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Salesforce tops estimates; slides on weak Q3 outlook

Cloud computing company (CRM) reported a 550% jump in earnings for the second quarter helped by gains on strategic investments. The top and bottom lines exceeded analysts’ expectations and the company raised its full-year 2019 guidance. The stock, which hit an all-time high today, is down about 1% in the extended hours after its third-quarter forecast fell below consensus.

Net income increased six times to $299 million or $0.39 per share. Excluding special items, earnings per share almost doubled to $0.71.

Revenue surged 27% year-over-year to $3.3 billion, due to benefits from clouds, industry segments, and geographies. Unearned revenue on the balance sheet as of July 31, 2018, increased 24% to $5.88 billion.

Looking into the third quarter of 2019, Salesforce expects profit in the range of $0.01 to $0.02 per share and adjusted earnings in the range of $0.49 to $0.50 per share. Revenues are anticipated to be in the range of $3.355 billion to $3.365 billion.

For the fiscal year 2019, the company raised its revenue outlook to a range of $13.125 billion to $13.175 billion from the prior estimate of $13.075 billion to $13.125 billion. GAAP EPS is now expected to be in the range of $0.97 to $0.99 and non-GAAP EPS is now predicted to be $2.50 to $2.52.

Salesforce second quarter 2019 earnings
Salesforce Q2 2019 Earnings Infographics

Salesforce’s all cloud service offerings contributed to its earnings, growing double digits, with Salesforce Platform reporting the highest growth of 54%. Subscription and support revenue saw a jump of 28%, surpassing projections.

Geographically, the Americas, which contributes 71% to the company’s revenue, jumped 25%, with Europe posting the highest growth of 35% for the quarter.

Shares of Salesforce ended Wednesday’s regular trading session up 1.18% at $154.80 on the NYSE. The stock had risen more than 64% for the past year.

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