Salesforce (CRM) Q1 Earnings & Revenues Beat Estimates, Up Y/Y
Salesforce CRM delivered better-than-expected results for first-quarter fiscal 2021. The company’s non-GAAP earnings of $1.21 per share handily beat the Zacks Consensus Estimate of 88 cents. Quarterly earnings jumped 72.9% year over year mainly on higher revenues and a benefit of 24 cents per share from mark-to-mark accounting required by ASU 2016-01.
Salesforce’s quarterly revenues of $5.96 billion climbed 23% year on year, surpassing the Zacks Consensus Estimate of $5.88 billion. The top-line figure also improved 20% at constant currency (cc).
Quarter in Detail
Coming to the company’s business segments, revenues at Subscription and Support increased about 21% from the year-earlier period to $5.54 billion. Professional Services and Other revenues climbed 47% to $427 million.
Sales Cloud revenues grew 11.2% year over year to $1.39 billion. Revenues from Service Cloud, one of the company’s largest and the fastest-growing businesses, also improved 20.8% to $1.51 billion. Moreover, Marketing & Commerce Cloud revenues rose 25.4% to $895 million. Salesforce Platform and Other revenues were up 28.7% to $1.75 billion.
Geographically, the company registered revenue growth at cc of 22% in the Americas (69% of total revenues), 17% in the Asia Pacific (9%) and 17% in Europe (22%) on a year-over-year basis.
Salesforce’s gross profit came in at $4.41 billion, up 22.2% from the prior-year quarter. However, gross margin remained flat year over year at 74%.
Salesforce’s operating margin expanded 710 bps to 20.2% on efficient cost management. Operating expenses flared up 8.2% year over year to $3.45 billion.
Salesforce exited the fiscal first quarter with cash, cash equivalents and marketable securities of $15.02 billion compared with $12 billion recorded at the end of the previous quarter. The company generated an operating cash flow of $2.23 billion in the first quarter of fiscal 2022.
As of Apr 30, 2021, the current remaining performance obligation, which reflects future revenues under contract, was $17.8 billion, up 22.8% on a year-over-year basis.
Guidance
For the fiscal second quarter, it now projects total sales between $6.22 billion and $6.23 billion. Furthermore, Salesforce anticipates non-GAAP earnings per share in a band of 90-92 cents for the current quarter.
For fiscal 2022, the company raised its sales outlook to $25.9-$26 billion from the $25.65-$25.75 billion projected earlier. It estimates earnings in the range of $3.79-$3.81 per share for the fiscal year, up from the previously guided $3.39-$3.41 per share range. Additionally, management projects non-GAAP operating margin of 18%.
Zacks Rank and Stocks to Consider
Salesforce currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Silicon Motion Technology Corporation SIMO, Lam Research Corporation LRCX and LG Display Co., Ltd. LPL, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Silicon Motion Technology Corporation, Lam Research and LG Display is currently pegged at 8%, 32.8% and 32.56%, respectively.
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