salesforce-tops-forecasts,-raises-outlook-on-software-demand

Salesforce Tops Forecasts, Raises Outlook on Software Demand

(Bloomberg) — Salesforce.com Inc. topped analysts’ second-quarter revenue and profit estimates and raised its annual sales forecast, signaling robust demand for the company’s customer-relations software. Shares jumped more than 12% in late trading.

In the second quarter, which ended July 31, revenue climbed 29% to $5.15 billion. On average, analysts projected $4.9 billion. Profit before certain items was $1.44 a share; excluding an additional 58-cent gain from investments, that number would have been 86 cents a share. Analysts had predicted 67 cents.

Sales will be as much as $5.25 billion in the third quarter, the San Francisco-based company said Tuesday in a statement. Analysts, on average, estimated $5 billion, according to data compiled by Bloomberg. The company also boosted its revenue predictions for the full fiscal year.

Salesforce will soon be a component of the Dow Jones Industrial Average, highlighting its rise from upstart to cloud-software bellwether over the past 21 years. Chief Executive Officer Marc Benioff has kept the momentum going, in part through acquisitions that have given the company a broader portfolio of software. Increasingly, Salesforce has pursued growth by taking aim at markets led by Microsoft Corp.

Benioff also recently promoted Gavin Patterson, the former CEO of British telecom company BT Group Plc, to be chief revenue officer. Patterson is meant to help Salesforce pen major deals with international customers.

Shares soared as high as $244.50 in extended trading after closing at $216.05 in New York. The stock has climbed 33% this year.

Revenue from Sales Cloud, the company’s flagship product, increased 13% to $1.28 billion in the second quarter. The company leads the market for sales-tracking software, but growth rates have slowed over time.

Service Cloud sales climbed 20% to $1.3 billion in the recent period. The software maker offers this tool so companies can communicate with field employees and customers, an area where it faces competition from ServiceNow Inc., Zendesk Inc. and others.

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