Salesforce projects revenue that tops analysts’ estimates

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(Bloomberg) Inc. gave a revenue forecast that topped Wall Street’s estimates, signaling the maker of cloud-based applications will continue to see rapid growth due to an expanding product lineup and its latest acquisitions.

Revenue will be as much as $4.45 billion in the period ending in October, the San Francisco-based company said Thursday in a statement. Analysts projected $4.18 billion, according to data compiled by Bloomberg.

Chief Executive Officers Marc Benioff and Keith Block have charted a new path for the market leader in software for managing customer relationships. This month, the company closed its biggest deal ever, buying Tableau Software Inc. for $15.3 billion and announced an agreement to acquire ClickSoftware Technologies Inc. for $1.35 billion. The Tableau purchase will take Salesforce into the analytics market and help it maintain a torrid pace of growth, even as the company turns 20 years old.

Adjusted profit will be 65 cents a share to 66 cents a share in the current period, in line with analysts’ estimates. Salesforce also increased its annual revenue forecast to a range of $16.75 billion to $16.9 billion from $16.45 billion to $16.65 billion.

“Their guidance for the year, which includes Tableau, came in above the Street’s expectations,” said Pat Walravens, an analyst at JMP Securities. “It’s looking pretty good.”

Shares rose about 7% in extended trading after closing Thursday at $148.24 in New York. The stock has climbed 8.2% this year.

Tableau will continue to be operated as a separate brand within Salesforce. When the company announced the acquisition, Benioff said that Seattle, where Tableau is based, will become the site of Salesforce’s second headquarters.

In addition to deal-making, the software maker has expanded internationally in an effort to grow sales by more than 20% each quarter. Salesforce announced in July that it would partner with Alibaba Group Holding Ltd. to offer its cloud-based applications in China, even amid a trade war between that country and the U.S. Revenue from the Asia Pacific region increased 26% in the fiscal second quarter, the company said.

Sales in the fiscal second quarter increased 22% to $4 billion. Analysts, on average, estimated $3.95 billion. Profit, excluding some items, was 66 cents a share, compared with analysts’ average projection of 47 cents.

Daniel Elman, an analyst at Nucleus Research, said investors lowered their expectations leading into the quarter amid a general slowdown in the technology sector and concern that Tableau wouldn’t fold into the company smoothly.

“One of the things they harp on about at their conferences is that they are able to keep growing at this pace,” Elman said. “They showed they are still able to perform and meet the benchmarks they set.”

Revenue from Sales Cloud, the company’s flagship product, grew 13% to $1.1 billion in the quarter. The company leads the market for sales-tracking software.

Service Cloud sales increased 22% to $1.1 billion. The software maker has relied more on this product for growth, taking advantage of businesses’ need for new tools to communicate with the customers.

Net income was $91 million, or 11 cents a share, compared with $299 million, or 39 cents a share, a year earlier.

Bloomberg News