Salesforce soars on big earnings beat

Salesforce shares rose as much as 12% in extended trading on Tuesday after the enterprise-software company reported fiscal second-quarter earnings that surpassed analysts’ expectations, the day after S&P Dow Jones Indices said Salesforce will replace Exxon Mobil in the 30-stock Dow Jones Industrial Average on Aug. 31.

Here’s how the company did:

• Earnings: $1.44 per share, adjusted, vs. 67 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $5.15 billion, vs. $4.90 billion as expected by analysts, according to Refinitiv.

The adjusted earnings were positively impacted by mark-to-market accounting for the company’s investments, according to a statement.

Overall revenue grew 29% year over year in the quarter, which ended on July 31, down slightly from 30% growth one quarter earlier. 

Revenue from the core Sales Cloud, which enables salespeople and managers to keep track of business, totaled $1.28 billion, growing 13% on an annualized basis. The Service Cloud product for customer support delivered $1.30 billion in revenue, up about 20%. Last quarter Service Cloud revenue slightly exceeded that of Sales Cloud. The company’s Platform and Other category, which includes the Tableau data-visualization software Salesforce acquired last year for $14.8 billion, came to $1.51 billion, up nearly 66%.

In the quarter Salesforce announced the introduction of Work.com tools to help organizations return to work following the onset of the coronavirus pandemic, which caused offices around the world to close.

Salesforce’s current remaining performance obligation, a measurement of future revenue under contract that the company believes will be recognized as revenue over the course of the next 12 months, totaled $15.20 billion, above the FactSet consensus estimate of $14.09 billion.

With respect to guidance, Salesforce called for 73 cents to 74 cents in adjusted earnings per share on $5.24 billion to $5.25 billion in revenue for the fiscal third quarter. Analysts surveyed by Refinitiv had expected 77 cents in adjusted earnings per share on $5.01 billion in revenue. 

For the full 2021 fiscal year Salesforce now sees $3.72 to $3.74 in adjusted earnings per share and $20.70 billion to $20.80 billion in revenue. Consensus among analysts polled by Refinitiv was $2.96 in adjusted earnings per share and $20.07 billion in revenue for that period. 

Excluding the after-hours move, Salesforce stock has risen 33% since the beginning of the year, while the S&P 500 is up less than 7%.

Executives will discuss the results with analysts on a conference call starting at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

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