Marc Benioff, CEO of Salesforce.
Adam Jeffery | CNBC
Salesforce stock rose 5% in expanded trading on Thursday after the cloud software maker released earnings and forecasts that exceeded analysts’ expectations.
This is how the company did it:
- Merits: According to Refinitiv, $ 1.21 per share, adjusted down from 88 cents per share as analysts expected.
- Revenue: According to Refinitiv, $ 5.96 billion versus $ 5.89 billion as analysts expected.
Revenue rose 23% year over year for the first quarter of the fiscal year ended April 30, the company said in a statement. In the previous quarter, sales rose by 20%.
The company will hold its large Dreamforce conference in person in San Francisco as well as in New York, Paris and London, CEO Marc Benioff said in a conference call with analysts. All participants must be fully vaccinated, Benioff said. Salesforce practically held Dreamforce in 2020 to help reduce the spread of the coronavirus.
The Platform and Other segment, which includes MuleSoft and Tableau products, currently Salesforce’s top segment for subscription and support revenue, contributed $ 1.75 billion to revenue, up 28%.
Salesforce’s core Salesforce product, which sales reps use to pursue business opportunities, had sales of $ 1.39 billion, up 11%.
While different parts of the world have reopened their economies to varying degrees, there wasn’t a single area in the quarter slower than others, said Gavin Patterson, Salesforce chief revenue officer.
Turning to the projections, Salesforce sees adjusted earnings per share of 91 to 92 cents for the second quarter on revenue of $ 6.22 to $ 6.23 billion. Analysts polled by Refinitiv were looking for adjusted earnings per share of 86 cents and sales of $ 6.15 billion.
Salesforce called for adjusted earnings per share of $ 3.79 to $ 3.81 for the full 2022 fiscal year with revenue of $ 25.9 billion to $ 26.0 billion, or growth of 22%. Analysts surveyed by Refinitiv agreed that adjusted earnings per share were $ 3.43 and revenue was $ 25.76 billion.
The expected adjusted operating margin for the full year increased from 17.7% to 18% as mid-range revenue guidance increased by $ 250 million. “Our decision to grow sales in fiscal 2022 reflects our performance in the first quarter and our confidence in our ability to thrive for the remainder of the year,” said Amy Weaver, the company’s chief financial officer.
The guide takes into account the assumption that some trips will return, but nowhere near pre-pandemic levels, Weaver said.
“We just learned how to work effectively and how to serve our customers effectively without being on the plane every day,” she said.
The full year forecast includes $ 500 million in revenue from the Slack team communications software app, a $ 27.7 billion acquisition that is expected to close by the end of the quarter ending July 31. This expected contribution is $ 100 million lower than Salesforce forecast in February as the company updated its forecast at the time the deal closed. The forecast also includes $ 190 million in revenue from Acumen Solutions, a salesforce professional services company acquired in the first quarter of the fiscal year.
Despite the post-close shift, Salesforce stock is up less than 2% since the start of the year, while the S&P 500 index is up nearly 12% over the same period.
Morgan Stanley analysts upgraded their rating on Salesforce stock to the equivalent of buying versus the equivalent of holding earlier this month. “While concerns about the appetite for mergers and acquisitions and permanent margin expansion remain, leading franchisees are not staying cheap for long, especially given the strong demand we anticipate over the next few years,” they write.
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