salesforce.com (NYSE:CRM) has been on a roll the last several years, as the customer relationship management specialist continues its practice of "beat and raise": this habit of not only beating its own guidance (and that of analysts as well), but raising its forecast after each quarter has pushed the stock to new heights, up 51% so far in 2018.

Going into the company's fiscal 2019 second quarter, which ended on July 31, investors were hoping Salesforce would continue its winning ways -- and cloud giant did just that. 

The front entrance of a building with the Salesforce cloud logo above the door.

Image source: Salesforce.

Another one for the win column

Metric

Q2 2019

Q2 2018

Change (YOY)

Revenue

$3.28 billion

$2.58 billion

27%

Operating income

$115 million

$84 million

37%

Diluted earnings per share

$0.39

$0.06

550%

Data source: Salesforce Second-Quarter 2019 Financial Release. YOY = year over year.

Salesforce reported revenue of $3.28 billion, up 27% year over year, topping the high end of the company's forecast, as well as analysts' consensus estimates of $3.23 billion. The company was also more profitable than expected, with its adjusted earnings per share of $0.71 more than doubling the $0.33 earned in the prior-year quarter, and exceeding expectations of $0.47 per share. Salesforce said that its results benefited to the tune of $0.18 per share for tax benefits related to the recent MuleSoft acquisition.

The company saw strong growth across its portfolio of products. Sales cloud revenue grew to $1 billion, up 13% year over year. Service cloud revenue increased to $0.9 billion up 27% compared to the prior-year quarter. Two of the company's smallest segments produced the largest growth, with the Salesforce platform growing to $0.7 billion and Marketing and Commerce Cloud increasing to $0.5 billion, year-over-year growth of 54% and 37%, respectively. Growth was also solid across the company's geographies, as the Americas produced revenue growth of 25% year over year, while EMEA (Europe, Middle East, and Africa) and APAC (Asia Pacific) grew 35% and 29%, respectively.

In conjunction with the adoption of a new accounting standard (Topic 606), Salesforce has begun reporting a new metric -- remaining performance obligation (RPO), similar to deferred revenue. This is a measure of all remaining revenue that is contractually obligated, but that has not yet been recognized as revenue. This will be split into two pieces: current RPO, which is revenue expected to be recognized in the coming 12 months, and noncurrent RPO, which will be recognized beyond 12 months. 

Under this new standard, Salesforce has a total RPO of $21 billion, an increase of 36% year over year, with a current RPO of approximately $9.8 billion. Unearned revenue increased to $5.88 billion, an increase of 24% year over year.

Earlier this month, Salesforce announced that Keith Block, who has served as chief operating officer, had been promoted to co-CEO (chief executive officer), joining founder and CEO Marc Benioff at the helm.

Salesforce co-CEO Keith Block giving keynote address at TrailheaDX 2018

Salesforce co-CEO Keith Block giving a keynote address at TrailheaDX 2018. Image source: Salesforce.

"Salesforce revenue grew 27% to almost $3.3 billion in the second quarter, with excellent performance across our clouds, industry segments and geographies," Block said. "With this strong quarter, we're well on our way to our next milestone of $23 billion in revenue in fiscal year 2022," which will end in January 2022.

Looking ahead

In light of its better-than-expected quarter, Salesforce is raising its full-year guidance for the second time in as many quarters. Management now expects fiscal 2019 revenue in a range of $13.125 billion to $13.175 billion, which would represent about 25% year-over-year growth, significantly higher than the 20% to 21% growth the company originally forecast for the year. Salesforce is projecting earnings per share of $0.98 at the midpoint of its guidance, up 476% year over year, and sailing past its original forecast of about $0.62 for the full year.

For the upcoming third quarter, Salesforce is guiding for revenue of $3.36 billion at the midpoint of its guidance, which would represent year-over-year growth of just over 25%, and just above analysts' consensus estimates of $3.35 billion. The company is projecting adjusted earnings per share of between $0.49 and $0.50, which is slightly lower than analyst expectations of $0.54.

This quarter produced much of what we've come to expect from Salesforce, and that looks to continue for the foreseeable future.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Salesforce.com. The Motley Fool has a disclosure policy.