salesforce.com (NYSE:CRM) has a particular talent for providing fairly impressive guidance, and then not only exceeding expectations but raising its full-year guidance to boot -- a practice referred to as the "beat and raise."
The customer relationship management software provider did it again with its first-quarter results and raised its forecast for the fiscal year.
For its fiscal 2020 first quarter, which ended April 30, Salesforce reported revenue of $3.74 billion, up 24% year over year, and up 26% in constant currency. This performance exceeded the high end of management's forecast and analysts' consensus estimates, both of which topped out at $3.68 billion. The bottom-line results were also surprisingly robust, with non-GAAP earnings per share of $0.93, far exceeding Wall Street's expectations of $0.61.
The never-ending story
Subscription and support revenue still represents the bulk of Salesforce's results, coming in at $3.5 billion, up 24% year over year, while the contribution from professional services and other revenue remains much smaller, increasing to $241 million, up 23% from the prior-year quarter.
The company continued to generate strong increases across its portfolio of products. Revenue from the sales cloud grew to $1.1 billion, up 11% year over year. Service cloud revenue grew even faster, topping $1 billion, up 20% year over year. The two smaller segments produced the largest percentage gains, with the Salesforce platform and other growing 46% year over year to $800 million, while the marketing cloud and commerce cloud combined grew to $600 million, up 33% from the prior-year quarter.
The results were strong across the company's geographical regions. The Americas still represent the lion's share of company's business, generating $2.617 billion, up 25% compared to the prior-year quarter. Sales in Europe, the Middle East, and Africa (EMEA) rose 25% year over year to $755 million, though it rose 32% in constant currency. Revenue from the Asia-Pacific region (APAC) climbed to $365 million, each up 22% year over year or 27% in constant currency.
Salesforce's remaining performance obligation -- which consists of future revenue that is under contract but has not yet been recognized, swelled to $24.9 billion, up 22% year over year. The portion of the performance obligation that will be realized over the coming 12 months jumped to $11.8 billion, a 23% increase over the prior-year quarter.
A word on MuleSoft
Salesforce completed its $6.5 billion acquisition of MuleSoft more than a year ago, yet the segment was mentioned 25 times on first-quarter conference call to discuss the results -- a testament to its continued contribution to Salesforce's overall strategy. Mulesoft provides tools that can extract data from a variety of cloud silos and integrate it for analysis. That capability has allowed Salesforce to expand its reach, not only to new clients but also within its existing customer base. The acquisition helped Salesforce close the loop by helping it extract data from almost every customer interaction, regardless of the application, and providing actionable information by aggregating the data together.
During the quarter, MuleSoft was also named a leader in the Gartner Magic Quadrant for enterprise integration platform as a service.
Icing on the cake
In light of its better-than-expected performance, Salesforce also raised its full-year guidance. The company now expects revenue in a range of $16.1 billion to $16.25 billion, up from $16 billion at the midpoint of its guidance provided just last quarter.
For the upcoming quarter, Salesforce is forecasting revenue in a range of $3.94 billion to $3.95 billion, up about 20.3% year over year at the midpoint of its guidance.
Considering how often Salesforce has sailed past its sales targets, I wouldn't be surprised if the company did it again next quarter.