Is Salesforce Stock A Buy Ahead of Earnings?

Salesforce’s Q2 Earnings: What To Expect

After smashing earnings last quarter, can it do it again this week? Let’s find out what we can expect from Salesforce’s Q2 earnings. 

The customer relationship management company is one of the last of the big tech squad to report its Q2 earnings, and Wall Street is excited after the company’s big year. 

By offering clients tools and applications to help run their sales, e-commerce, marketing, and analytics, Salesforce (NYSE: CRM) has become one of the most well-known software companies in the world. With a thriving work culture and stellar sales people, this firm stands out for being best in its class. Its expensive acquisition of Slack Technologies proved that Salesforce is out on a mission to provide businesses with a complete communication platform and also solidified its reputation of obliterating its rivals by using its big cheque book. 

The stock is up more than 12% over the past six months, and shareholders can expect its share price to jump again if it releases an earnings beat this week. To ensure Salesforce is in a healthy financial state, investors will want to see proof that its numbers are growing in its Q2 report this week. Here is what to expect. 

When is Salesforce’s earnings date?

Salesforce will report its Q2 earnings report on Wednesday, 25 August, at 5:00 PM Eastern Time.

How can I listen to Salesforce’s earnings call? 

To listen to the earnings call and to access the transcript, simply visit Salesforce’s Investor Relations page on its website or access the report here.

What to expect from Salesforce’s earnings 

Analysts are expecting Salesforce to post earnings of $0.91 per share on revenues of $6.23 billion, which would represent a 21% increase from the year-ago quarter.  

The companyhas projected similar expectations for Q2, forecasting total revenues to come in between $6.22 billion and $6.23 billion and non-GAAP earnings of $0.92 per share.

In Q2, Wall Street predicts that Salesforce has benefited from increasing demand for its products as their clients have gone through a major digital transformation throughout the pandemic. Salesforce’s offerings of integrated solutions for business needs whilst employees working remotely is likely to have been a big growth driver during the quarter. In addition, Salesforce’s acquisitions of Mobify and Vlocity are believed to have boosted its top-line growth in Q2. 

Investors have high expectations for this report after the company smashed its Q1 report when it released results back in May. Proving that it’s a force to be reckoned with, Salesforce posted adjusted earnings per share of $0.50 on revenue of $5.96 billion, up 23% year-over-year. 

For the full 2022 fiscal year, Salesforce previously stated in its Q1 report that it expects EPS of $3.81 on revenue of $26.0 billion, representing 22% growth. The San Francisco-based firm’s guidance is assuming that travel, which is paramount for Salesforce’s sales team, will resume, but not close to pre-pandemic levels.

One issue that may arise in Salesforce’s report is that of a slowdown in growth with small and medium-sized businesses (SMBs). COVID-19 had, and continues to have, a devastating impact on these smaller companies. Restrictions caused many of them to either shut their doors or resulted in a massive drop in sales. This trend might have affected Salesforce’s sales too if a large percentage of SMBs scaled back spending on the expensive software. 

There’s also growing competition in the business software industry. Tech giants Microsoft and Oracle are hot on its tails as they use their experience, along with big purses, to attempt to dominate the space. Increased spending on international expansions and data centers might have negatively affected its profitability in Q2. 

We can also expect to hear questions from shareholders on its plans to move into the streaming content space. In early August, the company announced its plans to become the Netflix of business content. As Salesforce stated that the service will be free to start with, shareholders might have an issue with the massive marketing spend. 

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