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Chicago, IL –March 6, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Salesforce (CRM - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Buy Salesforce (CRM - Free Report) as It Tries to Double Revenue by 2023
Shares of Salesforce fell after-hours Monday and continued their dip in morning trading Tuesday after the firm provided some weaker-than-expected guidance. Despite the small downturn, the cloud-focused, software-as-a-service powerhouse said it plans to double its revenue over the next four years as businesses around the world adapt to the quickly changing digital age.
Q4 Overview
Salesforce posted fourth-quarter fiscal 2019 revenue of $3.60 billion. This marked a 26% jump from the prior-year quarter and surpassed our $3.56 billion Zacks Consensus Estimate. Investors should note that CRM’s Q4 revenue growth topped the four-quarter of 2018’s 24% and matched Q3’s climb.
More specifically, Salesforce’s quarterly subscription and support division came in at $3.375 billion, which beat our NFM estimate and represented a 26.4% climb. CRM’s smaller, professional services and other unit did fall short of our estimate at $228 million.
At the bottom end of the income statement, Salesforce’s adjusted fourth-quarter EPS climbed from $0.47 to reach $0.70 a share and crush our $0.56 per share estimate. Meanwhile, the customer relationships management firm’s free cash flow surged 27% to $1.16 billion, to easily top Wall Street expectations that called for just a 4% climb.
Q1 & Fiscal 2020 Outlook
Looking ahead, as we mentioned at the top, Salesforce provided some lower-than-expected guidance.
Management projected adjusted fiscal first-quarter earnings between $0.60 and $0.61 per share, which came in just below our $0.62 a share estimate. Despite the subdued Q1 outlook, the company’s full-year earnings guidance of $2.74 to $2.76 per share came in above our $2.73 a share estimate.
CRM expects to report first-quarter fiscal 2020 revenues between $3.67 billion and $3.68 billion. This fell below our $3.72 billion estimate, which would have marked 23.6% growth. For the full year, Salesforce provided revenue guidance in the $15.95 billion to $16.05 billion range, which came somewhat in line with our current $15.98 billion estimate that would have marked nearly 21% year over year expansion.
What’s Next?
Jumping even further ahead, Salesforce management projects to see its revenue reach $26 billion to $28 billion by fiscal 2023. This implies an annual growth rate of roughly 19% over the next four years and would see the firm double its revenue. However, investors should note that this revenue growth would mark some of the slowest Salesforce has seen in years, after an extended run of roughly 25% growth every quarter.
Clearly, the slowdown is certainly not guaranteed and Salesforce has surpassed the high-end of its short-term revenue forecast every quarter for the past five years. Still, revenue deceleration is certainly not a welcome sign, but it is something that every successful company experiences at some point.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Salesforce
For Immediate Release
Chicago, IL –March 6, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Salesforce (CRM - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Buy Salesforce (CRM - Free Report) as It Tries to Double Revenue by 2023
Shares of Salesforce fell after-hours Monday and continued their dip in morning trading Tuesday after the firm provided some weaker-than-expected guidance. Despite the small downturn, the cloud-focused, software-as-a-service powerhouse said it plans to double its revenue over the next four years as businesses around the world adapt to the quickly changing digital age.
Q4 Overview
Salesforce posted fourth-quarter fiscal 2019 revenue of $3.60 billion. This marked a 26% jump from the prior-year quarter and surpassed our $3.56 billion Zacks Consensus Estimate. Investors should note that CRM’s Q4 revenue growth topped the four-quarter of 2018’s 24% and matched Q3’s climb.
More specifically, Salesforce’s quarterly subscription and support division came in at $3.375 billion, which beat our NFM estimate and represented a 26.4% climb. CRM’s smaller, professional services and other unit did fall short of our estimate at $228 million.
At the bottom end of the income statement, Salesforce’s adjusted fourth-quarter EPS climbed from $0.47 to reach $0.70 a share and crush our $0.56 per share estimate. Meanwhile, the customer relationships management firm’s free cash flow surged 27% to $1.16 billion, to easily top Wall Street expectations that called for just a 4% climb.
Q1 & Fiscal 2020 Outlook
Looking ahead, as we mentioned at the top, Salesforce provided some lower-than-expected guidance.
Management projected adjusted fiscal first-quarter earnings between $0.60 and $0.61 per share, which came in just below our $0.62 a share estimate. Despite the subdued Q1 outlook, the company’s full-year earnings guidance of $2.74 to $2.76 per share came in above our $2.73 a share estimate.
CRM expects to report first-quarter fiscal 2020 revenues between $3.67 billion and $3.68 billion. This fell below our $3.72 billion estimate, which would have marked 23.6% growth. For the full year, Salesforce provided revenue guidance in the $15.95 billion to $16.05 billion range, which came somewhat in line with our current $15.98 billion estimate that would have marked nearly 21% year over year expansion.
What’s Next?
Jumping even further ahead, Salesforce management projects to see its revenue reach $26 billion to $28 billion by fiscal 2023. This implies an annual growth rate of roughly 19% over the next four years and would see the firm double its revenue. However, investors should note that this revenue growth would mark some of the slowest Salesforce has seen in years, after an extended run of roughly 25% growth every quarter.
Clearly, the slowdown is certainly not guaranteed and Salesforce has surpassed the high-end of its short-term revenue forecast every quarter for the past five years. Still, revenue deceleration is certainly not a welcome sign, but it is something that every successful company experiences at some point.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.