Salesforce (CRM - Free Report) delivered better-than-expected results for third-quarter fiscal 2021. The company’s fiscal third-quarter non-GAAP earnings of $1.74 per share handily beat the Zacks Consensus Estimate of 74 cents. Quarterly earnings soared 132% year over year mainly on higher revenues and a benefit of 86 cents per share from mark-to-mark accounting required by ASU 2016-01.
Salesforce’s quarterly revenues of $5.42 billion climbed 20%, year on year, surpassing the Zacks Consensus Estimate of $5.25 billion. The top-line figure also improved 19% in constant currency (cc).
The enterprise cloud computing solutions provider has been benefiting from the robust demand environment as customers are undergoing a major digital transformation. The rapid adoption of its cloud-based solutions resulted in the better-than-expected performance during the fiscal third quarter.
Quarter in Detail
Coming to the company’s business segments, revenues at Subscription and Support increased about 20% from the year-earlier period to $5.09 billion. Professional Services and Other revenues climbed 22% to $334 million.
Sales Cloud revenues grew 12%, year over year, to $1.31 billion. Revenues from Service Cloud, one of the company’s largest and the fastest-growing businesses, also improved 21% to $1.38 billion. Moreover, Marketing & Commerce Cloud revenues jumped 25% to $804 million. Salesforce Platform and Other revenues were up 24% to $1.59 billion.
Geographically, the company registered revenue growth at cc of 17% in the Americas (69% of total revenues), 20% in the Asia Pacific (10%), and 26% in Europe and Middle East Asia or EMEA (21%) on a year-over-year basis.
Salesforce’s gross profit came in at $4.03 billion, up 19.1% from the prior-year quarter. However, gross margin contracted 100 basis points (bps) to 74%.
Salesforce recorded a non-GAAP operating income of $1.07 billion, up 22.8% year on year. Operating margin expanded 40 bps to 19.8% on efficient cost management. Operating expenses flared up 17.3% year over year to $3.19 billion.
Salesforce exited the fiscal third quarter with cash, cash equivalents and marketable securities of $9.5 billion compared with the $9.3 billion recorded at the end of the previous quarter. The company generated an operating cash flow of $339 million in the fiscal third quarter.
As of Jul 31, 2020, remaining performance obligation, which reflects future revenues under contract, was $15.3 billion, up 20% on a year-over-year basis.
Guidance
Buoyed by the stronger-than-expected third-quarter results, Salesforce raised its revenue outlook for fiscal 2021 to $21.10-$21.11 billion from the $20.7-$20.8 billion projected earlier. The company now expects full-fiscal non-GAAP earnings per share to come in at $4.62-$4.63, up from the earlier expectation of $3.72-$3.74.
Operating cash flow is still projected to grow between 12% and 13% on a year-over-year basis.
Coming to the fiscal fourth quarter, revenues are estimated between $5.665 billion and $5.675 billion, calling for 17% growth, year on year. Furthermore, Salesforce anticipates non-GAAP earnings per share in the band of 73-74 cents for the current quarter.
Additionally, the company initiated a sales outlook for first-quarter and fiscal 2022. For the fiscal first quarter, Salesforce projects revenues at $5.680-$5.715 billion and between $25.45 billion and $25.55 billion for fiscal 2022.
Salesforce to Acquire Slack
In a separate press release, Salesforce announced entering into a definitive agreement to acquire Slack Technology in a cash-stock deal worth $27.7 billion. Per the terms of the deal, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce for each shares held. The transaction is expected to complete in the second quarter of fiscal 2022.
Zacks Rank & Stocks to Consider
Salesforce currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Arrow Electronics (ARW - Free Report) and Texas Instruments (TXN - Free Report) , both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Arrow and Texas is currently pegged at 9.8% and 9.3%, respectively.
Zacks Names “Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Salesforce (CRM - Free Report) delivered better-than-expected results for third-quarter fiscal 2021. The company’s fiscal third-quarter non-GAAP earnings of $1.74 per share handily beat the Zacks Consensus Estimate of 74 cents. Quarterly earnings soared 132% year over year mainly on higher revenues and a benefit of 86 cents per share from mark-to-mark accounting required by ASU 2016-01.
Salesforce’s quarterly revenues of $5.42 billion climbed 20%, year on year, surpassing the Zacks Consensus Estimate of $5.25 billion. The top-line figure also improved 19% in constant currency (cc).
The enterprise cloud computing solutions provider has been benefiting from the robust demand environment as customers are undergoing a major digital transformation. The rapid adoption of its cloud-based solutions resulted in the better-than-expected performance during the fiscal third quarter.
Quarter in Detail
Coming to the company’s business segments, revenues at Subscription and Support increased about 20% from the year-earlier period to $5.09 billion. Professional Services and Other revenues climbed 22% to $334 million.
Sales Cloud revenues grew 12%, year over year, to $1.31 billion. Revenues from Service Cloud, one of the company’s largest and the fastest-growing businesses, also improved 21% to $1.38 billion. Moreover, Marketing & Commerce Cloud revenues jumped 25% to $804 million. Salesforce Platform and Other revenues were up 24% to $1.59 billion.
Geographically, the company registered revenue growth at cc of 17% in the Americas (69% of total revenues), 20% in the Asia Pacific (10%), and 26% in Europe and Middle East Asia or EMEA (21%) on a year-over-year basis.
Salesforce’s gross profit came in at $4.03 billion, up 19.1% from the prior-year quarter. However, gross margin contracted 100 basis points (bps) to 74%.
Salesforce recorded a non-GAAP operating income of $1.07 billion, up 22.8% year on year. Operating margin expanded 40 bps to 19.8% on efficient cost management. Operating expenses flared up 17.3% year over year to $3.19 billion.
Salesforce exited the fiscal third quarter with cash, cash equivalents and marketable securities of $9.5 billion compared with the $9.3 billion recorded at the end of the previous quarter. The company generated an operating cash flow of $339 million in the fiscal third quarter.
As of Jul 31, 2020, remaining performance obligation, which reflects future revenues under contract, was $15.3 billion, up 20% on a year-over-year basis.
Guidance
Buoyed by the stronger-than-expected third-quarter results, Salesforce raised its revenue outlook for fiscal 2021 to $21.10-$21.11 billion from the $20.7-$20.8 billion projected earlier. The company now expects full-fiscal non-GAAP earnings per share to come in at $4.62-$4.63, up from the earlier expectation of $3.72-$3.74.
Operating cash flow is still projected to grow between 12% and 13% on a year-over-year basis.
Coming to the fiscal fourth quarter, revenues are estimated between $5.665 billion and $5.675 billion, calling for 17% growth, year on year. Furthermore, Salesforce anticipates non-GAAP earnings per share in the band of 73-74 cents for the current quarter.
Additionally, the company initiated a sales outlook for first-quarter and fiscal 2022. For the fiscal first quarter, Salesforce projects revenues at $5.680-$5.715 billion and between $25.45 billion and $25.55 billion for fiscal 2022.
Salesforce to Acquire Slack
In a separate press release, Salesforce announced entering into a definitive agreement to acquire Slack Technology in a cash-stock deal worth $27.7 billion. Per the terms of the deal, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce for each shares held. The transaction is expected to complete in the second quarter of fiscal 2022.
Zacks Rank & Stocks to Consider
Salesforce currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Arrow Electronics (ARW - Free Report) and Texas Instruments (TXN - Free Report) , both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Arrow and Texas is currently pegged at 9.8% and 9.3%, respectively.
Zacks Names “Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on TXN - FREE
Get the latest research report on CRM - FREE
Get the latest research report on ARW - FREE