2 Big Surprises In The Salesforce Q2 Print

Even as investors jumped ship on what some consider disappointingly steady guidance, KeyBanc Capital Markets was pleasantly surprised by salesforce.com, inc. CRM’s quarterly results.

For one, Sales Cloud grew at its strongest rate in two years, with revenue coming in 17 percent higher year-over-year against last quarter’s 14-percent growth.

This metric was compounded by accelerated gains in billed and unbilled deferred revenue. Salesforce posted 29-percent annual growth in this area against a three-year average of 27 percent.

Together, the two categories contributed to total revenue growth of 26 percent and a narrow consensus beat.

“Salesforce's run-rate exceeded $10 billion for the first time, validating its marquee role as one of the few software franchises to reach this level,” KeyBanc wrote in a Wednesday note.

The analysts were further encouraged by improvements in operating margins and fundamentals, the latter of which inspired a $120 million increase in revenue estimates.

“Accelerating growth across a number of different metrics this quarter is further evidence that Salesforce is capitalizing on its potential to become the modern digital platform for large B2B and B2C enterprises,” the firm wrote.

KeyBanc maintained an Overweight rating on the stock with a $108 price target.

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