q4 2018 | Year-Over-Year Change |
|---|---|---|---|
Revenue | $3.60 billion | $2.87 billion | 26% |
Operating cash flow | $1.33 billion | $1.05 billion | 27% |
Adjusted EPS | $0.70 | $0.47 | 49% |
Data source: Salesforce.com Q4 2019 earnings release.
What happened with Salesforce.com this quarter?
Salesforce continues to gain share in the global customer relationship management market. The company's revenue market share rose to 20.3% in the first half of 2018, according to intelligence firm IDC. That's more than Salesforce's three closest competitors combined.
Salesforce is also expanding its service offerings. Its $6.5 billion acquisition of MuleSoft has made it the leader in data integration solutions. The combined company also holds leadership positions in marketing, service, and sales software. Revenue in these segments rose 54%, 34%, 22%, and 11%, respectively, in the fourth quarter.
"As companies of all sizes turn to Salesforce, we're enabling them to put the customer at the center of their digital transformation through our intelligent Customer 360 platform," chairman and co-CEO Marc Benioff said in a press release. "I've never been more excited about the opportunity ahead."
Benioff's optimism appears well founded. Salesforce's unearned revenue -- essentially business that's been booked but not yet fulfilled -- jumped 22% to $8.56 billion. And remaining performance obligation, which represents future revenue that's under contract but not yet recognized, leapt 25% to $25.7 billion. Both figures suggest that Salesforce is likely to enjoy robust growth in the quarters ahead.
Among companies of its size, Salesforce's revenue growth is in a class of its own. Image source: Getty Images.
Looking forward
Still, Salesforce's guidance for the first quarter of fiscal 2020 represents a slight deceleration from the fourth quarter of 2019, though the company has a history of underpromising and overdelivering.
Management expects first-quarter revenue to rise by 22% to approximately $3.68 billion. GAAP and non-GAAP earnings per share, meanwhile, are projected to be $0.10 to $0.11 and $0.60 to $0.61, respectively.
Salesforce also raised its full-year revenue forecast to a range of $15.95 billion to $16.05 billion, up from $15.9 billion to $16 billion.
Additionally, the software titan announced some aggressive long-term growth targets.
"Our relentless focus on delivering innovation and customer success has fueled our growth and solidified our leadership in the enterprise," co-CEO Keith Block said. "This is just the beginning, which is why we're now targeting $26 to $28 billion in revenue by FY23 -- organically doubling our revenue again in the next four years."
Benioff was even more optimistic during an interview with CNBC. "I see $30 billion right around the corner," Benioff said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Salesforce.com. The Motley Fool has a disclosure policy.
