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Mayank Marwah
Mayank Marwah
Articles (751) 

What Investors Need to Know About Salesforce's 3rd-Quarter Earnings

Revenue increased year-over-year, but earnings fell

December 04, 2019 | About:

Salesforce.com Inc. (NYSE:CRM) released its third-quarter results on Dec. 3 after the market closed. The global leader in customer relationship management surpassed Wall Street’s revenue expectations thanks to robust subscription revenue and support revenue growth. However, the company registered a net loss during the quarter.

Snapshot of the quarter

Salesforce posted GAAP losses of 12 cents per share in the third quarter, down from a profit of 13 cents per share reported in the prior-year quarter. Barring certain items, the company posted adjusted earnings of 75 cents per share.

Revenue during the same period came to $4.5 billion, up 33% year-over-year. Wall Street had anticipated $4.45 billion in revenue. The high revenue included a roughly $327 million contribution from Tableau, a data visualization software acquired by Salesforce. The company has also partnered with major cloud service providers like Microsoft Corp. (NASDAQ:MSFT) and Amazon.com Inc. (NASDAQ:AMZN) in view of making its software all-pervasive. Reflecting on the quarter’s performance, the company’s co-CEO Keith Block said:

“We had strong growth across our clouds and regions in the quarter as more companies turn to Salesforce as a trusted advisor in their digital transformations. With these trusted customer relationships, continuous innovation and our phenomenal Trailblazer ecosystem, we have never been better positioned for the future.”

At quarter's end, the balance of cash, cash equivalents and marketable securities stood at a combined $6.53 billion.

Segment performance

In the Sales Cloud division, sales surged 15% to $1.17 billion during the quarter. Similarly, sales in the Service Cloud segment inched up 24% to $1.14 billion. Revenue in the Marketing and Commerce Cloud jumped 32%, while in the Platform and Other segment, revenue rose 73%.

Financial forecast

For fiscal 2020, Salesforce is guiding for GAAP earnings between 44 and 45 cents per share, while sales are expected to be around $17 billion, reflecting a growth of 28%.

Non-GAAP operating margin is projected to be around 16.6%. On the other hand, the compay expects operating cash flow to grow by around 22%-23%.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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