Salesforce (CRM) Stock Q2 Earnings Analysis

TL;DR

Salesforce.com reported Q2 earnings with revenue of $7.72 billion, representing 21% YoY growth. Q3 revenue guidance is between $7.8 billion and $7.82 billion, with full-year revenue expected to be around $31 billion. However, the company's profitability is a concern, with just $200 million in operating profits off of $7.7 billion in revenue.

Transcript

what is going on investors hopefully guys are doing well out there time to talk about salesforce.com ticker symbol crm the company reported their q2 earnings earlier in the week this stock is down over 5 this was on friday and over the last year the stock is down over 38 in year to date painting a similar story let's jump into those q2 numbers beca... Read More

Key Insights

• 💪 Salesforce.com reported strong YoY revenue growth of 21% in Q2.
• ☠️ The company's Q3 revenue guidance is below market consensus, with an expected growth rate of about 14%.
• ✋ Despite its high valuation, Salesforce.com is not generating significant profits, which raises concerns for investors.
• ❎ Negative fx impact is affecting Salesforce.com's results, with around $250 million expected in Q3 and $800 million for the full year.
• 😘 The company's profitability is comparable to other companies that trade at a market premium but generate low profits.
• 💪 Salesforce.com's balance sheet is relatively strong, with ample cash and receivables.
• 😘 Short-term technical indicators suggest potential support in the $150-$160 range, but a break below previous lows may indicate further downside potential.

Questions & Answers

Q: How did Salesforce.com perform in Q2?

In Q2, Salesforce.com achieved revenue of $7.72 billion, showing a growth rate of 21% year over year.

Q: What are the revenue guidance numbers for Q3 and full year?

Salesforce.com provided Q3 revenue guidance ranging from $7.8 billion to $7.82 billion. The full-year revenue is expected to be approximately $31 billion.

Q: What is the company's profitability like?

Despite its strong revenue growth, Salesforce.com's profitability is a concern. It generated just $200 million in operating profits off of $7.7 billion in revenue.

Q: Can the negative fx impact on revenue be disregarded?

The negative fx impact on Salesforce.com's revenue is significant, with $250 million expected in the upcoming Q3 quarter and $800 million for the full year. While some investors may overlook it, the impact should be considered as it will balance out in the long run.

Q: What is the market's expectation for Salesforce.com's growth?

Wall Street anticipates Salesforce.com to be a mid to low teens grower. However, considering its valuation and anticipated growth rate, investors need to assess whether paying a premium for the stock is justifiable.

Q: How does Salesforce.com's profitability compare to other companies?

Salesforce.com's profitability is relatively low, with just $200 million in operating profits off of $7.7 billion in revenue. This raises concerns, as other companies with similar valuations generate significantly higher profits.

Q: Does Salesforce.com have a solid balance sheet?

Salesforce.com's balance sheet is relatively strong, with plenty of cash and receivables. However, it also has some long-term debt that needs to be addressed.

Q: What are the technical indicators for Salesforce.com's stock?

From a technical perspective, Salesforce.com's stock is currently in a consolidation phase. It could find support in the $150-$160 range, but a break below previous lows may indicate further downside potential.

Summary & Key Takeaways

• Salesforce.com reported Q2 revenue of $7.72 billion, showing 21% YoY growth.

• Q3 revenue is expected to be between $7.8 billion and $7.82 billion, while full-year revenue is projected at around $31 billion.

• Despite strong revenue growth, the company's profitability is low, with just $200 million in operating profits off of $7.7 billion in revenue.