There aren't many $100 billion companies that are growing revenue at 20% per year. Yet Salesforce.com (NYSE:CRM) is doing that and more, as can be seen in its strong fiscal 2019 third-quarter results, which were reported this week. 

Salesforce.com results: The raw numbers

Metric

Q3 2019

Q3 2018

Year-Over-Year Change

Revenue

$3.392 billion

$2.701 billion

26%

Operating cash flow

$143 million

$125 million

14%

Adjusted EPS

$0.61

$0.42

45%

Data source: Salesforce.com Q3 2019 earnings release.

A compass pointing toward the word growth

Image source: Getty Images.

What happened with Salesforce.com this quarter? 

Salesforce is enjoying broad-based growth. Revenue in its sales, service, marketing, and platform businesses rose 11%, 24%, 37%, and 51%, respectively. 

Moreover, unearned revenue -- essentially business that's been booked but not yet fulfilled -- increased 25% to $5.4 billion. And remaining performance obligation, which represents future revenue that's under contract but not yet recognized, climbed 34% to $21.2 billion.

Salesforce is benefiting from the global shift toward digitally delivered services. "Companies across every industry, in every geography have a mandate to digitally transform their businesses and are turning to Salesforce as a strategic partner," co-CEO Keith Block said in a press release.

One of Salesforce's recent acquisitions -- MuleSoft -- is helping the company capture a larger share of this immense opportunity. The application platform is enjoying strong demand for its data integration solutions.

"Integration has become a strategic imperative for all of our customers," Block said during a conference call with analysts. "It has captured the attention of C-level executives in virtually every conversation I have."

However, Salesforce's investments in MuleSoft and other growth initiatives did weigh on its profit margins in the third quarter. Non-GAAP operating margin decreased by 76 basis points year over year to 16.9%. 

All told, non-GAAP operating income -- which excludes stock-based compensation expense -- rose 20% to $572 million. Operating cash flow, meanwhile, increased 14% to $143 million.

Looking forward

These strong results prompted Salesforce to boost its full-year guidance. The company now expects:

  • Revenue of $13.23 billion to $13.24 billion -- up from a prior estimate of $13.125 billion to $13.175 billion -- representing year-over-year growth of 26%.
  • Non-GAAP EPS of $2.60 to $2.61, up from $2.50 to $2.52.

Salesforce also issued revenue guidance for fiscal 2020. Management expects revenue to increase as much as 21%, to $16 billion.

"I'm thrilled that Salesforce will be the fastest enterprise software company in history to reach $16 billion in revenue," Chairman and Co-CEO Marc Benioff said.

Joe Tenebruso 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.