Cloud computing company salesforce.com, inc. (NYSE: CRM) reported better-than-anticipated fiscal 2019 first-quarter results, with the company’s CEO Marc Benioff highlighting the growing success of AI platform Einstein. Salesforce also provided upbeat second-quarter guidance while raising fiscal 2019 earnings and revenue outlook. Furthermore, all the segments of the company performed well. Therefore, we are expecting the stock of Salesforce, which closed at $129.32, to move up in the week ahead.
The San Francisco, California-based company reported 1Q18 revenues of $3.01 billion, an increase from $2.40 billion in the similar quarter last year. The Thomson Reuters consensus estimate was $2.95 billion. Net income for the quarter ended April 30 was $344 million, or $0.46 per share, compared with $1 million, or break-even per share, in the prior-year period.
Excluding amortization of purchased intangibles, stock-based expense, and income-tax effects, the non-GAAP net income increased to $557 million, or $0.74 per share, from $212 million, or $0.29 per share, in the corresponding quarter of 2017. The Street analysts had expected earnings of $0.46 per share for the recent quarter.
Segment-wise, Subscription and support fees grew 27% to $2.81 billion, from $2.21 billion last year. The figures also surpassed FactSet estimates of $2.73 billion.
In particular, Sales Cloud revenue was $965 million, while Service Cloud revenue was $848 million. Salesforce platform and other revenues were $575 million, and Marketing and Commerce Cloud revenue was $422 million. Benioff also pointed out that the Einstein platform is being used by clients to deliver nearly two billion AI predictions per day, up 100% from the previous quarter.
Professional services and other revenues were $196 million, an increase of $8 million from Q1 2017.
For the current quarter, Salesforce anticipates GAAP earnings in the range of $0.08 to $0.09 per share and non-GAAP earnings of between 46 cents and 47 cents. The company expects revenues of between $3.22 billion and $3.23 billion for 2Q19. The Wall Street analysts are expecting earnings of $0.52 per share on revenues of $3.11 billion for Q2 2019.
For FY19, the company raised its GAAP earnings outlook to a range of $0.49 to $0.51 per share. The non-GAAP earnings is expected to be between $2.29 and $2.31 per share. Salesforce also upwardly revised its revenue outlook to a range of $13.08 billion to $13.125 billion. On average, analysts surveyed by Thomson Reuters anticipated earnings of $2.12 per share on revenues of $12.76 billion. Therefore, robust 1Q19 earnings, impressive 2Q19 outlook, and upwardly revised FY19 earnings are expected to turn Salesforce bullish.
Technically, the stock is trading above its 50-day moving average. The Chaikin money flow indicator is in the positive region. Therefore, we can expect the stock to continue its uptrend in the short-term.
To gain from the uptrend, we are looking for a binary broker who would offer us a call option contract, which is valid for a period of one week. We may invest in the option only if the stock trades near $130 on the NYSE.
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