Salesforce Continues Winning Ways, Shares Undervalued

First-quarter revenue rose 25% versus the prior-year period to $3.01 billion, slightly ahead of our expectations. Management spoke at length about a number of large wins in the quarter (despite what is typically a seasonally weak period for new business), including a transformational deal with an insurance company that was one of the largest signed in Salesforce history. We think this sort of demand is a reflection of Salesforce’s best-in-class product offering across the CRM suite, as the company continues to take share across its sales, service, and marketing cloud products. Marketing cloud was a bright spot in the quarter, as revenue rose 41% year over year, an acceleration from the 33% growth rate the business generated in the fourth quarter. We believe commerce cloud is beginning to lower barriers to adoption of the broader marketing Cloud for both B2C and B2B customers alike as enterprises increasingly focus on omnichannel sales strategies.

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