(Bloomberg) — Salesforce.com Inc., the top maker of cloud-based customer-relations software, posted a strong gain in quarterly sales and boosted its forecast for annual revenue, a sign that businesses have accelerated spending and the company’s acquisitions are paying off as customers add a broader array of products.
In the second quarter, which ended in July, revenue rose 23% to $6.34 billion, the San Francisco-based company said Wednesday in a statement. The average analyst prediction was $6.24 billion. Profit rose to $1.48 a share, topping the average estimate of 92 cents. Sales in the current fiscal year will be as much as $26.3 billion, while analysts on average were projecting $26 billion.
Spending on technology software is accelerating as companies restart plans and projects halted by the pandemic, boosting demand for Salesforce’s programs that manage relationships with customers and handle other business tasks. Chief Executive Officer Marc Benioff’s acquisition strategy is also paying off, with more customers augmenting their Salesforce contracts by scooping up products from recently added companies such as data-visualization software maker Tableau, for data visualization, and MuleSoft, which connects applications.
“People are starting to spend again, particularly in high-tech,” said Pat Walravens, an analyst at JMP Securities. “There is this point of view of, ‘Covid is not over but we have to begin reinvesting in the initiatives that differentiate us.’”
Profit in the fiscal third quarter, excluding certain items, will be 91 cents to 92 cents a share, Salesforce said. Analysts on average projected 83 cents, according to data compiled by Bloomberg. Revenue will be as much as $6.79 billion, compared with an estimate of $6.66 billion.
Shares of Salesforce rose more than 2% in extended trading after closing at $260.85 in New York. The stock has gained 17% this year.
Salesforce last month completed the acquisition of Slack Technologies Inc. for $27.7 billion, a deal meant to fuel sales growth of more than 25% a year. The transaction gave Benioff another product to hawk to customers — a popular enterprise chat program that’s been used to help employees communicate and collaborate, especially during the pandemic. Still, Slack faces increasing competition from Microsoft Corp.’s rival Teams program, and it fell behind companies like Zoom Video Communications Inc. at providing videoconferencing software early in the lockdowns.
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