Q2 2024 Earnings Report Reveals Salesforce (CRM) Performance

Salesforce shares experienced a 6% surge in extended trading on Wednesday following the announcement of the company’s quarterly results and guidance that exceeded Wall Street’s expectations.

Here’s a breakdown of the company’s performance:

• Earnings: $2.12 per share, adjusted, surpassing analysts’ expectation of $1.90 per share from Refinitiv.
• Revenue: $8.60 billion, beating analysts’ expectation of $8.53 billion from Refinitiv.

According to a statement, Salesforce’s revenue in the fiscal second quarter grew by 11% compared to the previous year. Net income also increased to $1.27 billion, or $1.28 per share, from $68 million, or 7 cents per share, in the year-ago quarter.

During a conference call with analysts, Salesforce’s finance chief, Amy Weaver, highlighted the impact of the uncertain economy on the company’s growth. She mentioned encountering challenges in the U.S. market, as well as in industries like technology, retail, and consumer goods.

“We are still experiencing longer sales cycles, additional deal approval layers, and deal compression in our subscription and support and professional-services businesses,” explained Weaver. She noted that clients have become more cautious since July 2022.

For the current quarter, Salesforce expects adjusted earnings per share of $2.05 to $2.06 and revenue of $8.7 billion to $8.72 billion. This exceeds analysts’ expectations of $1.83 per share in earnings and $8.66 billion in sales, according to Refinitiv.

The company achieved growth across all five of its product categories, and CEO Marc Benioff sees further expansion through the utilization of artificial intelligence.

“We’re leading our customers into the new AI era,” Benioff stated in a press release.

Salesforce has raised its full-year forecast, projecting adjusted earnings per share of $8.04 to $8.06 and revenue of $34.7 billion to $34.8 billion, indicating an 11% increase in revenue. This surpasses the expectations of analysts, who anticipated $7.45 per share in profit and $34.65 billion in revenue from Refinitiv. The company’s previous guidance three months ago indicated adjusted earnings per share of $7.41 to $7.43 and revenue of $34.5 billion to $34.7 billion, resulting in a 10% revenue growth.

During the quarter, Salesforce introduced AI enhancements to its Sales Cloud and Service Cloud applications, available for an additional $50 per person per month on top of existing costs. Additionally, they announced the launch of an AI Cloud, which will provide tools for marketing and data analysis, according to reports.

Weaver assured that both AI and a recent price hike will not have a significant impact on the full-year guidance.

This year, Salesforce shares have experienced a 62% increase, while the S&P 500 index has only gained about 18% during the same period.

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