Salesforce.com Meets Consensus For Revenue, Will Cloud Segment Push The Growth For FY 2020?

+7.26%
Upside
301
Market
323
Trefis
CRM: Salesforce logo
CRM
Salesforce

Salesforce.com (NYSE: CRM) announced its Q1 FY 2020 (ended April 2019) results on June 4, 2019, followed by a conference call with analysts. The company’s revenue were recorded in line with consensus at $3.7 billion, up by 24.3% y-o-y. The increase was driven largely by revenue from the CRM Software segment (the Salesforce Platform). The earnings missed consensus and were recorded at $0.49, lower than the $0.74 per share in the same period of FY 2019.

 

Salesforce.com reported $13.3 billion in Total Revenues in FY 2019. This included 3 revenue streams:

  • Cloud Based CRM Software: $9.6 billion in FY 2019 (72% of Total Revenues). This includes revenues generated from subscription and support Sales Cloud, Service Cloud, and Marketing & Commerce Cloud.
  • Cloud Software: $2.8 billion in FY 2019 (21.5% of Total Revenues). This includes revenues generated from subscription and support of of the Salesforce platform.
  • Consulting and Services: $0.9 billion in FY 2019 (6.5% of Total Revenues). This includes revenues generated from any professional services provided by the company.
Relevant Articles
  1. Up 69% In The Last Twelve Months, What To Expect From Salesforce Stock?
  2. Up 74% Since The Beginning of 2023, Will Salesforce Stock Continue Its Strong Rally?
  3. Salesforce Stock Is Undervalued
  4. Salesforce Stock To Edge Past The Consensus In Q1
  5. Salesforce Stock Is Trading Below Its Fair Value
  6. What To Expect From Salesforce Stock In Q4?

 

We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Salesforce.com’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2020? In addition, here is more Information Technology Data.

 

Key Factors Affecting Earnings:

Revenue Growth to continue:

  • Salesforce.com has seen continuous growth over the years and over the last 8 quarters. The growth has been above 25% every quarter in FY 2019 as compared to the same quarter in FY 2018. In Q1 2020 (ended April 2019) the revenue grew by 24.3% y-o-y to $3.7 billion.
  • In absolute terms the Cloud based CRM Software segment has grown the most as the company continues to be a synonym for CRM Software across the globe. The revenue from the segment is expected to increase from $7.8 billion in FY 2018 to $11.2 billion in FY 2020.
  • The Cloud Software segment has registered the highest growth in terms of percentage over the past few years.

Trend in Expenses:

  • Cost of Revenue has been steady at around 26% of Total Revenue over the quarters. In Q1 2020 (ended April 2019) the same fell to 24.3% of Total Revenue.
  • Marketing and Sales expenses contributes the highest to Total Expenses. In FY 2018 it contributed about 46% but increased to around 50% of Total Expenses in FY 2019. In Q1 FY 2020 (ended April 2019) it continued to be around the same and was recorded at 50.7%.

Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 20% to $15.9 billion, led by the growth in the Cloud segment.
  • Gross Profit margin is expected to remain in line at around 77%.

 

Trefis has a price estimate of $174 per share for Salesforce.com’s stock. The value is based on the expectation that the company is on a high growth path as they continue to expand reach across geographies.

 

 

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Data

Like our charts? Explore example interactive dashboards and create your own.