Marc Benioff, Co-CEO of Salesforce, speaks at the opening of the Salesforce Tower in San Francisco in May 2018.
David Paul Morris | Bloomberg | Getty Images
Salesforce shares fell as much as 4% in expanded trading Thursday after the enterprise software company posted earnings above analysts’ estimates. However, Salesforce fell short of its full-year profit guidance as that factored in the impact of buying a team communication app from Locker.
This is how the company did it:
- Merits: Adjusted for $ 1.04 per share compared to 75 cents per share as analysts expected, Refinitiv said.
- Revenue: According to Refinitiv, $ 5.82 billion versus $ 5.68 billion as analysts expected.
Salesforce saw revenue grow 20% year over year in the company’s fourth quarter of fiscal 2021, which ended Jan. 31, according to a statement. In the previous quarter, sales rose by 20%.
While the sales forecasts for the full fiscal year 2022 exceeded estimates, the profit forecasts were weak.
For the full year, including the Slack impact, the company called for adjusted earnings per share of $ 3.39 to $ 3.41 on sales of $ 25.65 to $ 25.75 billion. That includes $ 600 million in Slack revenue. (Separately, Slack announced Thursday that preliminary revenue increased 43% from $ 902.6 million for the year ended January 31st.) Analysts polled by Refinitiv had adjusted earnings per share of $ 3.49 and expects sales of $ 25.42 billion.
“We anticipate the recent mergers and acquisitions will be a 63-cent headwind for diluted non-GAAP EPS,” said Amy Weaver, Chief Financial Officer of Salesforce, on a conference call with analysts about the 2022 fiscal year.
Salesforce posts adjusted earnings per share of 88 to 89 cents for the first quarter of fiscal year on revenue of $ 5.875 billion to $ 5.885 billion. Analysts polled by Refinitiv had expected adjusted earnings of 76 cents per share on sales of $ 5.72 billion.
In the fourth quarter of fiscal year, Salesforce generated $ 1.36 billion in subscription and support revenue for its key Sales Cloud product for tracking sales leads. This corresponds to an annualized growth of around 11% compared to 12% in the previous quarter. Salesforce has grown through acquisitions over the years, and Salesforce Tableau data visualization software, purchased in 2019, contributed $ 1.81 billion to Salesforce’s subscription and support revenues for platform and other products, which grew 26% and accelerated from 24% in the previous quarter.
In December, Salesforce announced it would acquire Slack for over $ 27 billion. Salesforce expects the deal to close by the end of the quarter ending July 31. Also in the quarter, Salesforce announced Vaccine Cloud, a tool that government agencies and businesses can use to manage coronavirus vaccine delivery.
While the pandemic continued, Salesforce had $ 184 million in spending in the quarter due to the termination of certain real estate leases – more than Salesforce’s expected $ 80-100 million. “During the quarter, we identified additional consolidation and sublease opportunities in our global portfolio, including at some of our hub locations,” said Weaver.
Salesforce currently had $ 18 billion in performance obligations remaining at the end of the quarter, up 20%. Analysts surveyed by FactSet had expected 16% growth, and the growth rate was 20% in the previous quarter.
Regardless of the after-business move, Salesforce stocks are up 4% since early 2021, while the S&P 500 index is up about 2%.
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