We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Salesforce (CRM) Q1 Earnings & Sales Beat Estimates, Up Y/Y
Read MoreHide Full Article
Salesforce (CRM - Free Report) reported better-than-expected financial results for the first quarter of fiscal 2024. The enterprise cloud computing solution provider’s first-quarter fiscal 2024 non-GAAP earnings increased 71.4% to $1.69 per share from 98 cents reported in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.61.
The quarterly non-GAAP earnings were adversely impacted by a loss of 11 cents per share from mark-to-mark accounting of CRM’s strategic investments at a non-GAAP tax rate of 23.5%. However, the company’s ongoing restructuring initiative, which includes trimming the workforce, benefited first-quarter non-GAAP earnings by 72 cents per share.
Salesforce’s quarterly revenues of $8.25 billion climbed 11% year over year, surpassing the Zacks Consensus Estimate of $8.17 billion. The top line also improved 13% in constant currency.
The company has been benefiting from the robust demand environment as customers are undergoing a major digital transformation. Thus, the rapid adoption of its cloud-based solutions resulted in the better-than-anticipated performance in the fiscal first quarter.
Coming to CRM’s business segments, revenues from Subscription and Support (93% of the total revenues) increased 11.5% from the year-earlier period to $7.64 billion. Professional Services and Other (7% of total sales) revenues climbed 9% to $605 million.
Under the Subscription and Support segment, Sales Cloud revenues grew 10.9% year over year to $1.81 billion. Revenues from Service Cloud, one of the company’s largest and fastest-growing businesses, also improved 11.5% to $1.96 billion.
Marketing & Commerce Cloud revenues jumped 7.4% to $1.17 billion. Salesforce Platform and Other revenues were up 10.4% to $1.57 billion. Also, revenues from Data increased 18.4% year over year to $1.13 billion.
Geographically, Salesforce registered revenue growth of 10.3% in America (66.5% of the total revenues), 16% in the Asia Pacific (9.9%) and 12.3% in the EMEA (23.7%) on a year-over-year basis.
Salesforce’s gross profit came in at $6.12 billion, up 14.1% from the prior-year period. Moreover, the gross margin improved 200 basis points (bps) to 74%.
Salesforce recorded a non-GAAP operating income of $2.27 billion, indicating an increase of 73.9% from the year-ago quarter’s level of $1.31 billion. Moreover, the non-GAAP operating margin expanded 1,000 bps to 27.6% from 17.6% in the year-ago quarter due to lower operating expenses as a percentage of total sales. Operating expenses as a percentage of revenues declined to 69% from 72% in the year-ago quarter.
Balance Sheet & Other Details
Salesforce exited the fiscal first quarter with cash, cash equivalents and marketable securities of $14 billion, up from the $12.5 billion recorded at the end of the previous quarter.
CRM generated operating cash flow of $4.49 billion and free cash flow of $4.25 billion in the first quarter.
As of Apr 30, 2023, the current remaining performance obligation reflecting revenues under contract for the next 12 months was $24.1 billion, up 12% on a year-over-year basis. In the fiscal first quarter, the company bought back shares worth $2.1 billion. With this buyback of shares, the company has now $9.9 billion remaining under its current authorization limit of $20 billion.
Strong Guidance for Q2 and FY24
Salesforce provided strong guidance for the second quarter and fiscal 2024. For the fiscal second quarter, Salesforce projects total sales between $8.51 billion and $8.53 billion (midpoint $8.52 billion), indicating 10% year-over-year growth.
The company expects no impact on second-quarter revenues from foreign currency exchange rates. Furthermore, CRM anticipates non-GAAP earnings per share in the band of $1.89-$1.90 for the current quarter.
For fiscal 2024, Salesforce forecasts revenues in the range of $34.5-$34.7 billion. The company expects no impact from foreign currency exchange rates.
The company projects fiscal 2024 non-GAAP earnings between $7.41 and $7.43 per share. Salesforce estimates a non-GAAP operating margin of approximately 28% for fiscal 2024 and expects a year-over-year increase in operating cash flow in the 16-17% range.
Zacks Rank & Stocks to Consider
Salesforce currently has a Zacks Rank #3 (Hold). Shares of CRM have gained 26.8% over the past year.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 17.6% upward to $2.87 per share over the past 30 days. For 2023, earnings estimates have moved north by 14.8% to $12.04 in the past 30 days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have climbed 40.3% in the past year.
The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 60 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 60 days.
MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have jumped 31.8% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by a penny to $2.05 per share over the past 30 days. For 2023, earnings estimates have moved up by 5 cents to $9.59 in the past 30 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 14.6% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Salesforce (CRM) Q1 Earnings & Sales Beat Estimates, Up Y/Y
Salesforce (CRM - Free Report) reported better-than-expected financial results for the first quarter of fiscal 2024. The enterprise cloud computing solution provider’s first-quarter fiscal 2024 non-GAAP earnings increased 71.4% to $1.69 per share from 98 cents reported in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.61.
The quarterly non-GAAP earnings were adversely impacted by a loss of 11 cents per share from mark-to-mark accounting of CRM’s strategic investments at a non-GAAP tax rate of 23.5%. However, the company’s ongoing restructuring initiative, which includes trimming the workforce, benefited first-quarter non-GAAP earnings by 72 cents per share.
Salesforce’s quarterly revenues of $8.25 billion climbed 11% year over year, surpassing the Zacks Consensus Estimate of $8.17 billion. The top line also improved 13% in constant currency.
The company has been benefiting from the robust demand environment as customers are undergoing a major digital transformation. Thus, the rapid adoption of its cloud-based solutions resulted in the better-than-anticipated performance in the fiscal first quarter.
Salesforce Inc. Price, Consensus and EPS Surprise
Salesforce Inc. price-consensus-eps-surprise-chart | Salesforce Inc. Quote
Quarterly Details
Coming to CRM’s business segments, revenues from Subscription and Support (93% of the total revenues) increased 11.5% from the year-earlier period to $7.64 billion. Professional Services and Other (7% of total sales) revenues climbed 9% to $605 million.
Under the Subscription and Support segment, Sales Cloud revenues grew 10.9% year over year to $1.81 billion. Revenues from Service Cloud, one of the company’s largest and fastest-growing businesses, also improved 11.5% to $1.96 billion.
Marketing & Commerce Cloud revenues jumped 7.4% to $1.17 billion. Salesforce Platform and Other revenues were up 10.4% to $1.57 billion. Also, revenues from Data increased 18.4% year over year to $1.13 billion.
Geographically, Salesforce registered revenue growth of 10.3% in America (66.5% of the total revenues), 16% in the Asia Pacific (9.9%) and 12.3% in the EMEA (23.7%) on a year-over-year basis.
Salesforce’s gross profit came in at $6.12 billion, up 14.1% from the prior-year period. Moreover, the gross margin improved 200 basis points (bps) to 74%.
Salesforce recorded a non-GAAP operating income of $2.27 billion, indicating an increase of 73.9% from the year-ago quarter’s level of $1.31 billion. Moreover, the non-GAAP operating margin expanded 1,000 bps to 27.6% from 17.6% in the year-ago quarter due to lower operating expenses as a percentage of total sales. Operating expenses as a percentage of revenues declined to 69% from 72% in the year-ago quarter.
Balance Sheet & Other Details
Salesforce exited the fiscal first quarter with cash, cash equivalents and marketable securities of $14 billion, up from the $12.5 billion recorded at the end of the previous quarter.
CRM generated operating cash flow of $4.49 billion and free cash flow of $4.25 billion in the first quarter.
As of Apr 30, 2023, the current remaining performance obligation reflecting revenues under contract for the next 12 months was $24.1 billion, up 12% on a year-over-year basis. In the fiscal first quarter, the company bought back shares worth $2.1 billion. With this buyback of shares, the company has now $9.9 billion remaining under its current authorization limit of $20 billion.
Strong Guidance for Q2 and FY24
Salesforce provided strong guidance for the second quarter and fiscal 2024. For the fiscal second quarter, Salesforce projects total sales between $8.51 billion and $8.53 billion (midpoint $8.52 billion), indicating 10% year-over-year growth.
The company expects no impact on second-quarter revenues from foreign currency exchange rates. Furthermore, CRM anticipates non-GAAP earnings per share in the band of $1.89-$1.90 for the current quarter.
For fiscal 2024, Salesforce forecasts revenues in the range of $34.5-$34.7 billion. The company expects no impact from foreign currency exchange rates.
The company projects fiscal 2024 non-GAAP earnings between $7.41 and $7.43 per share. Salesforce estimates a non-GAAP operating margin of approximately 28% for fiscal 2024 and expects a year-over-year increase in operating cash flow in the 16-17% range.
Zacks Rank & Stocks to Consider
Salesforce currently has a Zacks Rank #3 (Hold). Shares of CRM have gained 26.8% over the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) , Momo (MOMO - Free Report) and ServiceNow (NOW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 17.6% upward to $2.87 per share over the past 30 days. For 2023, earnings estimates have moved north by 14.8% to $12.04 in the past 30 days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have climbed 40.3% in the past year.
The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 60 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 60 days.
MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have jumped 31.8% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by a penny to $2.05 per share over the past 30 days. For 2023, earnings estimates have moved up by 5 cents to $9.59 in the past 30 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 14.6% in the past year.