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Alberto Abaterusso
Alberto Abaterusso
Articles (1791) 

Salesforce.com Tops Forecasters on 3rd-Quarter Numbers

The US cloud computing company targets strong revenue growth for fiscal 2020 and 2021

December 04, 2019 | About:

Shares of Salesforce.com Inc (NYSE:CRM) were slightly down 0.97% to $160 per share in after-hours trading on Tuesday, despite topping consensus estimates on adjusted earnings and revenue for the company's third quarter of fiscal 2020, which ended on Oct. 31.

Adjusted earnings per diluted share of 75 cents was up 23% year-over-year and exceeded consensus estimates by 9 cents.

Total revenue of $4.51 billion marked a 33% increase from the prior-year quarter, surpassing projections by $60 million.

By segment, subscription and support revenues of $4.24 billion represented a gain of 33.8% and professional services and other revenues of $274 million represented a gain of 22.3%.

In a statement, co-CEO Keith Block commented on Salesforce.com’s third-quarter results:

“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.”

The San Francisco-based cloud computing company also posted a 108.4% rise in operating cash flow to $298 million in the third quarter of fiscal 2020, up from $143 million in the third quarter of fiscal 2019. Further, remaining performance obligations were nearly $26 billion, increasing 22% year over year while its current portion reached approximately $12.8 billion, increasing 28%.

Remaining performance obligations are contracted prepayments and unbilled sums that the company will pencil in as revenues in subsequent periods.

Looking ahead, Salesforce.com provided its shareholders with the following guidance on revenue and adjusted earnings:

For the final quarter of fiscal 2020, earnings per diluted share are expected to fall in the 54 cents to 55 cents range versus consensus estimates of 62 cents. Revenue is expected to grow 32% year over year to a range of $4.743 billion to $4.753 billion versus projections of $4.72 billion.

For the full year of fiscal 2020, the company targets earnings per diluted share of $2.89 to $2.90 on revenue of $16.99 billion to $17 billion, while analysts estimate earnings per diluted share of $2.86 on revenue of $16.9 billion.

For the first quarter and full year of fiscal 2021, the company predicts revenue of $4.8 billion to $4.835 billion (up 28-29% from the prior-year quarter) and of $20.8 billion to $20.90 billion (up 22-23% from the prior year). Analysts project revenue of $4.83 billion for the first quarter of fiscal 2021 and revenue of $20.93 billion for the full year of fiscal 2021.

The balance sheet had $6.53 billion in cash on hand, equivalents and marketable securities as of Oct. 31. It also had $6.86 billion in unearned revenues and $2.82 billion in non-current debt. Total equity was worth 33.28 billion.

The stock gained 18% so far this year to close at a price of $161.57 per share on Tuesday for a market capitalization of $141.70 billion. The share price is above the 120-, 70- and 30-day simple moving average lines.

The 52-week range is $120.16 to $167.56.

The 14-day relative strength index of 56 suggests the stock is neither oversold nor overbought.

The stock has a recommendation rating of 1.7 which belongs to the 1 (Strong Buy) – 2 (Buy) range. The average target price of $189.20 reflects a 17.1% upside from Tuesday’s closing price.

Disclosure: I have no position in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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