Video Source: CNBC Television on YouTube
Salesforce Inc (NYSE: CRM) reported better-than-anticipated fiscal 2024 second-quarter results. While issuing a robust Q3 outlook, the company also upwardly revised its FY 2024 view. Both the Q3 and FY 2024 outlooks exceeded Wall Street estimates. The stock of Salesforce ended Friday’s trading session at $221.53, almost unchanged from the prior close.
The San Francisco, California-based company reported second-quarter revenues of $8.60 billion, up 11.40% from $7.72 billion in the similar quarter of fiscal 2022.
For the second quarter, which ended July 31, 2023, Salesforce posted net income of $1.27 billion, or $1.28 per share, compared with net income of $68 million, or $0.07 per share, in the second quarter, which ended July 31, 2022.
Excluding depreciation and amortization, stock-based compensation expense, losses on strategic investments, accounts receivable, costs capitalized to obtain revenue contracts, prepaid expenses, and other current assets, accounts payable and accrued expenses, and operating lease liabilities, among others, the 2Q 2024 non-GAAP net income was $2.094 billion, or $2.12 per share, up from $1.19 billion, or $1.19 per share, in 2Q 2023.
Analysts surveyed by Refinitiv had anticipated Salesforce to post earnings of $1.90 per share on revenues of $8.53 billion.
Commenting on the quarterly results, Marc Benioff, Chair and CEO of Salesforce, stated “Our transformation drove our strong second quarter results, delivering revenue of $8.6 billion and record GAAP and non-GAAP operating margins.”
Segment wise:
- Subscription and support revenues rose by 12.08% y-o-y to $8.01 billion.
- Professional services revenues increased to $597 million from $577 million.
Salesforce reported a second-quarter non-GAAP operating margin of 31.60%. Additionally, Q2 2023 cash from operations was $0.81 billion, up 142% on a y-o-y basis. Free cash flow for the second quarter was $0.63 billion, an increase of 379% from last year. Notably, the company paid back $1.90 billion to shareholders in the form of share repurchases.
Looking forward, the company forecasts Q3 revenues of between $8.70 billion and $8.72 billion. Also, Salesforce expects Q3 adjusted earnings in the range of $2.05 to $2.06 per share. Analysts surveyed by Refinitiv had anticipated the company to post non-GAAP adjusted earnings of $1.83 per share on revenues of $8.66 billion.
The company also upwardly revised its FY 2024 outlook. Salesforce now expects full-year revenues in the range of $34.70 billion to $34.80 billion, translating to about 11% annual growth. The company also lifted its FY 2024 non-GAAP earnings to be between $8.04 and $8.06 per share. Previously, Salesforce had issued non-GAAP earnings and revenue guidance of $7.41 to $7.43 per share and $34.50 billion to $34.70 billion, respectively.
The quarterly earnings beat, solid Q3 outlook, and upward revision of the FY 2024 view are expected to keep the stock of Salesforce slightly bullish in the short term.
The historical price chart indicates that the stock of Salesforce is ascending after consolidating at the $215 level. The next resistance is anticipated to be near $235. Additionally, the stock is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the stock price of Salesforce to remain in an uptrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
