A previous version of this article reported “multicloud” to mean multiple cloud-service providers. Salesforce said Thursday afternoon that the CFO’s use of “multicloud” referred to their internal cloud-software suites. The article has been updated.
Salesforce.com Inc.’s revenue will be supported by customers who use more than one of its cloud service, the software giant told analysts Wednesday at its Dreamforce convention in San Francisco, while maintaining its forecasts.
After Salesforce CRM, +1.33% shares closed down 0.3% from a record high Wednesday, Chief Financial Officer Mark Hawkins reiterated the company’s forecast at the company’s Investor Day. Salesforce expects revenue of $13.18 billion this year to grow to $21 billion to $23 billion in fiscal 2022. Analysts surveyed by FactSet expect $13.17 billion in fiscal 2019.
That march to $23 billion is powered, in part, by Salesforce customers who use more than one of the company’s cloud products like Sales Cloud, Service Cloud and Marketing Cloud, Hawkins said. The CFO said that 38% of its customers are such multicloud customers, and Salesforce generates 92% of its revenue from that minority, which spends 10 times more on average than their single-cloud product customers.
“This will power durable growth for years to come,” Hawkins said.
The way Salesforce structures it sales through subscriptions also supports the company’s confidence in its forecast, Salesforce Deputy CFO David Havlek said. Havlek said that about 80% of the company’s revenue was under contract at the start of the year, and about 60% of revenue is under contract two years out.
On Tuesday after the market closed, Chairman and Co-Chief Executive Marc Benioff delivered the convention’s opening keynote and highlighted its Siri-enabled Einstein Voice, following an earlier announcement that Salesforce was partnering with Apple Inc. AAPL, +2.06% Einstein uses artificial intelligence to provide predictions and recommendations based on a company’s business processes and customer data.
Salesforce shares are up nearly 55% for the year, compared with a 6.7% rise in the Dow Jones Industrial Average DJIA, +0.21% , an 8.7% gain in the S&P 500 index SPX, +0.28% and a 15.8% surge in the tech-heavy Nasdaq Composite Index COMP, +0.65%
Of the 42 analysts who cover Salesforce, 38 have buy or overweight ratings, four have hold ratings and none have a sell rating, with an average price target of $169.42.