Why Salesforce Earnings Are So Great

Technology

Published: May 30, 2018 10:10 am

Last Updated: January 11, 2020 11:00 pm

When Salesforce.com Inc. (NYSE: CRM) reported its most recent quarterly results late on Tuesday, the company said it had $0.74 in earnings per share (EPS) and $3.01 billion in revenue. Consensus estimates from Thomson Reuters had called for $0.46 in EPS on revenue of $2.94 billion. The first quarter of last year reportedly had EPS of $0.28 and $2.39 billion in revenue.

During the quarter, subscription and support revenues were $2.81 billion, an increase of 27% year over year. Professional services and other revenues were $196 million, an increase of 4% year over year.

Remaining transaction price, representing future revenues that are under contract but have not yet been recognized, ended the first quarter at roughly $20.4 billion, an increase of 36% year over year. Current remaining transaction price, which represents the future revenues under contract expected to be recognized over the next 12 months, ended the first quarter at $9.6 billion, an increase of 26% year over year.

Looking ahead to the fiscal second quarter, the firm expects to see EPS in the range of $0.46 to $0.47 and revenues between $3.22 billion and $3.23 billion. The consensus estimates call for $0.52 in EPS and $3.11 billion in revenue for this time.

Cash generated from operations for the first quarter was $1.47 billion, a year-over-year increase of 19%. On the books, total cash, cash equivalents and marketable securities totaled $7.16 billion at the end of the quarter.

Marc Benioff, board chair and chief executive of Salesforce, commented:

Salesforce delivered more than $3 billion in revenue in the first quarter, surpassing a $12 billion annual revenue run rate. Our relentless focus on customer success is yielding incredible results, including delivering nearly two billion AI predictions per day with Einstein.

Shares of Salesforce traded up 2% early Wednesday to $129.44, with a consensus analyst price target of $139.22 and a 52-week range of $83.55 to $131.00.