Salesforce.com Inc.’s revenue forecast over the next few years is supported by customers who use more than one public cloud service and its subscription model, the customer-relations management software company told analysts Wednesday at its Dreamforce convention in San Francisco.
Salesforce CRM, -0.34% shares finished down 0.3% Wednesday at $158.33, after closing at an all-time high of $158.87 Tuesday.
At the company’s Investor Day after Wednesday’s close, Chief Financial Officer Mark Hawkins reiterated the company’s forecast of $21 billion to $23 billion in annual revenue in fiscal 2022, and for revenue of $13.18 billion this year, while analysts surveyed by FactSet expect $13.17 billion.
That march to $23 billion is powered, in part, by Salesforce customers who have data that is spread across multiple sources, Hawkins said. The CFO said that 38% of its customers are multicloud customers in that they have their data spread across multiple sources and clouds whether they be public or private. Of that 38%, Salesforce generates 92% of its revenue, Hawkins said, noting that multicloud customers spend 10 times more than their single cloud customers.
“This will power durable growth for years to come,” Hawkins said.
That works into Salesforce’s recent $6.5 billion acquisition of MuleSoft, which closed on May 2. MuleSoft uses application programming interfaces, or APIs, to help companies access or unlock data across legacy and mobile systems, and helps Salesforce power its Customer 360 product that allows it to gather customer data from a variety of sources and cloud platforms.
MuleSoft contributed a more-than-expected $122 million in revenue for the quarter, the company reported in its most recent earnings, adding it would not update its guidance for MuleSoft but would report its contribution to revenue in future quarters. Earlier in the year, Salesforce said MuleSoft would contribute $315 million to revenue for the year.
Organizations that use more than one cloud service is on the rise, often using the one cloud service as a backup in case the other goes down, according to Maribel Lopez, principal analyst at Lopez Research.
The way Salesforce structures it sales through subscriptions also supports the company’s confidence in its forecast, said Salesforce Deputy CFO David Havlek.
Havlek said that about 80% of the company’s revenue was under contract at the start of the year, and about 60% of revenue is under contract two years out.
On Tuesday after the market close, Chairman and Co-Chief Executive Marc Benioff delivered the convention’s opening keynote and highlighted its Siri-enabled Einstein Voice, following an earlier announcement that Salesforce was partnering with Apple Inc. AAPL, -0.80% Einstein uses artificial intelligence to provide predictions and recommendations based on a company’s business processes and customer data.
Salesforce shares are up nearly 55% for the year, compared with a 6.7% rise in the Dow Jones Industrial Average DJIA, -0.40% , an 8.7% gain in the S&P 500 index SPX, -0.33% and a 15.8% surge in the tech-heavy Nasdaq Composite Index COMP, -0.21%
In its last earnings report, Salesforce but its forecast fell short of the Wall Street consensus at the time. At last year’s Dreamforce, Salesforce had forecast revenue of $20 billion to $22 billion for fiscal 2022.
Last week, Microsoft fired a shot across Salesforce’s bow with new AI, mixed reality offerings, including an AI version of the Redmond, Wash.-based tech giant’s Dynamics 365 CRM software.
Of the 42 analysts who cover Salesforce, 38 have buy or overweight ratings, four have hold ratings and none have a sell rating, with an average price target of $169.42.
