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Why Soared 39.9% in August

By Royston Yang – Sep 2, 2020 at 8:17AM

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The company continues to chalk up broad-based growth across its entire product portfolio.

What happened

Shares of (CRM 0.73%) soared 39.9% in August, according to data provided by S&P Global Market Intelligence.

The customer relationship management (CRM) provider's stock price continues to set new all-time records and is up a stunning 63.3% year to date.

Person tapping on logos on transparent screen

Image source: Getty Images.

So what

The company released a sparkling set of earnings for its fiscal 2021 second quarter, ended July 31. Revenue continued to climb, rising by 29% year over year to $5.15 billion, while net income received a lift to $2.6 billion thanks to a one-time $2 billion net tax benefit arising from a change in its corporate structure. Broad-based revenue growth was seen across all of Salesforce's CRM products, with the Salesforce Platform division seeing the largest increase at 66% year over year. 

Current remaining performance obligations rose 26% year over year to $15.2 billion, and the company revised its full-year 2021 revenue guidance to between $20.7 billion to $20.8 billion, representing year-over-year growth of 21%. Operating cash flow generation for the first six months of the fiscal year stood steady at $2.3 billion, and the company generated around $1.9 billion of free cash flow, for a free cash flow margin of around 18.5%. 

Now what

Salesforce continues to push ahead of its competitors, registering a revenue market share of 18.4% in 2019 in worldwide CRM applications, according to IDC. The total addressable market for CRM applications stands at $176 billion, according to a Gartner forecast, and is poised to grow at a four-year compound annual growth rate of 14% from 2020 to 2023. With Salesforce being the dominant player in this industry, and with its revenue growing at double-digit rates accelerated by the shift to digital caused by the pandemic, the future looks bright for the company.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool has a disclosure policy.

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