Salesforce CRM is scheduled to release second-quarter fiscal 2023 results on Aug 24.
For the fiscal second quarter, the company projects total revenues between $7.69 billion and $7.70 billion. Also, non-GAAP earnings are expected between $1.01 and $1.02 per share.
The Zacks Consensus Estimate for revenues is pegged at $7.70 billion, indicating an increase of 21.5% from the year-ago quarter’s reported figure. The consensus mark for earnings has been pegged at $1.02 per share, implying a year-over-year decrease of 31.1%.
Salesforce’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 30.3%.
Let’s see how things have shaped up before this announcement.
Salesforce Inc. Price and EPS Surprise
Salesforce Inc. price-eps-surprise | Salesforce Inc. Quote
Factors to Consider
Salesforce’s second-quarter performance is likely to have benefited from the robust demand environment as customers are undergoing a major digital transformation. The customer relationship management software provider’s focus on introducing more aligned products per customer needs is expected to have boosted its top line in the quarter.
Salesforce’s ability to offer integrated solutions for customers’ business problems is likely to have been a key growth driver. The firm’s products like Trailhead and myTrailhead are helping companies through their transformation processes along with increasing business scale with modern technology. Additionally, the acquisitions of Slack, Mobify and Vlocity are anticipated to have aided CRM’s top line during the to-be-reported quarter.
The company’s quarterly performance is likely to have gained from its focus on building and expanding relationships with leading brands across industries and geographies. Also, significant growth opportunities in the public sector are expected to have been a tailwind during the fiscal second quarter.
Growth across its four major cloud service offerings, Sales Cloud, Service Cloud, Platform and Other and Marketing & Commerce Cloud, is anticipated to have boosted Salesforce’s subscriptions and supported its revenues.
However, a decline in software spending by small & medium businesses amid the macroeconomic uncertainty due to the pandemic and the ongoing Russia-Ukraine war might have affected Salesforce’s fiscal second-quarter performance.
Further, stiff competition from Oracle and Microsoft is a concern, along with forex headwinds. Also, the increasing investments in international expansions and data centers might have eroded the company’s profitability during the to-be-reported quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Salesforce currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Campbell Soup CPB, Oracle ORCL and Science Applications International SAIC have the right combination of elements to post an earnings beat in their upcoming releases.
Campbell Soup carries a Zacks Rank #2 and has an Earnings ESP of +0.22%. The company is expected to report fourth-quarter fiscal 2022 results on Sep 7. Campbell Soup’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 10.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CPB’s fiscal fourth-quarter earnings is pegged at 56 cents per share, indicating a year-over-year increase of 1.8%. The consensus mark for revenues stands at $1.97 billion, suggesting an increase of 5.2%.
Oracle is expected to report first-quarter fiscal 2023 results on Sep 12. The company carries a Zacks Rank #2 and has an Earnings ESP of +1.41% at present. Oracle’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 5.8%.
The Zacks Consensus Estimate for quarterly earnings is pegged at $1.07 per share, suggesting a year-over-year improvement of 3.9%. ORCL’s quarterly revenues are estimated to increase 17.9% year over year to $11.47 billion.
Science Applications currently carries a Zacks Rank #3 and has an Earnings ESP of +1.19%. The company is slated to report its second-quarter fiscal 2023 results on Sep 1. Science Applications’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 23.6%.
The Zacks Consensus Estimate for Science Applications’ second-quarter earnings stands at $1.68 per share, implying a year-over-year decline of 14.7%. SAIC is estimated to report revenues of $1.82 billion, which suggests a decrease of 0.8% from the year-ago quarter.
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