Salesforce.com Jumps on Earnings Beat

The company increases revenues Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- By Alberto Abaterusso

” data-reactid=”11″>- By Alberto Abaterusso

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Shares of Salesforce.com Inc. (CRM) were up 2.66% to $154.82 in after-hours trading on Tuesday after beating consensus estimates on non-GAAP earnings for the first quarter of fiscal 2020 by 5 cents, reporting 66 cents per share. Earnings increased 26.9% year-over-year.” data-reactid=”12″>Shares of Salesforce.com Inc. (CRM) were up 2.66% to $154.82 in after-hours trading on Tuesday after beating consensus estimates on non-GAAP earnings for the first quarter of fiscal 2020 by 5 cents, reporting 66 cents per share. Earnings increased 26.9% year-over-year.

GAAP earnings were 22 cents per share or 4.8% better than 21 cents per share in the prior-year quarter, beating consensus estimates by 10 cents.

Revenue came in at a record of $3.74 billion, which was up 24.3% and beat market expectations by $50 million. By segment, subscription and support revenues rose 24% to $3.5 billion and professional services and other revenues were up 23% to $241 million.

The chart below shows the trend in total revenues of Salesforce.com for the past five quarters through the first quarter of fiscal 2020. Salesforce.com is steadily growing its revenue.

Further, revenues that the company hasn’t earned yet or that it will recognize and bill in future periods reached $24.9 billion, which represents a 22% increase.

The San Francisco-based cloud computing company also posted a 26% growth in gross profit to $2.823 billion, a 10% rise in the operating income to $210 million and a 14% increase in the net income to $392 million. The gross profit margin improved 104 basis points from 74.5% in the first quarter of fiscal 2019 to 75.54% in the first quarter of fiscal 2020. In contrast, the net profit margin declined 95 basis points to 10.5% due to higher total operating expenses.

First quarter operations generated cash flows totalling $1.97 billion, which were up 34%.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Additionally, for the second quarter of fiscal 2020, the company expects revenue of $3.94 billion to $3.95 billion versus consensus estimates of $3.94 billion, and it forecasts earnings per share of 46 cents to 47 cents versus expectations of 66 cents.” data-reactid=”32″>Additionally, for the second quarter of fiscal 2020, the company expects revenue of $3.94 billion to $3.95 billion versus consensus estimates of $3.94 billion, and it forecasts earnings per share of 46 cents to 47 cents versus expectations of 66 cents.

For full fiscal 2020, Salesforce.com raised its non-GAAP earnings per share guidance to a range of $2.88 to $2.90 versus analysts’ expectations of $2.69.

The share price was $150.81 at close on Tuesday for a market capitalization of $116.84 billion. Following an 11% increase for the 52 weeks through June 4, the share price is clearly below the 100- and 50-day simple moving average lines but still slightly above the 200-day SMA line. Salesforce.com has outperformed the S&P 500 index by 10.5% over the same period. The 52-week range is $113.60 to $167.56.

The 14-day relative strength index of 44 suggests the stock is neither oversold nor overbought.

Wall Street issued a buy recommendation rating for shares of Salesforce.com. The average target price per share is $182.59 reflecting 21.1% upside from the share price at close on Tuesday.

Disclosure: I have no position in any securities mentioned.