Salesforce delivers another strong quarter with revenue growth of 25pc

Salesforce posted strong third-quarter earnings, with revenue up by 25 percent to $2.68 billion. The company also raised its full-year fiscal 2018 revenue guidance to range between $10.43 billion and $10.44 billion.

“In fact as the fastest growing enterprise software company ever to reach $10 billion, we are now targeting to grow the company organically to more than $20 billion by fiscal year 2022 and we plan to do that to be the fastest enterprise software company ever to get to $20 billion,” CEO and chairman Marc Benioff said.

Sales Cloud continues to be Salesforce's largest and flagship product and while it's reached nearly $1 billion in quarterly revenues, its growth has slowed down to 17 percent y/y, largely as expected. Here's the y/y growth rate of all of the products: Sales Cloud: 16.8 percent y/y growth, Service Cloud: 25.1 percent y/y growth, Platform and Other: 33.6 percent y/y growth, Marketing and Commerce Cloud: 40 percent y/y growth.

Salesforce's subscription and support segment reported $2.49 million in revenue in the third quarter compared to analyst estimates of $2.45 billion. The much smaller professional services segment reported just $193.7 million in revenue compared to analyst estimates of $201.4 million.

Salesforce's non-GAAP gross profit came in at $2.038 billion, up 25.6 percent. Additionally, gross margin expanded 40 basis points (bps) to 76.1 percent primarily owing to solid revenue growth that was partially offset by increased investment in infrastructure development including the expansion of the international data centers.

Non-GAAP operating expenses increased up 18.6 percent from the prior-year quarter to $1.601 billion. However, as a percentage of revenues, operating expenses decreased to 59.8 percent from 63 percent in the year-ago quarter. This was primarily because of efficient cost management.

Salesforce exited the reported quarter with cash and cash equivalents and marketable securities of $3.63 billion compared with $3.50 billion in the previous quarter. The company also provided an encouraging guidance for the fiscal fourth quarter and raised its outlook for the full year as well. For the fiscal fourth quarter, the company anticipates revenues in the range of $2.801-$2.811 billion.