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Salesforce shares soar 13% on strong growth despite the pandemic

August 25, 2020, 11:40 PM UTC

Salesforce shares jumped nearly 13% in after-hours trading on Tuesday after the business software firm reported solid earnings amid the coronavirus pandemic. 

The company’s shares rose $28.48 to $244.48 following the earnings report. Earlier in the day, during regular trading, they had gained $7.59, or 3.6%.

Salesforce said it had $5.15 billion in second-quarter sales, a 29% year-over-year jump. The result beat the $4.9 billion that analysts had projected.

Signaling that it expects the good times to continue, Salesforce raised its sales guidance for its fiscal 2021 from $20 billion to between $20.7 billion and $20.8 billion.

The company also had $2.6 billion in second-quarter profits, driven primarily by an accounting change that created tax benefits.

The strong results come at a time during which many businesses are cutting back on IT spending because of the economic uncertainty caused by COVID-19. But cloud software providers, whose products generally run in third-party data centers, and therefore require less upfront costs and less day-to-day maintenance, are doing relatively well.

In a conference call with investors on Tuesday, Salesforce CEO Marc Benioff gushed with optimism. But he described the strong results, achieved during the pandemic, as “a moment that is very much humbling and bittersweet.”

“We know that we are a light and we have to continue to be that light, especially during these difficult times,” Benioff said.

Even before the earnings call, Salesforce has been on a winning streak. Recently, the S&P Dow Jones Indices announced that the company would join the Dow Jones Industrial Average, replacing industrial stalwart Exxon—a sort of seal of approval that puts Salesforce in lofty company.

During the call, Benioff took potshots at competitors that sell both consumer and enterprise technology. Unlike those rivals, which he didn’t name, Salesforce isn’t “all over the field” and is instead focused on its core product, which sales teams use to manage their sales leads.

Benioff hinted that Salesforce is unlikely to go on an acquisition spree. When asked by an analysts whether he believes M&A activity will pick up, in general, he said, “We’re not in a good M&A environment” because of the high valuations given to tech companies.

Salesforce was “very lucky” to have acquired enterprise software companies MuleSoft in 2018 and Tableau in 2019 because today “we wouldn’t be able to buy them,” Benioff said.

“Maybe things can change,” Benioff said about acquisitions. “This isn’t really part of our plan right now.”