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Global Expansion to Drive salesforce's (CRM) Q4 Earnings

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salesforce's (CRM - Free Report) fourth-quarter fiscal 2019 results, scheduled to be announced on Mar 4, are likely to be buoyed by growth in its cloud-based solutions globally.

Notably, the company is benefiting from a robust demand environment as customers are undergoing a major digital transformation. Management mentioned that digitization is driving strategic relationships of the company. Its ability to provide an integrated solution for customers’ business problems is the key growth driver.

Click here to know how the company’s overall fourth-quarter performance is likely to be.

Expanding International Business

salesforce has been keen on building partnerships to expand its international operations. Partnership agreements with the likes of Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) for the firms’ cloud services have been helping it expand international operations. We note that during the last few quarters, the company won several deals due to its international expansion initiatives.

The main intent behind its endeavors in the international market might be the fact that its home market in the United States has hit a saturation point, leading to slower growth of its cloud software. Notably, in the last reported quarter, revenues from Americas grew 25% while that from Europe and Asia Pacific jumped 31% and 26%, respectively.

In the October quarter, salesforce strengthened its relationships in EMEA with Deutsche Telekom, NG, Dyson and Galois. In APAC, the company expanded relationship with Sulstra and Bajaj Finserv and formed a new partnership with MLC Life Insurance. In Japan, the company expanded its alliance with heavy industrial manufacturer, IHI Corporation.

It is likely that the company will continue winning international deals, which will drive its fiscal fourth-quarter results.

However, there is still a lot of room for salesforce’s growth in the international quarters. It still generates only about 30% of total revenues from international operations, which is lower than its rivals like Microsoft (MSFT - Free Report) or Oracle composition of around 50%. Therefore, the company is investing heavily to expand globally, which is an overhang on margins.

salesforce currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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