By: Daniel Sparks
There’s little doubt about software-as-a-service company Salesforce.com ‘s (NYSE: CRM) strong momentum. The company’s fiscal second-quarter earnings release highlighted broad momentum across its subscription clouds, industry segments, and geographies. Further, Salesforce’s revenue growth has accelerated for two consecutive quarters, rising 27% year over year in Q2.
As investors dig into the numbers behind Salesforce’s impressive quarter, more insight about the company can be found in the company’s earnings call . In particular, management provided a close look at two hot areas of its business likely to help drive more strong growth in the coming years: Einstein and Salesforce’s core platform.
Salesforce chairman and Co-CEO Marc Benioff. Image source: salesforce.com.
1. Einstein: A key catalyst
Salesforce’s Einstein assistant — the artificial intelligence (AI) component of Salesforce’s platforms — continues to become increasingly integral to the company’s cloud offerings.
“I don’t think that there is a more successful business implementation of artificial intelligence than Einstein,” said Salesforce CFO Mark Hawkins. Einstein has become key to salesforce.com’s software-as-a-service offerings, adding value to its core Salesforce platform, as well as its sales, service, marketing, and commerce clouds. As Hawkins explained:
You can see how Sales Cloud Einstein or Service Cloud Einstein or even in the Marketing Cloud, help transform the customer experience. Probably the most powerful is our commerce cloud. When [customers turn Einstein on in the commerce cloud], they see double-digit revenue growth above what they were already experiencing.
Now providing over 3 billion predictions and insights every day across salesforce.com’s platforms, AI has morphed into a key driver for the company.
2. Strong growth from Salesforce’s core platform
While Salesforce’s continued momentum in its service cloud was impressive during the quarter, with service cloud revenue growing 27% year over year, the company’s main Salesforce platform continued to deliver robust growth, too.
The company’s “salesforce platform and other” cloud service offering saw revenue jump 54% year over year during the quarter, benefiting from the company’s recent acquisition of Mulesoft . But even when backing out the additional sales generated during the quarter from Salesforce’s $6.5 billion acquisition, core platform revenue increased 32% year over year, management said during the call.
“Our core platform business is very strong,” said Salesforce co-CEO Keith Block. The co-CEO said its developer platform (Heroku), its security tools (Salesforce Shield), analytics, and the overall capability of its core platform are all contributing to Salesforce platform growth. He continued:
These are all growth drivers and difference makers for our customers to just extend the platform. And we’ve had a great deal of focus and energy on this topic and we’ve executed incredibly well. I think you’re just gonna continue to see that happen.
Considering these two catalysts alongside Salesforce’s accelerated growth rate for overall revenue, management’s outlook for full-year revenue to rise 25% year over year, and the company’s broad-based momentum, investors have plenty of reason to expect more strong growth.