Salesforce (CRM 122.04, -1.55, -1.25%) will report third quarter results on
Tuesday, November 27, after the market closes. Co-Chief Executives Marc Benioff
and Keith Block will host a call at 5:00 PM EST.
Salesforce is the leader in customer relationship management
(CRM) cloud software, including sales force automation, customer service and
support, marketing automation, digital commerce, community management,
analytics, application development, Internet of Things (IoT) integration, and
collaborative productivity tools. Salesforce had a near 20% market share in CRM
last year while Oracle (ORCL) and SAP (SAP) were both in the 7% range.
The company hasn't missed on the top line since January of
2006. Its subscription business model results in highly visible revenue
streams.
Salesforce has guided for Q3 non-GAAP EPS of $0.49-0.50 (vs.
$0.39 last year) with revenue up 24-25% to $3.355-3.365 bln and unearned
revenue up 20%. The Street expects revenue just above guidance.
The company has guided for Fiscal 2019 (January) non-GAAP
EPS of $2.50-2.52 with revenue up 25% to $13.125-13.175 bln and operating cash
flow (OCF) up 15-16%. Salesforce tends to tweak its revenue forecast higher as
the year progresses.
The CRM leader usually gives its initial outlook for the
following year along with third quarter results as well. The Street expects
fiscal 2020 revenue growth of 20%.
At the company's flagship Dreamforce conference two months
ago, Salesforce announced a slew of new products and initiatives, including
expanded relationships with both Amazon Web Services and Apple. CEO Marc
Benioff said the economy was “still ripping”.
Salesforce stock is down some 23% from its record high, set
two months ago, as software valuations have come under considerable pressure
during the recent market correction. Frothy valuations were most evident in
recent enterprise software IPOs, where a double-digit sales multiple had become
par for the course.
Exuberance among software stocks seemed to take off after
Salesforce paid $6.5 bln in cash for MuleSoft at a mid-teens sales multiple in
March.