Salesforce (NYSE:CRM)
Many tech stocks going down early Thursday morning were going up by midday, but not Salesforce (NYSE:CRM). Salesforce stock was still down 4% in the afternoon after an earnings report that most experts thought was good, but some worried about sales that were going down.
First-quarter sales and profits were above projections, and the business stuck to its full-year forecast of a revenue increase of around 10%.
The company’s crop increased by 12% to $24.1B compared to the previous year. Overall, RPO increased by 11% to $46.7B.
Salesforce also provided estimates for the top and bottom lines and crop growth of about 10% for the second quarter. That’s slower than the 12% seen from April 30 to May 1, the 13% seen from January 1 to February 1, and the 24% seen from April 2021 to April 2022.
As a result of the company’s “solid execution” throughout the quarter, Barclays maintained its optimistic stance by giving it an Overweight rating. The company “really liked” the increase in cRPO of 12%.
While the company acknowledged that some investors would see the 10% cRPO projection and the overall cautious revenue guidance as problems, it said, “but we would highlight the conservative nature of the management team (when guiding), and the fact that we are only in Q1.”
After Salesforce’s earnings report, Société Générale downgraded Salesforce stock to Hold, indicating that the company was adequately valued. This was because the “operating margin upswing continues unabated, but fully priced in.”
Salesforce’s operational margins are on the rise, and the company’s top-line growth prospects remain strong, according to analyst Richard Nguyen. However, we need to keep a careful eye on its research and development costs since a significant cut to these costs to assist in raising margins will have a negative effect on the group’s long-term competitiveness.
Citi has taken a neutral stance, saying that although the report was robust, it was not as strong as the previous quarter. However, although an improved profit forecast is welcome, “with the recent run in the shares, we worry the lack of positive top-line revisions may drive the stock lower in the near term,” the analysts at BTIG said.
For this reason, we have committed $250 million in our new AI venture fund to fuel entrepreneurs pursuing our generative AI vision,” CEO Marc Benioff remarked on the results call.
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