Shares of Salesforce rose 5% in extended trading on Thursday after the cloud software maker issued earnings and guidance that beat analysts’ expectations.
Here’s how the company did it:
- Profits: $ 1.21 a share, adjusted, versus 88 cents a share as analysts expected, according to Refinitiv.
- Income: $ 5.96 billion, compared to $ 5.89 billion as analysts expected, according to Refinitiv.
Revenue grew 23% year-on-year in the fiscal first quarter, which ended April 30, the company said in a statement. In the previous quarter, revenues increased 20%.
The company will hold its flagship Dreamforce conference in person in San Francisco, as well as in New York, Paris and London, CEO Marc Benioff said in a conference call with analysts. All attendees must be fully vaccinated, Benioff said. Salesforce held Dreamforce virtually in 2020 to reduce the spread of the coronavirus.
The Platform and Others segment that includes MuleSoft and Tableau products, currently Salesforce’s top segment in subscription and support revenue, contributed $ 1.75 billion in revenue, an increase of 28%.
Salesforce’s core Sales Cloud product that sellers use to track business opportunities generated $ 1.39 billion in revenue, up 11%.
While different parts of the world have reopened their economies to varying degrees, there was not a single area that was slower than others in the quarter, said Gavin Patterson, Salesforce’s chief revenue officer.
Regarding guidance, Salesforce said it sees 91 cents to 92 cents in fiscal second-quarter adjusted earnings per share over $ 6.22 billion to $ 6.23 billion in revenue. Analysts surveyed by Refinitiv expected 86 cents in adjusted earnings per share and $ 6.15 billion in revenue.
Salesforce asked for $ 3.79 to $ 3.81 in adjusted earnings per share in the full fiscal year 2022, with $ 25.9 billion to $ 26.0 billion in revenue, or growth of 22%. The consensus among analysts surveyed by Refinitiv was $ 3.43 in adjusted earnings per share and $ 25.76 billion in revenue.
The expected adjusted operating margin for the full year widened to 18% from 17.7% as the revenue guidance increased by $ 250 million in the middle of the range. “Our decision to increase revenue for fiscal 2022 reflects our performance in the first quarter and our confidence in our ability to execute for the remainder of the year,” said Amy Weaver, the company’s chief financial officer.
The guide takes into account the assumption that some trips will return, but they do not come close to pre-pandemic levels, Weaver said.
“We have simply learned how to work effectively and how to serve our customers effectively without having to be on an airplane every day,” he said.
The full-year guidance includes a contribution of $ 500 million in revenue from the team communication software application Slack, a $ 27.7 billion acquisition expected to close just at the end of the quarter ending 31 of July. That expected contribution is $ 100 million lower than Salesforce. forecast in February, because the company has updated its forecast on when the deal will close. The guide also includes $ 190 million in revenue from Acumen Solutions, a professional services company that Salesforce acquired in the first fiscal quarter.
Despite the after-hours movement, Salesforce shares have risen less than 2% since the beginning of the year, while the S&P 500 Index has risen nearly 12% over the same period.
Morgan Stanley analysts upgraded their rating on Salesforce shares to the buy equivalent from the hold equivalent earlier this month. “While concerns about M&A appetite and long-lasting margin expansion may persist, leading franchises do not stay cheap for long, particularly amid the strong demand environment we anticipate in the coming years,” they wrote.
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