The customer relationship management technology provider Salesforce.Com Inc (NYSE: CRM) reported better-than-anticipated fiscal 2022 second-quarter earnings and revenues. Furthermore, the company also upwardly revised its FY 2022 earnings and revenue outlook. Following the results, the stock closed at $267.79, up $6.94 or 2.66% from the prior close.
The California-based firm reported second-quarter revenues of $6.34 billion, an increase of 23.10% from $5.151 billion in the similar quarter last year.
For the quarter ended July 31st, 2021, the enterprise application provider posted a net income of $535 million, or $0.56 per share, compared with $2.625 billion, or $2.85 a share in the quarter ended July 31st, 2020.
The provision for income taxes was $291 million for 2Q 2022. On the contrary, the benefit from income taxes was $1.786 billion in 2Q21. This led to the big difference in second-quarter 2022 net income compared with last year.
Excluding amortization of purchased intangibles, stock-based expense, and income tax effects and adjustments, among others, the Q2 2022 non-GAAP net income was $1.402 billion, or $1.48 per share, up from $1.327 billion, or $1.44 a share, in the prior-year period.
Analysts interviewed by Refinitiv had anticipated the company to report earnings of $0.92 per share on revenues of $6.24 billion.
Commenting on the results, Marc Benioff, Chair & CEO, Salesforce, said, “With companies and governments around the world continuing to accelerate their digital transformations, we delivered our fifth phenomenal quarter in a row.”
Segment-wise,
- Subscription and support revenues rose by 22.20% y-o-y to $5.914 billion.
- Professional services and other revenues were $426 million, an increase of 37% on a y-o-y basis.
On the basis of applications,
- Sales Cloud, which is used by the sales department to quickly capitalize on opportunities, revenues rose by 15% y-o-y to $1.477 billion.
- Service Cloud revenues were $1.60 billion, up 23% from last year.
- Platform, including Tableau data-analytical system and MuleSoft integration tool, revenues grew 24% to $1.882 billion.
At the end of the second quarter, roughly 50% of its offices had been reopened after shutting down last year in accordance with lockdown restrictions.
During the second quarter, cash generated from operations was $0.39 billion, down 10% on a y-o-y basis. The company ended the second quarter with cash and cash equivalents of $9.65 billion.
Notably, the company concluded the $27.70 billion takeover of Slack, the team communication app provider.
For the current quarter (3Q 2022), Salesforce forecasts earnings per share in the range of $0.91 to $0.92. Also, revenue is expected to be between $6.78 billion and $6.79 billion. The Street analysts are forecasting earnings of $0.82 per share on revenues of $6.66 billion.
For fiscal 2022, the company expects non-GAAP earnings of between $4.36 and $4.38 per share. Salesforce also lifted its FY 2022 revenue guidance to a range of $26.20 billion to $26.30 billion. Earlier, the company had issued earnings guidance in the range of $3.79 to $3.81 and a revenue outlook of between $25.9 billion and $26 billion.
Analysts interviewed by Refinitiv had anticipated the company to post earnings of $3.82 per share on revenues of $26.01 billion. The full-year 2022 revenue projection includes Slack revenues of $530 million, almost $30 million higher than the forecast made by the company in the prior quarter.
Salesforce also expects FY 2022 GAAP operating margin to be 1.8% (up from 1.4% projected in the first quarter) and non-GAAP operating margin to be about 18.50%.
The quarterly earnings beat and upward revision of the FY 2022 outlook are expected to keep the stock range-bound with a short-term bullish bias.
The historical price chart indicates that the stock has broken above the ascending triangle. The stock is trading above its 50-day moving average, while the Chaikin money flow indicator shows a positive reading. We are anticipating the stock to stay in an uptrend in the near term.
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