When is a beat and raise not a beat and raise? When the beat and raise comes from Salesforce.com (CRM) , that's when.
Or at least that was the tone last night -- a tone that I, frankly, find ridiculously negative.
Salesforce.com's sales and earnings last night were the most impressive I have seen in ages. The quickness to $10 billion at an incredible profitable rate, the goal of $20 billion in sight already, because of the $15 billion in billed and unbilled business, it's all there and it is all coming in with terrific margins and $100 million in sales greater than anyone thought.
The biggest wins? This time not disclosed, which I am sure rankles some, but the trajectory of this particular vertical, the marketing vertical, is so incredibly strong that only a nitpicker would find fault with it.
To me, the business, which was actually in the doldrums one year ago, with Brexit woes in a pause in spending by customers, has accelerated rather dramatically, aided by the $2.8 billion purchase of Demandware, which is a leader in the digital commerce market.
Now, I know those bound by the four walls of the spreadsheet -- including most of the analysts who cheered more for Marc Benioff's civil rights talk at the top of the call than the amazing results -- can easily find fault in a less than robust guide-up, especially in margins, especially after the shares' dramatic 35% run this year, including a couple of points into the closing bell.
But if you look at each of the recent quarters, you got a nice bump in margins so, to me, that's just classic tech underpromise and overdeliver. It's how you have to play the game.
Far more important? A couple of broad trends that seem pretty cogent here:
-- First, Benioff showed a chart that demonstrated a dramatic pull away from competitors SAP (SAP) and Oracle (ORCL) in this particular silo, which, I might add, is the fastest-growing and potentially the largest portion of cloud usage. Oracle might say that it is selling a lot more annual recurring revenue in the cloud related to marketing than Salesforce.com, but Benioff is saying that's simply not the case. More important, maybe it doesn't matter. It's terrific to have bragging rights, but if this is headed toward being a trillion-dollar industry, it doesn't matter, does it?
-- Two: spending by the government, which had paused badly perhaps because of the election, is now growing nicely, as witnessed by the big VA contract that Salesforce.com picked up. I think there were more in the quarter that simply weren't highlighted.
-- Finally, there was a dramatic pick-up in European spending, particularly for fashion, which is all meant for the highest-end companies to be able to distinguish themselves form the fray. I would describe the efforts as retailers who are not rolling over and playing dead, but saying if you are going to spend that much money on our clothes and watches we will do our best to know you and know exactly what you want. In a world where Amazon AMZN has all sorts of artificial intelligence, it's a necessity for all brands to do so. I just don't think they are smart enough yet to understand that.
Now, because of the way the media is, if this stock falls it will be another one of those pin the tail on the donkey story, where we have to come up with a story line to justify the decline.
I am not going there.
This company had an amazing quarter and I do not think the 35% advance in the quarter fully reflects that. Therefore, I would use any weakness to buy -- not sell -- the stock of the fastest grower in the space even as, at a $10 billion run-rate, this company is now one of the largest in the enterprise software show.