For Salesforce, The Sum Is Worth More Than The Parts

Clear Line To $20 Billion Revenues

Analysts Joel Fishbein, Edward Parker and Abhinav Kapur noted that the company continues to deliver on its broadening platform strategy. The analysts indicated the ongoing strength in the company's core CRM product is being augmented by high growth in marketing, platform and service, driving plenty of upsell opportunities, including the new Einstein AI engine.

BTIG is confident that the company's product portfolio, helped by increasing contribution from recent acquisitions, can drive low-to-mid-20s growth on a consolidated basis. This, according to the firm, gives visibility to $20 billion in revenues.

Q1 Review

The firm termed the company's first-quarter results as excellent and noted that the company raised its guidance for the third straight quarter. Specifically, the firm noted that billings and revenues came ahead of the consensus estimates, with strong results across all goes and clouds.

Among other metrics:

• Off-balance sheet deferred: Up 26 percent year over year.
• Sales cloud: Up 14.5 percent.
• Marketing cloud, excluding Demandware: 32 percent.

The firm noted that sales cloud continued to show nice growth even as it passed a $3.3 billion run rate. Additionally, the firm said momentum in digital transformation initiatives is starting to contribute to overall growth.

A Core Holding

"Salesforce should easily march past $10 billion in revenue this year and at this rate the road to $20 billion looks pretty clear," the firm opined.

"CRM should continue to be a core holding."

BTIG said its estimates do not change much, except for shifting some of the expenses from the third quarter to the fourth. The shift is to reflect the Dreamforce conference to be held later this year, the firm clarified.

BTIG maintains its Buy rating and $100 price target for the shares of salesforce.

At time of writing, salesforce was up 1.07 percent at $88.69.

Salesforce Remains A Favorite Among Cloud Stocks In 2017 2 Salesforce Q1 Initiatives Warmly Received By Customers _______ Image Credit: By Raysonho @ Open Grid Scheduler / Grid Engine (Own work) [CC0], via Wikimedia Commons