Salesforce Q1 revenue jumps 11%: stock is still taking a hit

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on May 29, 2024
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  • Salesforce reported its financial reuslts for the first quarter today.
  • Here's what its CEO Marc Benioff said in a press release on Wednesday.
  • Salesforce stock is down close to 20% in after-hours trading.

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Salesforce Inc (NYSE: CRM) is slipping in extended trading on Wednesday even though it reported better-than-expected EPS for its first financial quarter.

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Salesforce stock down on disappointing guidance

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The stock is being hit because the management failed to impress with its guidance. $CRM now forecasts its sales to fall between $9.20 billion and $9.25 billion on up to $2.36 a share of earnings in Q2.

Analysts, in comparison, were at $9.34 billion and $2.40 per share, respectively. Marc Benioff – the chief executive of Salesforce Inc said in a press release today:

We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI.

The New York listed firm ended Q1 with $26.4 billion of current remaining performance obligations – up 10%. Salesforce stock is now down close to 30% versus its year-to-date high in early March.

Notable figures in Salesforce Q1 earnings release

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  • Earned $1.53 billion versus the year-ago $199 million
  • Per-share earnings also improved from 20 cents to $1.56
  • Adjusted EPS printed at $2.44 as per the earnings report
  • Revenue jumped 11% year-over-year to $9.13 billion
  • Consensus was $2.37 a share on $9.15 billion in revenue

Salesforce saw an annualised growth of 12% in its subscription and support revenue that helped offset a 9.0% decline in professional services revenue in the recently concluded quarter. CEO Benioff also said on Wednesday:

As the world’s #1 AI CRM, we’re incredibly well positioned to help companies realize the promise of AI over the next decade.

Salesforce dividend and share repurchase

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Salesforce returned a total of $2.60 billion to its shareholders in the first quarter. $2.2 billion of it was in the form of stock repurchase and the remaining in dividend payments.

$CRM improved its operating margin by a whopping 1,370 basis points to 18.7% in Q1. Still, the $263 billion giant based out of San Francisco, California lowered its full year operating margin outlook to 19.9% on Wednesday.

Salesforce ended its recent quarter with $6.08 billion of free cash flow that translates to a 43% growth on a year-over-year basis. According to Amy Weaver – its chief of finance:

We’ve also made significant progress on our capital return program, returning more than $14 billion to shareholders since inception, including the payout of our first ever quarterly dividend in Q1.”

Earlier in May, Wells Fargo analyst Michael Turrin reiterated his “equal weight” rating on Salesforce stock and trimmed his price objective to $300 which nonetheless suggests about a 33% upside from here.

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