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Salesforce (CRM) to Post Q2 Earnings: What's in the Cards?

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salesforce.com (CRM - Free Report) is slated to release second-quarter fiscal 2021 results on Aug 25.

For the quarter, the company projects total revenues between $4.89 billion and $4.90 billion. Moreover, non-GAAP earnings are expected between 66 cents and 67 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $4.90 billion, indicating an increase of 22.6% from the year-ago quarter.

Also, the consensus mark for earnings has remained unrevised at 67 cents per share over the past 30 days. The bottom line is expected to increase 1.5% year on year.

Notably, Salesforce’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 18.9%.

Let’s see how things have shaped up for this announcement.

Factors at Play

Salesforce’s fiscal second-quarter performance is likely to have benefited from the robust demand environment as customers are undergoing a major digital transformation. The company’s ability to provide integrated solutions for customers’ business problems is expected to have been a key growth driver.

The company’s performance is also likely to have gained from its firm focus on building and expanding relationships with leading brands across industries and geographies. In addition, significant growth opportunities in the public sector are likely to have been a tailwind during the quarter under review.

Growth across all its four major cloud service offerings, namely Sales Cloud, Service Cloud, Platform and other plus Marketing & Commerce Cloud is likely to have boosted the company’s subscription and supported the revenue stream, which is a major catalyst.

Additionally, strategic acquisitions of mainly Tableau and Salesforce.org are anticipated to have aided the company’s top-line growth during the quarter to be reported.

Nonetheless, decline in software spending by small & medium businesses (SMBs) due to the coronavirus outbreak might have negatively impacted the company’s fiscal second-quarter performance.

Further, stiff competition from Oracle and Microsoft is a concern in addition to forex headwinds. Increasing investment in international expansions and data centers might have eroded the company’s profitability in the to-be-reported quarter.

What Our Model Says

Our proven model does not predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Salesforce currently carries a Zacks Rank of 2and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Autodesk (ADSK - Free Report) has an Earnings ESP of +4.44% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutanix (NTNX - Free Report) has an Earnings ESP of +1.97% and currently carries a Zacks Rank of 2.

Ambarella (AMBA - Free Report) has an Earnings ESP of +100.00% and carries a Zacks Rank of 3, at present.

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