Wide-moat Salesforce reported second-quarter earnings on Wednesday night. Third-quarter guidance came in a little lighter than expected but full-year guidance both on a revenue and EPS side came in ahead of our expectations. We've raised our fair value to $175 per share.
Long term, we think Salesforce is growing faster than any company at a $10 billion-plus scale. To contextualize that, there are a few reasons why we are confident in our fair value estimate. First, overall CRM spendings are expected to outpace all other application software verticals over the next five years. Two, the firm acquired MuleSoft earlier in the year, and we think investors are underestimating both the impact and synergies as a result of MuleSoft. To contextualize MuleSoft's technology, their endpoint integration platform could pull data from on (premises) and cloud providers, accelerating cloud adoption long term. We think that's going to benefit all of Salesforce's verticals.