Salesforce Raises Annual Forecast on Bigger Product Lineup

Salesforce raised its revenue forecast for the fiscal year, showing confidence that its expanded lineup of cloud-based software will continue to attract new business, according to Bloomberg.

While analysts said there may be some concerns about future revenue, the company projected annual sales of as much as $10.40 billion, with adjusted profit of $1.29 a share to $1.31 a share. Analysts on average estimated $10.29 billion in sales and earnings of $1.30 a share.

The company is pouring money into marketing tools, artificial intelligence and e-commerce services in the hopes of bolstering growth. CEO Marc Benioff, a longtime advocate of cloud-based software for businesses, is trying to find new ways to lure customers away from rivals such as Oracle and Microsoft.

Revenue climbed 26 percent to $2.56 billion in the fiscal second quarter, the company said in a statement. Profit, excluding certain costs, was 33 cents a share. Analysts projected adjusted profit of 32 cents on revenue of $2.52 billion.

Revenue in one of the company’s key new areas, the marketing cloud business, gained 57 percent to $317.1 million in the quarter ended July 31, about the same growth rate as the previous period. Sales rose 17 percent to $886.4 million for its central business in tools for managing customer relationships.

The company is the clear leader in the market, according to IDC. In 2016, Salesforce was No. 1 worldwide with 18 percent share, the research firm said. Oracle was No. 2 with 9.4 percent, and SAP SE had 7.2 percent.

In the current period, Salesforce said revenue will be as much as $2.65 billion. Analysts on average estimated $2.61 billion. Profit before certain items will be 36 cents to 37 cents a share, topping projections of 35 cents.

Salesforce’s unbilled deferred revenue, a closely watched measure that shows the amount of business under contract, but not yet recognized, climbed 30 percent from a year earlier to $10.4 billion. It increased 26 percent in the previous quarter.

While the company has continued spending, the pace of acquisitions has slowed compared with last year when Salesforce closed or announced deals valued at more than $4 billion. They included companies such as Metamind, which assisted in the company’s push into artificial intelligence services, and Demandware, which added capabilities for e-commerce.