There has been a steady increase in the demand for customer relationship management solutions. It is estimated that a significant number of enterprises switched to cloud-based solutions last year, which bodes well for Salesforce. The tech firm has been betting heavily on the popularity of Customer 360, a unique product that tracks customer information in a comprehensive manner.
Growing Client Base
Salesforce is a market leader in enterprise application software, with a rapidly growing client base. The company keeps pursuing strategic partnerships and innovates its product line constantly. That makes its products attractive to clients across the globe, including public sector entities.
Headwinds
Having said that, rising competition remains a challenge for Salesforce, especially from tech giants like Oracle (ORCL) and Microsoft (MSFT). Another headwind is the pressure on margins from rising costs, mainly due to investments in product development. The bottom-line might be impacted by unfavorable exchange rates also.
Looking Back
All the four business segments registered double-digit revenue growth in the third quarter, as they did in the first two quarters of the year. As a result, adjusted earnings climbed 23% year-over-year to $0.75 per share and topped the Street view. Contributions from Tableau, the data visualization software firm that joined the Salesforce fold in a $16-billion deal last year, should add to revenue growth in the fourth quarter.
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Salesforce’s stock gained about 20% in the past twelve months and 17% since the beginning of the year, outperforming both its peers and the general market. The shares reached an all-time high of $195 this week, before withdrawing to the pre-peak levels in the last session.