FBR Capital: 'Passing SAP In Service Cloud Shows That Salesforce Can Compete With The Biggest Software Companies'

Shares of salesforce.com, inc. CRM opened strong on Thursday, up by over 5 percent, following better than expected first quarter numbers posted by the company after the closing bell on Wednesday.

Samad Samana, vice president at FBR Capital Markets, was on CNBC recently to weigh in on salesforce.com’s earnings.

Revenue Growth + Margin Expansion = Applause From Investors

“Salesforce.com is the marquee company in the SAS (software as service) space,” Samana began. “And now you have seen them be able to deliver 20 percent plus revenue growth and pair that with tremendous margin expansions as well. And we think investors are applauding that this morning.”

Overtaking SAP

Samana was asked if Salesforce’s service cloud replacing SAP SE (ADR) SAP to be the market leader in that space is a big moment for salesforce.com. He replied, “We think it’s crossing a big bridge for the company, right? They are well established and Salesforce automation, which is the core product that they have built the business on, but now you look at them see great success in a second product area.”

“And really as we think about the long-term market opportunity, service cloud can be even bigger potentially than what the core product has been. So, as investors think about what drives that next leg of growth as they try to go to $10 billion of revenue. Service cloud is going to play a key role and passing SAP shows that they can compete with the biggest software companies in the world,” Samana said.