Salesforce.com Inc., the largest seller of customer-management software, Thursday issued a fiscal third-quarter sales forecast that topped analysts’ estimates as the company takes a bigger share of spending with a push into marketing tools.
Sales for the period ending in October will be $1.05 billion to $1.06 billion, the company said in a statement. That compared with analysts’ average $1.04 billion estimate, according to data compiled by Bloomberg. Profit excluding some items will be 8 cents to 9 cents a share, compared with analysts’ average projection for 7 cents. Shares rose in extended trading and the company raised full-year guidance.
Chief Executive Officer Marc Benioff is adding online-marketing software to his lineup of sales and customer-support products as he seeks to expand beyond $4 billion in sales this year. Salesforce last month closed its $2.5 billion acquisition of ExactTarget Inc. – the San Francisco-based company’s biggest ever – to add tools for e-mail marketing by businesses.
“More and more IT budget dollars will flow to the chief marketing officer over time and Salesforce.com has decided to target that person,” said Steven Ashley, an analyst at Robert W. Baird & Co., who has an outperform rating on the shares, the equivalent of a buy. “Marketing generates leads and hands them to sales, then they become customers and need service.”
Shares of Salesforce rose as much as 8.7 percent in extended trading after closing 2 percent higher at $43.65 in New York. The stock has climbed 3.9 percent this year, trailing the 9.5 percent return of the Standard & Poor’s 500 Information Technology Index.
The company’s “current valuation does not give full credit to Salesforce’s status as the largest pure-play software-as-a- service vendor,” Brent Thill, and analyst at UBS AG, wrote in an Aug. 13 note to clients. The company “has shown a good track record of integrating acquisitions and providing execs of acquired companies with significant responsibilities,” he said.
For the fiscal second quarter through July, sales rose 31 percent to $957.1 million, compared with analysts’ average estimate for $938.9 million. Profit excluding some items was 9 cents a share, compared with analysts’ 7-cent projection.
Salesforce posted a net profit of $76.6 million, which included a $133.4 million tax gain. Analysts had predicted a $90 million loss.
Benioff is expanding Salesforce’s presence in online software that companies pay to use on an annual basis, getting regular updates and new features, instead of installing programs on personal computers and servers.
Salesforce raised its full-year sales forecast to $4 billion to $4.03 billion, from $3.96 billion to $4 billion.
In addition to ExactTarget, Salesforce has bought social- media marketing companies Buddy Media Inc. for $689 million last year, and Radian6 Technologies Inc. for $326 million in 2011. When Salesforce announced the ExactTarget deal in June, Benioff told analysts buying smaller companies was taking too long to tack on revenue.
Benioff is competing in the cloud-computing software market with companies including Oracle Corp., SAP AG and Workday Inc. Oracle CEO Larry Ellison in June hosted a conference call with Benioff as the companies mended fences. Salesforce signed a long-term deal to use Oracle’s software and Exadata computers, and Oracle began using Salesforce’s customer-management software. A former Ellison deputy, Benioff later became a competitor in in the customer-relationship software space.
Salesforce surpassed SAP this year as the top seller of customer-relationship management software, according to market researcher Gartner Inc. In June, Salesforce hired Keith Block, a former Oracle sales executive, as president and vice chairman.
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