Salesforce.com, Inc. (NYSE: CRM) disappointed the market this week, reporting a second-quarter earnings beat but issuing third-quarter guidance that fell short of expectations. Analysts say long-term investors shouldn’t be worried about the guidance miss, and any near-term earnings weakness in CRM stock is a buying opportunity.
Salesforce on Wednesday reported adjusted second-quarter earnings per share of 53 cents on revenue of $3.28 billion. Both numbers topped consensus analyst estimates of 47 cents and $3.23 billion, respectively. Revenue was up 27 percent from a year ago.
Sales Cloud revenue, which represents Salesforce’s largest product category revenue source, was up 12.7 percent to $1 billion.
Despite Salesforce’s $6.5 billion acquisition of MuleSoft, margins expanded by 1.7 percent in the second quarter.
Unearned revenue was $5.88 billion, up 24 percent. Remaining performance obligation, a measure of future revenues that are under contract but have not yet been recognized, was about $21 billion as of the end of the quarter, up 36 percent from a year ago.
“Salesforce revenue grew 27 percent to almost $3.3 billion in the second quarter, with excellent performance across our clouds, industry segments and geographies,” co-CEO Keith Block says in a statement. “With this strong quarter, we’re well on our way to our next milestone of $23 billion in revenue in 2022.”
Looking ahead, Salesforce guided for third-quarter revenue of between $3.355 billion and $3.365 billion, above consensus estimates of $3.35 billion. However, third-quarter EPS guidance of between 49 cents and 50 cents was below consensus expectations of 54 cents.
Salesforce also raised its full-year revenue guidance for the third consecutive quarter from a previous range of between $13.08 billion and $13.13 billion to a new range of between $13.125 billion and $13.175 billion. Despite the third-quarter earnings guidance miss, Salesforce also raised full-year adjusted EPS guidance from a previous range of between $2.29 and $2.31 to a new range of between $2.50 and $2.52.
“With the catalyst of Dreamforce coming up in September and heading into the seasonally stronger second half of their fiscal year, we would be…
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