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Salesforce is on a steady climb toward a $10 billion revenue run rate. And while it’s not quite there yet, its recent, nearly $2.4 billion quarter puts it squarely in the neighborhood.

According to the company’s CEO, Marc Benioff, Salesforce’s revenue growth results give it “the fastest growth of any top [five] enterprise software company.”

It’s clear that Salesforce has been on a phenomenal revenue growth run the last five years. And investors, seemingly pleased with the results, have rewarded the company with new share price records this month.

All that begs a simple set of questions: What is driving growth at Salesforce, and can the company possibly sustain the run it has been on?

Looking at the numbers

The company’s quarter was a triple-beat, with Salesforce turning in more revenue, profit and projected future growth than investors anticipated.

Concerning top line, Salesforce turned in $2.39 billion, above expectations of $2.35 billion. On the adjusted bottom line, Salesforce earned $0.28, above expectations of $0.26. And, the firm now expects its current fiscal 2018 to yield between $10.25 billion and $10.30 billion in revenue, between $1.28 and $1.30 in adjusted per-share profit, and $0.06 to $0.08 per share inclusive of all costs (GAAP).

And, critically, Salesforce will cross a revenue milestone in the next quarter. Here’s the firm detailing its FQ2’18 expectations:

Q2 FY18 Guidance: Revenue is projected to be approximately $2.51 billion to $2.52 billion, an increase of 23% to 24% year-over-year.

At the $2.51 billion, or $2.52 billion mark, Salesforce will cross the $10 billion revenue run rate mark. Now, not all of Salesforce revenue is purely subscription (SaaS), so we should not call its full revenue tally recurring revenue. As such, it’s too soon to say that the company’s purely annual recurring revenue (ARR) will crest the $10 billion mark in the current quarter, but the company has begun the march toward that previously stated goal.

Regardless, a picture tells a clear story. From its most recent earnings deck, check the Salesforce revenue chart.

At the same time, observe how close the small blue line stays to zero, what we can think of as the “break-even point”. By staying close to zero, the blue line shows that with all costs taken into consideration (GAAP), Salesforce has historically not lost or made money from its operating activities. That means its day-to-day results have made it little to no money. Instead, Salesforce has reinvested into growth consistently as it has matured.

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Chart: Salesforce

Posted May 19, 2017 by Ron Miller and Alex Wilhelm

Orginally posted at https://techcrunch.com/2017/05/19/salesforce-marches-steadily-toward-10b-run-rate-goal/

Photo credit: Tech Crunch

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