What To Watch For In Salesforce’s Q2 Earnings

by Trefis Team
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We expect  Salesforce‘s (NYSE:CRM) solid revenue growth to continue when the company reports its second quarter earnings on August 22nd. The company expects to generate revenues of $2.51 billion, representing 23% year-over-year growth. With customer preferences shifting towards cloud-based products, the company’s enterprise cloud computing solutions – which include apps and platform services, as well as professional services to facilitate the adoption of its solutions – will play a key role in driving its growth.

Salesforce is betting big on its AI CRM platform Einstein, and we expect it to boost the adoption of the company’s cloud solutions. Sales Cloud – the company’s flagship product – continues to be the largest contributor to the Subscription and Support segment. In the previous quarter, Service Cloud grew by 21% and Marketing Cloud saw a revenue increase of 32%, excluding the acquisition of Demandware. We expect continued growth across the CRM and software businesses.

Salesforce’s efforts in controlling expenses should boost earnings going forward. Sales and Marketing expenditures, which earlier contributed half of the company’s expenses, grew the least in comparison to other expenses, but are still around 50% of gross profits.

However, the continued expansion of services and acquisitions have taken a toll on the company’s operating income and margins, both of which declined marginally this year and will likely remain low in the near term. Given that Salesforce is likely to remain acquisitive going forward, this trend could continue.

See our complete analysis for Salesforce

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