On Feb 25th, Salesforce reported strong earnings that beat analyst estimates on most metrics (Revenue, OCF, EPS, cRPO). There are a lot of moving parts in the earnings report. On the positive side, the company raised its FY21 full-year guidance by 200 million to 21.0 to 21.1 billion, a 23% YoY growth. It also reiterated its $34-35 billion revenue target for FY24, implying a 20% four-year CAGR. Salesforce announced it is acquiring Velocity, an industry-specific cloud software company for $1.33 billion. The management also commented that Tableau has been performing better than expected.

On the negative side, Keith Block stepping down from Co-Chief only after 18 months was totally unexpected for investors. Salesforce's recent management shuffle can be found here. Wall Street analysts have praised not only Keith’s success on vertical market solutions but also his ability to drive margins. With Benioff at the helm focusing mostly on M&As, there will be again a wave of skepticism over Salesforce's ability to drive operating margin expansion. Number crunching on Salesforce's “organic revenue growth” has long been a headache for Salesforce investors. To make things even more complicated, a large part of MuleSoft and Tableau revenue are recognized as licensing revenue. Licensing is more volatile than cloud subscription revenue and Salesforce, so far, has not broken out license revenue from subscription revenue.

With respect to coronavirus, similar to most SaaS companies, the management believes Salesforce will continue to see sustainable growth: “I think that when we've looked at architecting Salesforce over the last 21 years and as we've looked at navigating the economic crisis that we've been through before. We've been through two serious recessions. Now as we look at navigating a biological crisis. When we started Salesforce, Parker and I really built a business model that was designed to transcend these situations so that we would have durable growth over time regardless of the crises.”