Why Salesforce Stock Jumped 34% in 2018

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What happened

salesforce.com (NYSE:CRM) stock had a great year in 2018, rising 34%, according to data provided by S&P Global Market Intelligence. Making this gain even more notable, the S&P 500 was down about 6% last year. Salesforce stock, therefore, absolutely crushed the market in 2018.

The stock’s outperformance last year came as the software-as-a-service company repeatedly beat its revenue targets and boosted its full-year outlook. Making the company’s strong growth even more impressive, Salesforce’s momentum was driven by broad-based growth across all of its service clouds.

Exterior entryway of Salesforce Tower in Indianapolis.

Image source: Salesforce.com.

So what

Capturing Salesforce’s strong momentum recently, consider some metrics from the company’s most recently reported quarter, or its third quarter of fiscal 2019. Revenue for the period was up 26% year over year. Non-GAAP earnings per share for the period was $0.61, up from $0.42 in the year-ago period.

Notably, company’s revenue growth has been driven by double-digit year-over-year growth in each of the company’s cloud service offerings.

Strong revenue growth has helped management’s expectations for the year increase dramatically. Initially, management had guided for fiscal 2019 revenue to be between $12.45 billion and $12.5 billion. But now management expects full-year fiscal 2019 revenue to be between $13.23 billion and $13.24 billion.

Now what

Management expects strong growth to continue beyond fiscal 2019. Initiating guidance for fiscal 2020 in its fiscal 2019 third-quarter earnings release, management said it expected fiscal 2020 revenue to be between $15.9 billion and $16 billion, representing 20% to 21% year-over-year growth.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Salesforce.com. The Motley Fool has a disclosure policy.