Risk/Reward Rating: Negative
Salesforce reported Q2 fiscal 2022 earnings the evening of August 25, 2021. The results were greeted with a 5.4% stock rally the following morning. The intraday share price gain was reversed, and the stock finished up just 2.6% which is where it opened for trading on the day. All in all, the revenue results continue to be strong coming in at 23% growth compared to last year (21% excluding currency effects).
Growth Drivers
The growth was driven by the recent acquisitions of Tableau and MuleSoft which dominated the top ten largest customer wins in the quarter. Tableau was involved in nine of the top ten deal wins while MuleSoft was involved in eight of the top ten deals. Saleforce’s core Sales Cloud revenue grew 15% in the quarter which, while still respectable, is decelerating as hypergrowth is in the rearview mirror.
Growth Strategy Risks
Stepping back for a moment, Salesforce has created a mature and dominant position as the world’s #1 customer relationship management (CRM) platform evidenced by its use in over 150,000 companies. As CRM growth matures and slows, in recent years Salesforce has increasingly turned to acquisitions to maintain revenue growth.
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