Salesforce Revenue: Nice Recovery Quarter, Fair…

VaselineAugust 30, 2024

0 2 minutes read

We raise our fair value estimate for Salesforce ( CRM ) to $290 (£219.78) per share from $285 after the company reported strong second-quarter results while maintaining full-year revenue guidance and slightly increasing profitability. Macroeconomic conditions continued to weigh on growth, even as the company outperformed our expectations on both the top and bottom lines.

Recent trends have continued, with multi-cloud offerings and vertical domain sales driving relative strength compared to expectations. Management was excited about its new Agentforce platform, which we believe represents a good long-term opportunity to transition from a predominantly human workforce to a pool of virtual agents over time. Monetization will be conversational. We still see some upside for stocks, but the window has narrowed over the last three months.

We wish President and CFO Amy Weaver well as she has announced that she is leaving the firm as soon as a successor is found, which could take six months. We have no doubt that the firm will attract a variety of top candidates. Weaver’s transformation of the company’s approach to both profitability and capital allocation is nothing short of remarkable.

Revenues have rebounded nicely from last quarter’s sluggishness. Strength was evenly distributed across solutions, with multi-cloud performing well and certain verticals such as health and life sciences or communications and media also providing resilience. Total revenue rose 8% year-over-year (9% constant currency) to $9.33 billion, compared to the top end of guidance of $9.25 billion. Both subscriptions and professional services were ahead of our model, with the former growing 9% as reported and the latter contracting 6% year-over-year as clients continued to take on larger projects small. Performance bonds outstanding rose 10% year-over-year but decelerated 210 basis points. However, CRPO outperformed revenues, which is a positive indicator.

Morningstar Key Metrics for Salesforce

• Estimated fair value: $290.00
• Morningstar rating: ★★★
• Morningstar Economic Moat Rating: Lat
• Morningstar Uncertainty Rating: High

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VaselineAugust 30, 2024

0 2 minutes read

Morningstar Key Metrics for Salesforce

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