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Salesforce Growth Continues Despite Lack of Acquisitions

Published on .

Outside Salesforce in San Francisco.
Outside Salesforce in San Francisco. Credit: JasonDoiy/iStock

Salesforce has raised its revenue forecast for the fiscal year, showing confidence that its expanded lineup of cloud-based software will continue to attract new business.

The company projected annual sales of as much as $10.4 billion. Analysts, meanwhile, estiamted on average $10.3 billion in sales.

The San Francisco-based company is pouring money into marketing tools, artificial intelligence and e-commerce services in the hopes of bolstering growth. Chief Executive Officer Marc Benioff -- a longtime advocate of cloud-based software for businesses -- is trying to find new ways to lure customers away from rivals such as Oracle and Microsoft.

In October of last year, Salesforce made a splash of a purchase when it acquired data-management platform Krux for $700 million. The company also made a pivot recently to focus on agencies, brands versus businesses that cater to other businesses. Salesforce's Marketing Cloud, which competes with category leaders like Adobe, is on track to top $1 billion in revenue for the first time this year.

Revenue climbed 26% to $2.6 billion in the fiscal second quarter, the company said Tuesday in a statement.

"We had a beat and a raise," says Mark Hawkins, the company's chief financial officer. "We're able to invest in the future. We're able to invest in the long-term success of the company."

Revenue in one of the company's key new areas, the marketing cloud business, gained 57% to $317 million in the quarter ended July 31, about the same growth rate as the previous period. Sales rose 17% to $886 million for its central business in tools for managing customer relationships.

The company is the clear leader in the market, according to research outfit International Data Corporation. In 2016, Salesforce was No. 1 worldwide with 18% share, the research firm said. Oracle was No. 2 with 9.4% and SAP SE had 7.2%.

In the current period, Salesforce said revenue will be as much as $2.6 billion. Analysts on average estimated $2.6 billion.

While the company has continued spending, the pace of acquisitions has slowed compared with last year when Salesforce closed or announced deals valued at more than $4 billion. They included companies such as Metamind, which assisted in the company's push into artificial intelligence services, and Demandware, which added capabilities for e-commerce.

-- Bloomberg News

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