Salesforce.com’s (CRM) lackluster 2013 just got a shot in the arm on news of its fiscal second-quarter results. CRM shares have spiked by nearly 14% as of midday Friday, setting new intraday highs (adjusted for splits) just south of $50 and sitting well above its all-time closing highs around $47.
And that’s because once again, Salesforce illustrated the continuing winning ways of cloud computing.
Salesforce’s Q2 revenues jumped 31% year-over-year to $957.1 million, besting Wall Street expectations for $938.9 million. Earnings flipped from a $9.8 million loss (-2 cents per share) to a profit of $76 million (12 cents per share), and adjusted profits of 9 cents per share beat the consensus by a pair of pennies.
Guidance also was upbeat. For the third quarter, CRM predicts revenues will come in between $1.05 billion and $1.06 billion, with adjusted earnings ranging from 8 cents to 9 cents per share. Both marks topped the Street view for revenues of $1.04 billion and earnings of 7 cents a share.
So why has CRM remained so strong?
A key to Salesforce’s success is that cloud computing is a secular mega-trend. Companies across the U.S. (and really, the world, for that matter) are ripping out their archaic software systems and replacing them with systems that are connected to the web, that provide access to to real-time data and that are generally more cost-effective.
CRM also has the advantage of a strong brand — one that has become synonymous with the cloud — and as a result, has snagged major deals. It also has helped that Salesforce has worked to make its software integrate with legacy solutions from companies such as Oracle (ORCL), Microsoft (MSFT) and SAP (SAP).
Scale is critical here, too; Salesforce’s platform delivered 86 billion transactions last quarter, up 46% on a YOY basis.
Meanwhile, CRM has continued to innovate. Keep in mind that the company’s offerings are about more than just applications for customer relationship management. Over the years, Salesforce has added cloud-based platforms for service/support, marketing, social and mobile. A key to this has been aggressive acquisitions, including its largest deal, ExactTarget, which came within the past few months at a $2.5 billion price tag.
Salesforce is far from a young company — it was founded in the late 1990s — but it appears perfectly capable of maintaining its strong leadership position, which should translate into continued growth for some time to come.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.