Salesforce Earnings: MuleSoft Shines in Another Overall Good Quarter

Salesforce continues to perform well in a measured environment, with upside versus our aggressive expectations for both revenue and profitability for its fiscal third quarter. Guidance, particularly for profitability, was also good. Management was enthusiastic to discuss green shoots in data cloud, while we were impressed by performance in large deals and the acceleration in remaining performance obligation, or RPO, growth. We also applaud the firm’s continued focus on capital returns, with $1.9 billion in share buybacks this quarter. Based on quarterly upside and updated guidance, we made minor adjustments to our model and raised our fair value estimate to $265 per share, from $255. With shares jumping in the aftermarket the stock seems slightly undervalued, in our view.