Salesforce.com (CRM) reported a solid Q1, posting revenue and EPS of $248 million (above $235.8 million consensus) and $0.08 (ahead of $0.07 consensus). Deferred revenue fell for the first time in 5 years, but bullish Citi attributes the decline to seasonality and a tough compare. Citi raises target to $80, from $70, says seasonal catalysts coming in the fall:
CRM delivered $12M rev upside to FQ1 and raised FY09 guid. range by $30M. PF op mgn expanded again: +600bp y/y, +140bp q/q. Def. revs. fell sequentially for first time in 5+ yrs (-$11M), but reflects seasonality, espec. vs. a very strong FQ4 (+$140M q/q).
[Don’t mean to nitpick, but the same “seasonality” must have affected previous years, too. So need more before we just ignore that.]
CRM is entering a seasonally softer period, with FQ2 seq. rev growth typically decelerating and stock slipping in May-July for last 2 yrs (-7% in ’07, -27% in ’06). This presents an opportunistic time to accumulate stock, which is down 10% in last 5 days & flat YTD (vs. NASDAQ -2% & -8%), ahead of seasonal outperformance in Aug.-Oct. (+45% in ’07, +52% in ’06) and catalyst in Nov. annual user conf.
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