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The Salesforce logo at the company’s headquarters in San Francisco.
Stephen Lam/Getty Images
Salesforce
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com stock headed higher in late trading Tuesday on better-than-expected results for the company’s fiscal first quarter ended April 30, although the company also trimmed its full-year sales outlook to reflect higher-than-expected headwinds from currency translation, in particular in Japan.
The positive reaction to Salesforce’s (ticker: CRM) results suggest there was deep concern about the quarter, following recently mixed results from some other cloud-based software companies, including Workday (WDAY) and Snowflake (SNOW). At least initially, the market seems to be ignoring what appears to be Salesforce’s weaker-than-expected guidance for the July quarter and beyond.
For the quarter, Salesforce posted revenue of $7.41 billion, up 24% from a year ago, or 26% adjusted for currency. That’s above both the company’s guidance range of $7.37 billion to $7.38 billion, and Street consensus at $7.38 billion. Non-GAAP profits were 98 cents a share, likewise ahead of the target range of 93 to 94 cents a share, and the Street at 94 cents.
The company said current remaining performance obligations, a measure of work to be performed over the next 12 months, were $21.5 billion, up 21% from a year ago. Total remaining performance obligations were $42 billion. Operating cash flow was $3.68 billion, up 14%.
For the July quarter, Salesforce sees revenue of $7.69 billion to $7.70 billion, with non-GAAP profits per share of $1.01 to $1.02; that’s shy of the Street consensus estimates at $7.77 billion and $1.14 a share, respectively. The company’s April quarter earnings press release gave no explanation for the softer-than-expected outlook.
Salesforce also trimmed its revenue outlook for the January 2023 fiscal year to a range of $31.7 billion to $31.8 billion, down from a previous range of $32 billion to $32.1 billion. The company said it now sees about $600 million in foreign exchange headwinds in the quarter, twice what they had previously forecast.
The company now sees a non-GAAP full-year profit per share of $4.74 to $4.76, up from a previous range of $4.62 to $4.64 a share. The outlook for profits under generally accepted accounting principles for the year falls to between 38 and 40 cents a share, down from a previous range of 46 to 48 cents a share. The company now sees non-GAAP operating margin for the year at 20.4%, up from a previous forecast of 20%.
On a call with analysts, co-CEO Marc Benioff said the company is not seeing any impact on the business from macroeconomic factors. “Our demand environment remains very strong,” he said.
Salesforce shares, which were off 37% for the year to date through Tuesday’s close, have rallied 6.4% in the after-hours session.
Write to Eric J. Savitz at [email protected]
Source: https://www.barrons.com/articles/salesforce-stock-earnings-51654032416?siteid=yhoof2&yptr=yahoo