Fly Intel: What to watch in Salesforce earnings report
Salesforce (CRM) is scheduled to report results of its second fiscal quarter after the market close on Thursday, August 22, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. GUIDANCE: Along with its announcement of a deal to acquire Tableau Software (DATA), Salesforce raised its fiscal year 2020 revenue view to $16.45B-$16.65B from $16.1B-$16.25B. Consensus, which stood at $16.1B for revenue at that time, has edged up to $16.66B. The company also lowered its FY19 adjusted EPS view to $2.51-$2.53 from $2.88-$2.90. Consensus for earnings, which was $2.69, has dropped to $2.65. 2. BLOCKCHAIN: In May, the company announce Salesforce Blockchain, a "low-code platform that enables organizations to share verified, distributed data sets across a trusted network of partners and third parties." Salesforce also announced that Pacific Life has selected Salesforce as one of its strategic technology partners to get a 360-degree customer view. 3. ACQUISITIONS: In June, Salesforce and Tableau Software entered into a definitive agreement under which Salesforce would acquire Tableau in an all-stock transaction, representing an enterprise value of $15.7B. "We are bringing together the world's #1 CRM with the #1 analytics platform. Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It's truly the best of both worlds," said co-CEO Marc Benioff at the time. The company announced in August that it completed the acquisition. In an August regulatory filing, Salesforce announced the acquisition of ClickSoftware Technologies for approx. $1.35B. The company said, "The purchase price will comprise a mix of cash and company common stock and includes the assumption of outstanding equity awards held by ClickSoftware employees. The acquisition is expected to close during the company's fiscal quarter ending October 31, 2019." 4. ANALYST VIEWS: On Tuesday, BMO Capital analyst Keith Bachman kept his Outperform rating and $185 price target on Salesforce, updating his model to reflect the company's Tableau acquisition and lowering its FY20 and FY21 EPS estimates by 9c and 16c to $2.79 and $3.22 respectively. The analyst believes the company had a "solid" July and that the stock is "very attractively valued" in the high-growth software space, but also notes that its "aggressive" M&A strategy has continued to push out the expansion of its margins while negatively impacting its year-to-date performance. Meanwhile, Stifel analyst Tom Roderick said consensus opinion from shareholders on Salesforce's deal to buy Tableau has been "one of concern and criticism," but he believes that the business remains healthy and his feedback on Tableau from checks has been very positive. He thinks Salesforce reporting in-line results in Q2 against low expectations will set up the stock for a great "catch-up trade" ahead of its Dreamforce event and the seasonally strong second half. Ahead of the company's report, Roderick kept a Buy rating and $185 price target on Salesforce shares. Additionally on Tuesday, Wedbush analyst Steve Koenig lowered his price target for Salesforce to $184 from $192, while reiterating an Outperform rating on the stock. The analyst acknowledges that macroeconomic concerns, currency headwinds, and some skepticism about the Tableau acquisition have pressured the shares over the last 30 days, but he expects some relief from the upcoming Q2 results, despite additional FX headwinds.