Salesforce Reports Earnings Beat, CFO Exit: What to Know
Salesforce stock is struggling for direction Thursday after the tech giant disclosed Q2 earnings and a key C-suite shake up.
Salesforce (CRM) stock is choppy Thursday as Wall Street parses the software-as-a-service firm's (Saas) second-quarter earnings beat and upwardly revised full-year profit forecast.
In the three months ended July 31, Saleforce's revenue increased 8.4% year-over-year to $9.3 billion. Its earnings per share (EPS) were up 20.8% from the year-ago period to $2.56.
"In Q2, we delivered strong performance across revenue, cash flow, margin and cRPO [current remaining performance obligation, a measure of revenue], and raised our fiscal year non-GAAP operating margin and cash flow growth guidance," said Salesforce CEO Marc Benioff in a statement.
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Benioff added that the company's new AgentForce artificial intelligence (AI) platform is "reimagining enterprise software for a new world where humans with autonomous Agents drive customer success together. Salesforce is the only company with the leading apps, trusted data and agent-first platform to deliver this vision at scale and help companies realize the incredible benefits of AI."
The company's top- and bottom-line results beat analysts' expectations. Wall Street was anticipating revenue of $9.2 billion and earnings of $2.36 per share, according to CNBC.
As a result of its strong performance in the first half of the year, Salesforce raised its profit forecast for its full fiscal year. The company now anticipates earnings per share in the range of $10.03 to $10.11, up from its previous forecast of $9.86 to $9.94. It added that it continues to expect revenue to arrive between $37.7 billion to $38 billion.
For the third quarter, Salesforce is guiding for revenue in the range of $9.31 billion to $9.36 billion and EPS in the range of $2.42 to $2.44. This is mixed compared to analysts' expectations for revenue of $9.41 billion and earnings of $2.43 per share.
The report also included news that Amy Weaver will be leaving her position as chief financial officer of Salesforce.
Is Salesforce stock a buy, sell or hold?
Salesforce has been one of the worst Dow Jones stocks this year, off a little over 1% at last check. Still, Wall Street is bullish on CRM.
According to S&P Global Market Intelligence, the average analyst target price for CRM stock is $308.22, representing implied upside of roughly 19% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Needham is one of the more bullish outfits on the blue chip stock with a Buy rating and $345 price target.
"CRM reported modest, but largely in line, Q2 results," says Needham analyst Scott Berg. "While sales appear steady, the negative news was CFO Amy Weaver's resignation who was well-liked by the Street given her successful push for operating leverage. The call's highlight was details given for its new AgentForce bot technology CRM believes can drive incremental sales in Sales and Service Clouds."
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