Denis Balibouse/Reuters
- On Tuesday, Salesforce beat Wall Street’s expectations and reported a revenue of $3.74 billion, up 24% from last year.
- On Wednesday, Salesforce’s stock was up 5%.
- Salesforce co-CEO and cofounder Marc Benioff acknowledged some concerns around a tech Cold War with China.
- Analysts believe Salesforce is safe from these pressures because it’s largely an American business and resists foreign clouds, and as more companies move to the cloud, Salesforce will continue to have plenty of growth opportunity.
- Read more on the Business Insider homepage.
Despite the uncertainties roiling global markets because of the trade war, Wall Street thinks Salesforce is a safe choice in the software market and that it’s poised to grow even more.
Salesforce expanded its top-line 24% year-over-year, generating revenue of $3.74 billion during its most recent quarter, the company reported this week. The results beat analyst expectations and sent Salesforce shares up 5%, or $7.63, on Wednesday.
Analysts credited some of the upside to positive results from the MuleSoft acquisition and its growth in government and European businesses.
While Salesforce acknowledged that there was some anxiety around the trade situation, investors seem to believe the company is less vulnerable than others to the tariffs and other risks of the escalating tech Cold War between the US and China.
"Salesforce is more insulated than the overall technology sector when it comes to President Trump’s trade policy with China, which has been a major point of emphasis for uncertainty and volatility in the overall market," Brian Pirri, the principal at New England Investment and Retirement Group, wrote in a note to investors.
The UBS analyst Jennifer Lowe wrote in a note that Salesforce "isn’t seeing any impact on results today."
‘An ocean liner surrounded by speed boats’
As Salesforce seeks to maintain its healthy revenue growth rates, a bigger threat than the trade war may be the rising competition. From Microsoft, Oracle, and SAP to a crop of fast-growing startups, Salesforce’s business is under siege on many fronts.
Rebecca Wettemann, the vice president of research at Nucleus Research, said Salesforce may face some competition from Microsoft, but it has also done well in making its artificial-intelligence technology accessible to new users.
"Salesforce’s ability to rapidly productize and make things accessible for customers to use is a key part of their success," Wettemann told Business Insider. Marty Wolf, the founder and president of Martinwolf, echoed the sentiment, describing Salesforce as "an ocean liner surrounded by speed boats."
And with so many businesses shifting their operations to the cloud, the market is huge, analysts say.
Pirri estimates that it’s possible that Salesforce’s revenue can double in the next four years, as there are opportunities through acquisitions, expansions, and acquisitions with tech giants like Amazon and Google.
See Also:
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- $13 billion identity company Okta rose as high as 12% the day after reporting earnings, and Wall Street says it’s a result of ‘excellent momentum’
Source: Business Insider – rmchan@businessinsider.com (Rosalie Chan)