* Reports second quarter 2020 results on Tuesday, August 25, after close
* Revenue forecast: $ 4.9 billion
* EPS forecast: $ 0.67
When Salesforce.com (NYSE 🙂 reports its second quarter results later in the day, investors will be eager to know if the latest acquisitions help drive growth.
Salesfore.com, which sells software and cloud-based services to enterprise customers, has expanded enormously in recent years following a series of acquisitions – part of its plan to diversify its revenue base and drive further growth.
The San Francisco-based customer relationship management company bought software maker Tableau Software for $ 15.3 billion last year, its largest transaction to date. The deal was part of the effort to expand into the business intelligence market.
The company's last show that these bets are starting to pay off. Salesforce has been profitable for 10 of the 12 most recent quarters, and acquisitions have made the company less dependent on its flagship Sales Cloud product.
In the company's most recent quarter, the majority of subscription and support revenues were in the & # 39; Platform & Other & # 39; category, including contributions from MuleSoft integration software and Tableau charting tools. The "Platform & Other" segment delivered 30% of subscription and support revenues, compared to 15% five years ago.
Investors and analysts are excited about Salesforce's growth prospects, even after the surprise departure of co-chief executive officer Keith Block early this year, leaving Marc Benioff as sole CEO once again.
Stocks of Salesforce are up 24% this year, rebounding strongly from the dip in March. They closed at $ 208.46 on Monday, up 0.45% on the day.
Despite this largely optimistic outlook, Salesforce is facing some headwinds from the difficult business environment in the wake of the COVID-19 pandemic. While the company announced its first quarter earnings at the end of May, the company updated its annual sales forecast, indicating that the recession caused by the coronavirus has weakened demand for the software manufacturer's cloud applications
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Salesforce.com One Year Chart.
Fiscal 2021 sales will be approximately $ 20 billion, down from an earlier forecast of a staggering $ 21.1 billion. The company expects earnings of $ 2.93 to $ 2.95 per share, excluding some items.
Benioff recognizes these threats, but believes that the company's business model is strong enough to face short-term challenges and maintain long-term profit potential.
In the past quarter, Salesforce announced a deal with AT&T (NYSE :), one of the largest, that will enable the wireless giant to collect customer data in one place and access it through multiple points of contact.
Bottom Line
Salesforce has an excellent track record of delivering consistently higher growth over the past decade. Despite a trimmed sales forecast for the current fiscal year, Wall Street remains confident in its growth, especially after the latest acquisitions that bring a broader presence in a number of key markets. For these reasons, we believe that any post-profit weakness should be considered a buying opportunity.
