Microsoft May Be Gaining Traction Against Salesforce In The Cloud Space

Salesforce.com, inc. (NYSE: CRM) reported strong Q3F17 results, while its Q4F17 guidance suggests acceleration in billings growth to 25 percent on a constant currency basis.

Deutsche Bank’s Karl Keirstead maintains a Buy rating on the company, with a price target of $90.

Positive Feedback From Partners

“The company’s confident tone about overall demand and the large deal pipeline is such that the consensus is for at least a modest 4QF17 beat but a more subdued 1QF18 DR guide given seasonality,” the analyst mentioned.

Following discussions with three of salesforce.com’s services partners, Keirstead stated that none of the partners indicated any slowdown in deal momentum or any post-election pause in Q4F17 for the company.

In fact, one large partner stated that there were multiple large deals that had been slated for H1F18 but were being accelerated and closed in Q4F17.

“By product, the feedback on the Sales and Service Cloud segments was solid but was weaker for the Marketing Cloud,” the analyst reported.

Competition From Microsoft

On the other hand, two of three services partners believed that the competing Dynamics CRM product from Microsoft Corporation (NASDAQ: MSFT) was either gaining traction or “being seen more.”

“We heard that Dynamics CRM has closed some functionality gaps against Salesforce and is no longer just a cheap option,” Keirstead noted.

However, the analyst believes that the rivalry has not yet reached a point that could be a threat to salesforce.com, which still has an edge with regard to features, along with huge scale advantage and a broader customer engagement suite.