Salesforce.com Inc.’s Marketing and Commerce Cloud software suite, which include its B2B and retail ecommerce software platforms, produced a 31.7% increase in revenue to $644 million for the fiscal 2020 third quarter ended Oct. 31, the company says.
By comparison, the company’s traditional and still largest product suite, its Sales Cloud customer relationship management software, increased 14.5% in the quarter to $1.17 billion. Its Service Cloud customer service software rose 24.3% to $1.14 billion.
Salesforce attributes its overall growth partly to demand for its integrated technology platform that includes its new Tableau web analytics platform, its Einstein artificial intelligence software, and its Mulesoft data integration technology, which together support what Salesforce calls its Customer 360 method of managing data on customer activity and products to personalize the commerce experience its clients provide to their own customers.
Marc Benioff, chairman and co-CEO, said on a conference call with investment analysts last week that its Customer 360 strategy is showing results for both retail and B2B companies. “Just look at how Customer 3 60 fueled our customers’ growth during Cyber Week,” the week after the Thanksgiving holiday, he said on the call, according to a transcript from Seeking Alpha. He said Commerce Cloud processed more than 30 million orders that week, up 27% over the same week a year earlier, and that it “powered more than 614 million retail site visits, up 17%.”
Profit forecast falls short
But Salesforce gave a profit forecast that fell short of Wall Street’s estimates, signaling that the software maker’s big-ticket acquisition of Tableau and global expansion have spurred rising costs.
Earnings, excluding some items, will be 54 cents to 55 cents a share in the current quarter, short of analysts’ average estimate of 62 cents. Shares declined about 2% in extended trading.
Still, the fiscal third quarter was notably strong, the company’s first-quarter of more than 30% year-over-year growth since July 2014.
Benioff and co-CEO Keith Block have made acquisitions a key part of the CRM software company’s strategy to increase sales, highlighted by the purchase of Tableau Software Inc., which generated $1.15 billion in revenue last year making analytics tools. The company also has forged partnerships with major cloud vendors such as Microsoft Corp. and Amazon.com Inc. to make its software more ubiquitous.
Shares declined to a low of $156.25 in extended trading after closing at $161.57 in New York. The stock has climbed 18% this year.
Profit, excluding some items, was 75 cents a share in the fiscal third quarter. Analysts, on average, projected 66 cents. Expenses were up 37% to $3.31 billion. The company held its annual user conference, Dreamforce, in November. Salesforce calls the event the world’s largest software conference, with 171,000 registered attendees this year.
CRM growth rate slows
The company’s full-time workforce increased almost 39% from a year earlier to 47,677 as of Oct. 31, Salesforce said.
With its flagship Sales Cloud CRM software, Salesforce still leads the market for sales-tracking software, but growth rates have slowed down, prompting the company to expand in other areas.
In the customer service market, Salesforce provides its Service Cloud software so companies can communicate with field employees and customers, a space where it faces increased competition from ServiceNow Inc. and others.
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