- Salesforce stock seesawed in after hours trading after reporting adjusted earnings that beat Wall Street estimates but revenue that was only slightly above estimates.
- The San Francisco cloud giant grew its revenue 33% to $US4.5 billion in the three months ending October 31, slightly above the $US4.45 billion expected by analysts.
- However, its Q4 2020 earnings guidance came in lighter than expected at $US0.54 – $US0.55 estimates versus the $US0.62 Wall Street forecasted. Q4 2020 revenue guidance was forecasted at $US4.74 to $US4.75 billion, slightly above the $US4.73 billion analysts predicted.
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Salesforce beat Wall Street’s financial targets in the third quarter, even as it swung to a loss on tax related issues.
The San Francisco cloud giant grew its revenue 33% to $US4.5 billion in the three months ending October 31, slightly above the $US4.45 billion expected by analysts. Excluding certain items, Salesforce reported adjusted earnings per share of $US0.75, compared to the $US0.66 that Wall Street had forecasted.
Shares of Salesforce traded up and down after the earnings report in extended trading on Tuesday, with the tock down a little more than 2% at last check.
Salesforce also gave guidance for the next quarter, with revenue forecasted of $US4.74 billion to $US4.75 billion, slightly above the $US4.73 billion analysts predicted. Its earnings per share guidance for the fourth quarter of $US0.54 – $US0.55 disappointed and was lower than the $US0.62 Wall Street expected.
The company however, maintained the FY 2020 revenue guidance of $US17 billion and the FY 2021 revenue guidance of $US20.9 billion that it gave at its investor day in November.
Last month during its annual Dreamforce conference, it also issued a revenue target for FY 2024 of $US35 billion and the company said it expects to double in size in five years.
“We’re now on track to double our revenue in five years,” said Marc Benioff Salesforce co-CEO in a statement. “With Customer 360, only Salesforce is providing companies with a single source of truth, bringing them even closer to their customers across every touchpoint.”
During Salesforce’s annual Dreamforce conference in San Francisco last month, the company announced updates to its platform that focused on helping businesses create a 360 degree view of their customers.
This means tracking customer’s actions, preferences and habits across devices. It’s a strategy that Salesforce co-CEO Keith Block has previously called the company’s “fourth act,” and a “Holy Grail” for its customers. It’s essentially Salesforce’s’ way to modernise and update its product with what its business customers are asking for.
Salesforce has also been turning to acquisitions as growth in its core businesses slows. In August it completed its largest acquisition ever, buying data analytics company Tableau for $US15.3 billion. This is just a year after it acquired MuleSoft for $US6.5 billion.
Revenue from subscription and support services came in at $US4.24 billion for the quarter, and included about $US308 million in revenue brought in from the acquisition of Tableau.
Here is what Salesforce reported for Q3 2020:
- Revenue: $US4.5 billion. Wall Street expected $US4.46 billion
- EPS (adjusted): $US0.75. Analysts forecasted $US0.66
- EPS (GAAP): Loss of 12 cents per share. Analysts forecasted 18 cents per share.
- EPS (adjusted, next quarter): $US0.54 – $US0.55 estimated. Analysts predicted $US0.62.
- Revenue (next quarter): $US4.74 billion – $US4.75 billion estimated. Wall Street expected $US4.73 billion.
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