Shares of Salesforce.com Inc. (NYSE: CRM) were up 24% in afternoon hours on Wednesday, a day after the company reported solid results for the second quarter of 2021. Revenues grew 29% to $5.15 billion and EPS rose triple-digits to $1.44, beating market projections. The stock has gained 64% since the beginning of this year and 51% over the past three months.
Subscription and support revenues increased 29% year-over-year while Professional services and other revenues rose 23%. The company’s cloud business witnessed strong growth in the quarter with Sales Cloud growing 13% and Service Cloud increasing 20%. Platform and Other rose 66% while Marketing and Commerce grew 21%. The company also saw strong growth across all its regions.
The quarterly performance benefited from new business generation and higher license revenue and also from better-than-expected revenue attrition. Looking ahead over the next one to two years, the company believes it is important to make strategic investments to position itself for growth in this new digital remote work environment.
Service Cloud helps companies deliver faster and personalized customer service and support. It provides a field service solution that helps connect employees through one centralized platform and allows to schedule, track and manage work in an efficient manner.
Service Cloud delivered a record performance in the second quarter with strong revenue growth. The application is growing at a fast rate on all fronts and is now bigger than Sales Cloud as the company continues to make new innovations. In the past six months, the use of messaging channels on the platform grew over 600%, and conversations hit around 19 million per day during the quarter.
Commerce Cloud helps in improving customer experience across all points of commerce including mobile, web, social and store, and helps in driving higher engagement, conversion and revenue.
During the quarter, Salesforce saw a year-over-year growth of over 100% in GMV, which reflects the broad digitization of commerce. The company has an advantage as it provides both B2C Commerce and B2B Commerce.
“One is, we do both B2C Commerce and B2B Commerce, and I think that when I talk to customers, it’s really about all of their channels, it’s direct to consumer channels, it’s their warehousing, it’s their partnerships and we’re really the one platform that can do both.”- Bret Taylor, Chief Operating Officer
The integration of Commerce Cloud with solutions such as Order Management and Service Cloud, which are part of Customer 360, also helps in digitizing and improving the customer experience and this has become increasingly important in the current digital work-from-anywhere environment.
Salesforce raised its fiscal year 2021 revenue guidance to $20.7-20.8 billion, representing a growth of around 21-22%. The guidance includes approx. $100 million of revenue from the Velocity acquisition. For the third quarter of 2021, revenue is expected to be $5.24-5.25 billion, reflecting approx. 16% growth.
For fiscal year 2021, GAAP diluted EPS is expected to be $3.12-3.14 while adjusted EPS is estimated to be $3.72-3.74. For Q3 2021, GAAP EPS is projected to be $0.03-0.04 while adjusted EPS is expected to be $0.73-0.74.
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