The $6.5 billion acquisition that everyone hated a year ago was the only thing everyone loved about Salesforce's latest quarter
- Nearly a year after Salesforce announced it would acquire MuleSoft, Salesforce sees MuleSoft as a major source of subscription growth.
- Mulesoft contributed $181 million in revenue, including $156 million in subscription and support revenue in the past quarter.
- Last quarter, Salesforce predicted that MuleSoft would generate $375 million in revenue for the entire fiscal year, but this quarter it reported that MuleSoft ended up generating $431 million.
Salesforce's softer-than-expected sales forecast for the current quarter left some investors disappointed. But there was one part of the company that everyone was gushing about: MuleSoft.
What a difference a year makes.
Salesforceacquired MuleSoft about a year ago for a whopping $6.5 billion, the largest deal in the company's history. The big-ticket deal raised plenty of skepticism at the time, especially since MuleSoft didn't fit neatly into Salesforce's customer relationship management business. Salesforce's stock sank about 5% in the immediate aftermath of the deal.
On Tuesday, UBS analyst Jennifer Swanson Lowe called MuleSoft a "standout" in Salesforce's final quarter of the year.
MuleSoft generated $181 million in total revenue, including $156 million in subscription and support revenue, during Salesforce's fiscal fourth quarter.
"This came in far ahead of our initial guidance as we quickly executed on our plans to integrate MuleSoft and accelerate digital transformation projects for customers around the world," Salesforce CFO Mark Hawkins said on the earnings call.
Hawkins said that this quarter was MuleSoft's "largest quarter of the year," but its products are more seasonal and may see some revenue declines depending on the quarter. However, Salesforce still sees much potential for MuleSoft. In the past year, Salesforce hired 450 new employees for MuleSoft.
In total, Salesforce generated $3.6 billion in revenue, 26% higher than this time last year. Total subscription and support revenue was $3.38 billion. The company's revenue guidance for the first quarter however, was slightly below Wall Street's expectations.
Over the past year, MuleSoft generated $431 million in revenue.
"Now, we are coming up on 1 year since our acquisition of MuleSoft and we are absolutely thrilled by their outstanding performance and the value we are creating for customers like SunTrust, State of Colorado and Unilever," Keith Block, co-CEO of Salesforce said on the earnings call.