Salesforce results blow past Street view, outlook raised once more, and shares rise

Salesforce reported fiscal second-quarter net income of $535 million, or 56 cents a share, compared with $2.63 billion, or $2.85 a share, in the year-ago period, when the company received a $2 billion tax benefit from changes to its international corporate structure. Last year’s second-quarter earnings report also drove the stock to its best one-day gain ever. Adjusted earnings for the just-completed second quarter were $1.48 a share, compared with $1.44 a share in the year-ago period.

Revenue rose to $6.34 billion from $5.15 billion in the year-ago quarter.

Analysts surveyed by FactSet had estimated earnings of 92 cents a share on revenue of $6.24 billion, based Salesforce’s forecast of 91 cents to 92 cents a share on revenue of $6.22 billion to $6.23 billion.

“With companies and governments around the world continuing to accelerate their digital transformations, we delivered our fifth phenomenal quarter in a row,” said Marc Benioff, Salesforce chairman and chief executive, in a statement. “Our Customer 360 platform is now fueled by a herd of unicorns perfectly designed for this all-digital world. Sales, Service, Marketing & Commerce, Platform, Tableau, MuleSoft and now Slack are all billion-dollar-plus products delivering customer success like no other company.”

Salesforce expects adjusted third-quarter earnings of 91 cents to 92 cents a share on revenue of $6.78 billion to $6.79 billion, while analysts had forecast 82 cents a share on revenue of $6.66 billion.

For fiscal 2022, Salesforce forecasts adjusted earnings of $4.36 to $4.38 a share on revenue of $26.2 billion to $26.3 billion, with analysts expecting $3.84 a share on revenue of $26 billion. Previously, Salesforce had forecast $3.79 to $3.81 a share on revenue of $25.9 billion to $26 billion.

The full-year outlook includes about $530 million in revenue from the company’s $27.7 billion acquisition of Slack Technologies Inc., which closed on July 21.

Operating margins for the second quarter were 5.2% on an unadjusted basis, and 20.4% on an adjusted basis, compared with the first quarter’s 5.9% unadjusted and 20.2% adjusted.

Last quarter, analysts debated whether Salesforce’s operating margins could be better after the company had forecast an unadjusted operating margin of about 1.4% and an adjusted operating margin of 18% for the year. This quarter, Salesforce was calling for operating margins of 1.8% unadjusted and 18.5% adjusted for the year.

Over the past 12 months, Salesforce shares have advanced 21%, while the iShares Expanded Tech-Software Sector ETF  IGV, +0.22%  has risen 37%, the S&P 500 index  SPX, +0.22%  has gained 31%, the tech-heavy Nasdaq Composite Index  COMP, +0.15%  has risen 31%, and the Dow Jones Industrial Average  DJIA, +0.11%  — which added Salesforce as a component this time last year — has advanced 25%.