Salesforce Reports Robust Q1 Results; Shares Jump 7%

Salesforce (CRM) reported stronger-than-expected Q1 results, topping both earnings and revenue estimates driven by strong business momentum. Shares of the global leader in customer relationship management (CRM) gained around 7% in early trading on Friday.

The company reported adjusted earnings of $1.21 per share, beating analysts’ estimates of $0.88 per share. Revenues of $5.96 billion exceeded the consensus estimate of $5.89 billion. Furthermore, earnings jumped 72.9% while revenues increased 22.6% on a year-over-year basis.

Based on the solid Q1 results, the company initiated guidance for the second quarter. Management expects Q2 2022 EPS in the range of $0.91 – $0.92, versus the consensus estimate of $0.85. Second-quarter revenues are expected to range between $6.22 billion and $6.23 billion, versus the consensus estimate of $6.15 billion.

For the Fiscal Year 2022, Salesforce projects adjusted EPS in the range of $3.79 – $3.81 and revenues to range between $25.9 billion and $26.0 billion. (See Salesforce stock analysis on TipRanks).

Together with the results, the company also announced the launch of the world’s largest software event, Dreamforce. The event will take place both in-person and digitally from September 21 – 23, 2021 across a global campus, including San Francisco, New York City, London, and Paris, among other cities.

Salesforce CEO Marc Benioff commented, “We believe our Customer 360 platform is proving to be the most relevant technology for companies accelerating out of the pandemic. With incredible momentum throughout our core business, we’re raising our revenue guidance for this fiscal year by $250 million to approximately $26 billion and non-GAAP operating margin to 18 percent. We’re on our path to reach $50 billion in revenue in FY26.”

Following the quarterly results announcement, Oppenheimer analyst Brian Schwartz maintained a Buy rating and a price target of $265 (11% upside potential) on the stock.

Schwartz said, “CRPO, which we view as the best leading indicator, accelerated to 32% growth in F1Q, and combined with the higher outlook implies results across the four clouds well-ahead of expectations too.”

The analyst further added, “Salesforce is generating a record number of big deals and magnitude of upside for the backlog and billings this quarter, which can support long-term growth. We believe the recovery and strength in the customer software market this year is driving a material benefit to the company’s bookings. On balance, the F2Q CRPO guidance implies a decel from this quarter, but could prove conservative given the strength in the end-market demand and execution.”

Overall, the stock has a Strong Buy consensus rating based on 18 Buys and 3 Holds. The average analyst price target of $279.25 implies 16.5% upside potential from current levels. Shares of CRM have jumped 24.7% over the past year.

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