Healthcare, Growth At A Reasonable Price, Tech, Growth
Contributor Since 2009
Marty Chilberg is a seasoned financial professional with over 30 years of C-Suite, board, consulting and advisory experience. He began his career as a certified public accountant (CPA). He moved to Silicon Valley in 1981 to begin his career in the software industry, working for Atari, Daisy Systems, Symantec and Visio. He took Symantec and Visio through their initial public offerings as their Chief Accounting Officer and Chief Financial Officer, respectively. The past ten years have been focused on emerging macro investing themes including Cloud and Genomic Medicines.
Salesforce.com (CRM) is scheduled to release their July 2017 earnings on Tuesday August 22nd 2017. In many ways, Salesforce has been the poster child for the SaaS cloud movement (brief history link). Lately they have been targeted by a number of competitors including Oracle (ORCL) and Microsoft (MSFT). As a result, I expect this quarter to provide some insight into whether this focus has had the effect of eroding or energizing Salesforce.
As can be seen in the following chart, Salesforce revenue has maintained a solid growth trajectory.
Platform revenues do not appear to be showing any weakness as predicted by Gartner for many of the IaaS platform providers. Last quarter Salesforce delivered 32% growth which was slightly down from the prior quarter. The combined SaaS offerings show a similar modest decline that can be attributed to their size as opposed to competition. Oracle reported annual SaaS growth of 67% in their recent release, but much of that is acquired growth. Organic growth was 25% for their cloud business. Microsoft reported a stellar quarter but with limited insight into their Dynamics 365 revenues it remains challenging to ascertain any impact to Salesforce.
A few metrics worth watching in addition to revenue trends include:
Salesforce provided revenue guidance of $2.51 to $2.52 billion for this quarter on their last earnings call. The current consensus is $2.51 billion which is 23.2% growth from the prior year.
Disclosure: I am/we are long MSFT.
Additional disclosure: I may go long any of the companies included in this blog in the next 72 hours.