The customer relationship management company that pioneered the software-as-a-service business model, salesforce.com (NYSE:CRM), reported strong fiscal third-quarter results on Tuesday. The period's better-than-expected top- and bottom-line results add to the company's long history of impressive business growth.
"We're now on track to double our revenue in five years," said Salesforce co-CEO Marc Benioff in the company's third-quarter update. Co-CEO Keith Block cited "strong growth across our clouds and regions in the quarter" as key catalysts for the period.
Here's a closer look at the results.
Key numbers from Salesforce's third quarter
Salesforce's third-quarter revenue rose 33% year over year to $4.5 billion. In constant currency, revenue was up 34% year over year. Revenue was above management's guidance range for $4.44 billion to $4.45 billion, and the top-line figure also beat analysts' average forecast for $4.45 billion.
Salesforce's remaining performance obligation, which is a reflection of the company's backlog, was up 22% year over year.
The company saw strong growth across all of its cloud offerings. Salesforce's platform and other revenue increased 73% year over year to $1.29 billion. But the segment was helped by $308 million from the company's acquisition of data analytics company Tableau this summer. When excluding revenue from this acquisition, segment revenue was up 32% year over year. Revenue from Salesforce's sales and service clouds increased 15% and 24% to $1.17 billion and $1.14 billion year over year, respectively. The company's smallest cloud offering -- marketing and commerce -- saw revenue increase 32% year over year to $0.64 billion.
Salesforce's non-GAAP (adjusted) earnings per share during the period were $0.75, up from $0.61 in the year-ago quarter. This crushed both management's guidance for $0.65 to $0.66 and analysts' consensus estimate for $0.66.
Helping profitability was a 250 basis-point year-over-year improvement in the company's non-GAAP operating margin. Non-GAAP operating margin for the period was 19.4%.
Salesforce is optimistic about its ability to sustain strong growth in Q4 and beyond.
Reporting adjusted earnings per share well ahead of its guidance for the period, it wasn't surprising to see management lift its full-year outlook for non-GAAP earnings per share. Management now expects full-year fiscal 2020 non-GAAP EPS between $2.89 and $2.90, up from a previous forecast for $2.82 to $2.84. But management left its outlook for fiscal 2020 revenue unchanged. The tech company expects total fiscal 2020 revenue to increase 28% year over year to about $17 billion.
Looking to fiscal 2021, management said it expects revenue to increase 22% to 23% year over year to between $20.8 billion and $20.9 billion.
With broad-based momentum across its cloud offerings and a promising outlook for fiscal 2021, Salesforce appears to be on pace to achieve its ambitious goal of revenue between $34 billion and $35 billion in fiscal 2024.