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Salesforce (CRM) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

·4 min read
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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).

salesforce.com, inc. Price, Consensus and EPS Surprise
salesforce.com, inc. Price, Consensus and EPS Surprise

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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