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CRM

Salesforce

$159.64

-1.45 (-0.90%)

11:05
12/03/19
12/03
11:05
12/03/19
11:05

Fly Intel: What to watch in Salesforce earnings report

Salesforce (CRM) is scheduled to report results of its third fiscal quarter after the market close on Wednesday, December 3, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. GUIDANCE: During the company's investor day at Dreamforce 2019, Salesforce raised its fiscal year 2020 revenue view to $16.99B-$17B from $16.75B-$16.9B. This compares to analyst consensus of $16.9B. Along with its second quarter earnings, the company raised its FY20 adjusted EPS view to $2.82-$2.84 from $2.51-$2.53. Consensus for earnings, which was $2.65, has increased to $2.86. 2. ACQUISITIONS: In an August regulatory filing, Salesforce announced the acquisition of the holding company of ClickSoftware Technologies, a software company providing field service management solutions., for approximately $1.35B. "Delivering exceptional field service is an increasingly important priority for companies across industries with more than 70% of customer service leaders making significant investments to transform their mobile workforce," said Bill Patterson, EVP and GM of Salesforce Service Cloud. "Our acquisition of ClickSoftware will not only accelerate the growth of Service Cloud, but drive further innovation with Field Service Lightning to better meet the needs of our customers." Additionally in August, Salesforce announced completion of the acquisition of Tableau. 3. ANALYST VIEWS: Following Salesforce's investor day at Dreamforce 2019, Jefferies analyst Brent Thill said he left the event "incrementally positive" on the company. While the analyst would have liked to see more in the way of margin expansion above the 125-150 basis points announced, he said he continues to believe the company has a portfolio of assets to serve the customer through both its Customer 360 and Data offerings. He maintained a Buy rating on the shares with a $195 price target. Additionally, BofA/Merrill analyst Kash Rangan said he was "incrementally positive." Salesforce expressed confidence in the business by giving "multiple gifts" to investors, including increased fiscal 2020 revenue guidance, initial fiscal 2021 revenue guide above projections, and a fiscal 2024 goal of doubling revenue scale in four years, Rangan said. The said he believes the company could increase its revenue scale closer to $40B by fiscal 2025. Rangan kept a Buy rating on Salesforce with a $200 price target. Meanwhile, RBC Capital analyst Alex Zukin kept his Outperform rating and $200 price target on Salesforce, saying the discussion makes him believe that its preliminary guidance is "conservative with potential to outperform the top and bottom line through FY20 and FY21." The analyst added that CEO Benioff indicated that the company is entering a "digestion period" after its recent uptick in M&A. Zukin said he thinks Salesforce can grow its current remaining performance obligation, or cRPO by over 20%, and has many avenues to sustain that growth, even though some deceleration is "inevitable."

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