Salesforce Beats in Q1 and Offers Strong Guidance Ahead

American cloud-based software company Salesforce reported its first quarter results this week and exceeded estimates.

Salesforce shares rose 5% in extended trading on Thursday after the results surpassed analysts’ expectations and the company issued strong guidance.

For the first quarter, Salesforce reported earnings per share of $1.21, adjusted. This was better than the 88 cents per share that had been expected by analysts per Refinitiv. Revenue at $5.96 billion was also better than the $5.89 billion that had been expected by analysts, per Refinitiv.

Revenue for the company grew 23% year over year in the fiscal first quarter, which ended April 30th. In the previous quarter revenue increased by 20%.

The Platform and Other segment that includes the MuleSoft and Tableau products, currently Salesforce’s top segment for subscription and support revenue, contributed $1.75 billion in revenue, a growth of 28%.

Salesforce’s core Sales Cloud product generated delivered $1.39 billion in revenue, up 11%.
While different parts of the world have reopened their economies to varying degrees, there wasn’t a single area that was slower than others in the quarter, remarked Gavin Patterson, Salesforce’s chief revenue officer.

Looking ahead, Salesforce said it sees 91 cents to 92 cents in adjusted fiscal second-quarter earnings per share on $6.22 billion to $6.23 billion in revenue. Analysts polled by Refinitiv were expecting 86 cents in adjusted earnings per share and $6.15 billion in revenue.

Salesforce called for $3.79 to $3.81 in adjusted earnings per share in the full 2022 fiscal year, with $25.9 billion to $26.0 billion in revenue, or 22% growth. Consensus among analysts that had been polled by Refinitiv was $3.43 in adjusted earnings per share and $25.76 billion in revenue.

“Our decision to raise fiscal 2022 revenue is reflective of our Q1 performance and our confidence in our ability to execute for the rest of the year,” said Amy Weaver, the company’s finance chief.

According to Weaver, the guidance takes into account the assumption that some travel will return, but not anywhere near pre-pandemic levels.

“We’ve simply learned how to work effectively and how to serve our customers effectively without being on a plane every day,” she said.

Excitingly, Salesforce will be holding its major Dreamforce conference in person in San Francisco as well as in New York, Paris and London, said CEO Marc Benioff. All attendees will have to be fully vaccinated, Benioff added. Salesforce held Dreamforce virtually in 2020 to reduce spread of the coronavirus.

Morgan Stanley analysts upgraded Salesforce to the equivalent of buy from the equivalent of hold this month. “While concerns on M&A appetite and durable margin expansion may linger, leading franchises do not stay cheap for long, particularly amidst the strong demand backdrop we foresee over the next several years,” wrote the firm.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.