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Software giant Salesforce had a blockbuster January quarter. It reports earnings for the April quarter on Wednesday, after the market closes.
Stephen Lam/Getty Images
What can
Salesforce
do for an encore?
As you might remember, Salesforce (ticker: CRM) had a blockbuster January quarter, which saw better-than-expected results, and raised guidance. That was only the beginning. Salesforce, a leading in cloud-based enterprise software, also unveiled an expanded stock-repurchase program. It also created a board-level “business transformation committee,” after five activist investors took stakes in the company. Then the board disbanded a committee focused on mergers and acquisitions.
Add in some recent announcements of the company’s artificial-intelligence plans, and the stage was set for a big move.
And in fact, Salesforce stock has rallied 32% since the company last reported earnings on March 1.
Salesforce reports April quarter results after the close Wednesday. Guidance called for revenue of $8.16 billion to $8.18 billion, with adjusted profits of $1.60 to $1.61 a share, and earnings under generally accepted accounting principles of 24 to 25 cents a share. Street consensus estimates call for revenue of $8.14 billion, adjusted profits of $1.59 a share, and GAAP earnings of 30 cents a share.
For the July quarter, the Street sees sales of $8.5 billion and adjusted profits of $1.68 a share.
For the January 2024 fiscal year, Salesforce has projected revenue of $34.5 billion to $34.7 billion, up 10%. Guidance called for full-year profits on an adjusted basis of $7.12 to $7.14 a share. Salesforce sees non-GAAP operating margin for the year of 27%. On a GAAP basis, the company sees fiscal 2024 profits of $2.59 to $2.61 a share.
Evercore ISI analyst Kirk Materne wrote in a note Wednesday that he’s “not expecting a ton of surprises” on the Salesforce earnings call. He thinks margins will be a little above Street estimates, and added that CRPO—current remaining performance obligations, a measure of future work—should be up about 11%, which should be good enough for investors.
Materne adds that the Street wants to see evidence that the company can continue to grow 10% going forward. Given the recent rally, Materne writes that “the question at these levels” becomes whether there is a surprise growth driver in the second half and beyond, and in particular if the company can monetize its AI initiatives.
Wedbush analyst Dan Ives is more optimistic. He thinks the company will post “modest upside” to Street numbers. He’s also bullish on the company’s moves in AI. “We believe this is a major land grab opportunity that could significantly benefit CRM over the coming years and could increase overall revenue by $4 billion-plus annually…by 2025,” Ives writes in an earnings preview note.
In early trading Wednesday, Salesforce stock is flat at at $218.87.
Write to Eric J. Savitz at [email protected]
Source: https://www.barrons.com/articles/salesforce-earnings-stock-price-91747150?siteid=yhoof2&yptr=yahoo