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Salesforce (NYSE: CRM) beat Q3 estimates, provides strong outlook

Cloud enterprise software company Salesforce.com (CRM) reported third quarter 2019 earnings after the bell today. Earnings of $0.61 per share and revenue of $3.39 billion beat the analysts’ estimates. Analysts had expected earnings to be $0.50 per share on revenues of $3.3 billion. Salesforce stock was up more than 5% during the extended trading hours.

“Given the strength of this quarter’s results and the incredible customer demand we are seeing, we are again raising our FY19 revenue guidance and initiating our full year fiscal 2020 revenue guidance at $16 billion at the high end of the range,” said co-CEO Keith Block.

Revenue growth of 26% was driven by the strong growth in all four segments. GAAP EPS was $0.13. Geographically, Americas accounted for 71% of total revenues. Europe and Asia Pacific’s share stood at 19% and 10%, respectively.

The San Francisco-based company’s operating expenses increased 32% year-over-year to $2.4 billion. Sales and marketing expenses surged 36% to $1.6 billion, while R&D expenses rose 22% to $481 million, driven by the investments in the recently acquired MuleSoft, other app platforms and Einstein machine learning platform.

For Q4 2019, unearned revenue is expected to grow about 17%. Buoyed by the strong quarterly results, the CRM software giant lifted the fiscal 2019 revenue and EPS outlook.

Remaining performance obligation (RPO), which represents future revenues that are under contract but have not yet been recognized, jumped 34% to $21.2 billion. Current RPO, which represents the future revenues under contract expected to be recognized over the next 12 months, ended the third quarter at about $10 billion, up 27% year-over-year.

On October 19, all the cloud companies and the tech majors’ stocks were hammered and traded in the negative territory. Salesforce also got battered by the broader fall in the tech sector and plunged about 9% during the intraday session, its worst fall since February 2016.

Salesforce’s rival Oracle (ORCL) reported its first quarter 2019 results on September 17 in which the company’s bottom line exceeded analysts’ views. However, the below-consensus cloud revenues triggered a stock sell-off after the company’s earnings announcement.

Shares of Salesforce ended Tuesday’s regular trading session up 0.89% at $127.54. The stock, which hit a yearly high ($161.19) on October 1, had given a positive return of 24% so far this year and 19% in the past one year.

Salesforce tops estimates; slides on weak Q3 outlook

 

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