Salesforce (CRM) reported better than anticipated fiscal 2024 third-quarter revenues. The customer relationship management company’s Q3 revenues were in line with estimates. Salesforce also issued an upbeat fourth-quarter earnings and revenue outlook. Additionally, the company also upwardly revised its lower end of FY 2024 revenue guidance. Overall, the stock of Salesforce ended Thursday’s trading session at $251.90, up 9.36%, or $21.55 from the prior close. Notably, the stock of Salesforce has appreciated over 70% this year.
The San Francisco, California-based company reported third-quarter revenues of $8.72 billion, an increase of 11% from $7.84 billion in the comparable quarter of fiscal 2023.
Salesforce, known for its consistent annual growth exceeding 20%, has experienced a decline in its growth rates in recent quarters. This shift is attributed to businesses scaling back expenditures in response to economic uncertainties and elevated interest rates.
For the third quarter, which ended October 31, 2023, the company recorded a net income of $1.22 billion, or $1.25 per share, compared with a net income of $210 million, or $0.21 per share, in the third quarter, which ended October 31, 2022.
Excluding amortization of purchased intangibles, stock-based compensation expense, and restructuring income tax effects and adjustments, among others, the Q3 2024 non-GAAP net income was $2.07 billion, or $2.11 per share, an increase from $1.40 billion, or $1.40 per share, in Q3 2023.
Analysts surveyed by LSEG anticipated Salesforce to post adjusted earnings of $2.06 per share on revenues of $8.72 billion.
Commenting on the quarterly results, Marc Benioff, Chair and CEO, of Salesforce, stated “We had another strong quarter of executing on our profitable growth plan we set in motion last year, delivering $8.7 billion in revenue and again raising our operating margin guidance for this fiscal year.”
Segment wise:
- Subscription and support revenues were $8.14 billion, up 12.60% from last year.
- Specifically, sales revenues grew 11% y-o-y to $1.91 billion. Service revenues were $2.07 billion, an increase of 11.70% on a y-o-y basis. Platform and other revenues increased by 11.40% to $1.69 billion. Marketing and Commerce revenues were $1.23 billion, up 8.90% from last year. Data(1) revenues were $1.25 billion compared with $1.02 billion.
- Professional services revenues fell to $579 million from $604 million.
Looking ahead, Salesforce forecasts 4Q 2024 earnings in the range of $2.25 to $2.26 per share. The company also forecasts revenues of between $9.18 billion and $9.23 billion for the fourth quarter, translating to y-o-y growth of about 10%. Wall Street analysts anticipate Salesforce to report earnings of $2.17 per share on revenues of $9.21 billion.
Salesforce now expects FY 2024 operating cash flow growth of 33%, an increase from the 30% issued earlier. The company also upwardly revised its FY 2024 non-GAAP earnings guidance to a range of $8.18 to $8.19 per share, from $8.04 to $8.06 per share forecast earlier. Additionally, Salesforce narrowed its FY 2024 revenue outlook to a range of between $34.75 and $34.8 billion.
The quarterly earnings beat, robust Q4 outlook, and upward revision of FY 2024 revenue guidance are expected to keep the stock of Salesforce slightly bullish in the short term.
The historical price chart indicates that the stock of Salesforce has broken the resistance band of $210 to $230. The stock is also trading far above the 50-day moving average. Additionally, the MACD indicator is showing a positive reading. Therefore, we anticipate Salesforce’s stock to remain in an uptrend in the near term.
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