Salesforce Shares Rise As Profits, Guidance Top Expectations Amid Slack Acquisition

Salesforce.com (CRM) reported July quarterly earnings per share and revenue that beat analyst estimates, including a small contribution from recently acquired Slack Technologies. CRM stocks rose as Salesforce’s earnings expectations came above Wall Street’s targets.




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Salesforce reported earnings of $1.48 per share, including an investment gain of 43 cents, on an adjusted basis. In addition, sales increased 23% to $6.34 billion, including the acquisitions of Slack and Accumen. The Slack deal closed on July 21.

A year earlier, Salesforce’s profit was $1.44, including capital gains on $5.15 billion in revenue. Excluding capital gains, Salesforce earned $1.05 in the July quarter, up from 68 cents per share a year earlier.

Analysts expected Salesforce to report earnings of 92 cents a share on revenue of $6.24 billion.

The enterprise software maker said its current residual performance commitments, or CRPO bookings, are up 23% to $18.7 billion. That surpassed analyst estimates of $18.23 billion. CRPO postings are a total of deferred revenue and backlog.

CRM inventory: guidance beyond expectations

CRM shares rose 1.3% to 264.27 in extended stock market trading today. Heading into the earnings report, Salesforce stock traded about 4% below an entry point of 271.02.

For the current quarter that ended in October, Salesforce’s revenue outlook was above expectations. The software maker expects revenues of $6.78 billion to $6.79 billion versus estimates of $6.65 billion.

The company expects earnings of 91 to 92 cents per share. Analysts had expected earnings of 82 cents per share.

Operating margins a problem in acquisitions

Heading into the earnings report, Salesforce stock held a relative strength of 64 out of a possible 99.

Salesforce sells software under a subscription model. The software helps companies organize and handle sales activities and customer relationships.

The company has expanded into marketing, customer service and e-commerce. One problem for CRM stocks is that Salesforce’s operating margins are lagging behind large-cap, software peers.

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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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