CRM Stock: Earnings Fall But Come In Ahead Of Estimates

Shares in Salesforce (CRM) jumped Wednesday after its April-quarter earnings fell from a year earlier but topped Wall Street targets. Revenue also edged by analyst estimates. The enterprise software maker’s own outlook for CRM stock eased some analyst concerns.


“In a quarter where expectations were muted and the backdrop mixed, CRM delivered metrics ahead of expectations,” said Alex Zukin, analyst at Wolfe Research in a report. “While the company is not calling an all-clear or pretending to be immune to macro headwinds, the message was one of focus, efficiency, experience and resiliency in an increasingly uncertain environment.”

At Jefferies, analyst Brent Thill said in a note to clients: “CRM delivered better-than-feared results as it reported in line despite high currency headwinds. CRM lowered the fiscal 2023 top line guide to 20% (growth) due to $300 million in incremental currency headwinds, but committed to delivering higher margins at 20.4% despite the headwinds.”

CRM Stock: Worries Over Economy

Some analysts were cautious about Salesforce guidance amid rising interest rates and a possible economic slowdown.

“Against a backdrop of rising investor concern about the macro impact on IT spend, Salesforce’s tone was surprisingly strong,” said UBS analyst Karl Keirstead in a report. “Salesforce shrugged-off macro concerns with a ‘watching things carefully but it’s not impacting us’ message. Bottom line, Salesforce is proving to be more durable than we expected, both in this early-stage economic downturn and by over-coming the risk of a post-pandemic revenue growth normalization.”

Including Slack Technologies, acquired in 2021, Salesforce earnings fell 19% to 98 cents on an adjusted basis. San Francisco-based Salesforce said revenue climbed 24% to $7.41 billion.

Salesforce Stock: Slack Revenue Beats

“Slack revenue of $344 million exceeded guidance of $330 million and marked the fourth consecutive quarter with more than 40% year-over-year growth in over $100,000 (revenue) customers,” Credit Suisse analyst Phil Winslow said in his note to clients.

A year earlier, Salesforce reported profit of $1.21 a share, including investment gains, on sales of $5.96 billion.

CRM stock analysts expected Salesforce to report earnings of 94 cents a share on sales of $7.38 billion.

“CRM reported solid results in Q1 and no material degradation in demand due to global macro uncertainty,” Truist Securities analyst Terry Tillman said in a note.

Salesforce reported first-quarter earnings after the market close on Tuesday. Salesforce stock jumped 9.9% to close at 176.07 on the stock market today.

The enterprise software maker said current remaining performance obligations, known as CRPO bookings, rose 24% to $21.5 billion, in line with estimates. CRPO bookings are an aggregate of deferred revenue and order backlog.

CRM Stock: July Quarter Guidance Light

For the current quarter ending in July, the company forecast earnings per share in a range of $1.01 to $1.02, vs. estimates of $1.14 a share for CRM stock. Also, the software maker expects revenue of $7.695 billion at the midpoint of guidance, vs. estimates of $7.77 billion.

One analyst was less upbeat.

“Salesforce had a mixed Q1,” said Oppenheimer analyst Brian Schwartz in a report. “Results included better-than-feared commentary on Europe and the macro plus good cost management that led to a higher fiscal 2023 operating margin target.”

He added: “These positives were offset by CRPO falling short of the consensus estimate for the first time since the 2020 recession and a reduction in fiscal 2023 revenue guidance due to negative currency.”

CRM stock had retreated about 35% in 2022, as software growth stocks generally struggle.

Salesforce sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. The company has expanded into marketing, customer services and e-commerce.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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