On the other side of the busiest part of earnings season, there are still some intriguing tech companies that have yet to report their latest quarterly results. One of these companies is cloud-based customer relationship platform salesforce.com (CRM 3.44%), which has seen both fast-growing revenue and a surging stock price.
Shares of the software-as-a-service company have jumped 62% in the past 12 months and 37% year to date. Strong growth in its stock price has been fueled by heady double-digit revenue growth and repeated upward revisions to full-year revenue guidance.
Salesforce reports its fiscal second-quarter results after market close on Wednesday, Aug. 29. Here's an earnings preview.
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Lofty expectations
Going into its fiscal 2019 second-quarter results, Salesforce has a high bar to clear.
In its fiscal 2019 first-quarter results, Salesforce demonstrated strong momentum, reporting accelerating revenue growth that was well above management's guidance range for the quarter. Salesforce benefited during the period from 27% year-over-year growth in its subscription and support revenue, which represents the bulk of the software-as-a-service company's revenue. Salesforce's overall revenue increased 25% year over year to $3.01 billion.
But Salesforce isn't a top-line-growth-only tech stock. It boasts strong earnings growth, too. The company's earnings per share in its fiscal first quarter reached $0.46, up from breakeven in the year-ago quarter. Similarly, non-GAAP EPS rose nicely, from $0.29 in the year-ago quarter to $0.74.
Both revenue and non-GAAP EPS handily beat a consensus analyst forecast for $2.94 billion and $0.46, respectively.
Expecting more strong growth
Analysts have big expectations from Salesforce's fiscal second quarter. On average, they expect revenue of $3.23 billion, representing 26% year-over-year growth. For non-GAAP EPS, the consensus forecast is $0.47 -- a slight uptick from Q1 and 42% higher than the year-ago quarter.
Management said it expected fiscal second-quarter revenue to be between $3.22 and $3.23 billion. Highlighting Salesforce's strong tailwind, this expected growth rate is in line with the 25% year-over-year revenue growth for Salesforce in fiscal Q1. Management expects non-GAAP EPS for the quarter to fall between $0.46 and $0.47.
A key area to watch will be Salesforce's service cloud. Not only is it Salesforce's second-largest cloud service offering, but it's growing at a rapid rate. Service cloud revenue increased 29% year over year in fiscal Q1 -- an acceleration from 28% growth in the prior quarter.
"[I]f you think about how companies differentiate themselves, they do it on service, and they do it specifically around the consumer experience," then-COO Keith Block said during the Q1 earnings call when asked about the company's strong performance from service cloud. [Block was named co-CEO on Aug. 8.] "And so, that's why we're seeing quite an uptick in our service cloud business."
Can Salesforce's service cloud keep up this momentum?
Investors should also look for Salesforce to give its full-year revenue outlook a boost. Investors have come to expect it, considering how Salesforce has gotten into a habit of raising this number every quarter. Management is currently modeling for fiscal 2019 revenue between $13.075 billion and $13.125 billion, representing 24% to 25% year-over-year growth.
