Salesforce stock falls despite strong earnings report
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Sales force
shares fell late in Wednesday’s trading, although the company posted better-than-expected results for the first fiscal quarter ending April 30.
Investors may be disappointed that the cloud-based software provider did not raise its full-year revenue outlook despite a strong first quarter.
Shares of Salesforce (ticker: CRM) fell 3.5% in late trading following the earnings report.
Salesforce CFO Amy Weaver said in an interview with Barron’s that it was a “solid quarter,” marked by a strong improvement in operating margins. She noted that the non-GAAP operating margin of 27.6% was about two points above consensus and 10 percentage points higher than the previous quarter of the year.
But Weaver also says there are a number of reasons she’s taking a cautious approach to full-year revenue guidance. In particular, she noted that the company continued to struggle in macro conditions. She said that the April quarter from that perspective was similar to the January quarter, except that Salesforce saw professional services revenue tighten further as customers shifted to projects that could generate profits more quickly. .
Weaver added that the company’s Tableau unit was “outstanding” in terms of Q4 performance, but with weaker results in Commerce, Marketing and Slack. That result, she says, is no surprise, with customers spending less in areas where they have more decision-making power to keep costs down.
For the quarter, Salesforce posted revenue of $8.25 billion, up 11% from a year ago or 13% in constant currency. This is slightly above the top of the company’s guidance range of $8.18 billion and the Wall Street consensus of $8.14 billion.
On an adjusted basis, the company earned $1.69 a share, 8 cents above the top of the guidance range and one cent better than the Street consensus. Under generally accepted accounting rules, the company earned 20 cents a share for the quarter. The remaining performance obligations are now $24.1 billion, up 12%.
For the July quarter, Salesforce posted revenue of $8.51 billion to $8.53 billion, up 10% and matching Wall Street’s forecast of $8.49 billion. The company reiterated its full-year revenue guidance of $34.5 billion to $34.7 billion but raised expectations for full-year operating margins.
Weaver noted that the company repurchased $2.1 billion in stock during the quarter, bringing the total number of shares since the start of the buyback program last August to $6 billion.
Sales force already in place blockbuster quarter 1yields better than expected results and higher instructions.
Salesforce, a leader in cloud-based enterprise software, also unveiled an expanded stock buyback program. It also created a board-level “business transformation committee,” after five active investors received shares in company. The board subsequently dissolved a committee focused on mergers and acquisitions. More recent company announcements artificial intelligence planand the stage was set for a big move.
Since the March 1 earnings report, Salesforce stock is up 32%.
Write to Eric J. Savitz at [email protected]