Salesforce (CRM) 4th Quarter Earnings: What to Expect
Salesforce.com (CRM) is set to report fourth quarter fiscal 2019 earnings results after the closing bell Monday. The software-as-a-service and cloud giant is expected to report a monster quarter, if you listen to the words of co-CEO Keith Block.
Salesforce’s customer relationship management services are a must-have for many companies looking to add capabilities such as sales, marketing, e-commerce and analytics. “Companies across every industry, in every geography have a mandate to digitally transform their businesses and are turning to Salesforce as a strategic partner,” Block said in prepared statements last quarter.
But strong revenue and earnings growth projections are par for the course for the enterprise cloud giant, which has topped or matched the Street’s earnings estimates in eighteen straight quarters. When the numbers are officially released, the only question is, how high can Salesforce stock fly? Shares are trading at 52-week highs and have risen 20% year to date, crushing the 11% rise in the S&P 500 index. And yet there are reasons to suspect the stock might actually be cheap.
The company’s projected earnings growth rate is 27.5% annually over the next five years. And this is despite the industry being highly competitive, where rivals such as Adobe (ADBE) and Oracle (ORCL) are growing market share. As such, Salesforce’s guidance and its billings forecast will be the most closely-watched aspects of Monday’s report.
For the quarter that ended January, Wall Street expects the San Francisco-based company to earn 50 cents per share on revenue of $3.37 billion. This compares to the year-ago quarter when earnings came to 39 cents per share on revenue of $2.68 billion. For the full year, earnings are projected to rise 93% year over year to $2.61 per share, while revenue of $13.24 billion would mark a 26.3% increase year over year.
Global expansion continues to be one of the main drivers of the company’s growth. Businesses of all sizes and industries recognize the need for a digital transformation. Salesforce’s ability to offer integrated solutions, combined with strategic partnerships with titans like Amazon (AMZN) and Alphabet (GOOG , GOOGL) has given it a key competitive advantage in terms of its international reach.
In the third quarter, revenues from Europe and Asia Pacific jumped 31% and 26%, respectively, outpacing the 25% rise in the Americas. Those are good signs that Salesforce is growing revenue to an extent that can offset saturation fears in the U.S. On Monday Wall Street will look to see if these trends can continue. And investors will be watching to see to what extent the company can realistically achieve its goal of reaching revenue of $20 billion by 2022.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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