What Can We Expect from Salesforce’s Fiscal 2Q17 Results?



Analysts’ expectations: Salesforce’s fiscal 2Q17 results

Salesforce (CRM) is scheduled to announce its fiscal 2Q16 results on August 31, 2016. For fiscal 2Q17, analysts expect Salesforce to post revenue and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of ~$2.0 billion and $0.22, respectively. It is very likely that Salesforce’s fiscal 2Q17 results will follow its past trends and meet or exceed analysts’ expectations.

For fiscal 2Q17, Salesforce has provided revenue and EPS (earnings per share) guidance in the range of $2.01 billion to $2.02 billion and $0.24 to $0.25, respectively.

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Seasonality might weigh on Salesforce’s 2Q17 results

Salesforce derives the majority of its revenue from subscription and support revenue, as the above chart shows. As a result, the growing adoption of the cloud is working in the company’s favor. In calendar 1Q16, cloud infrastructure revenues surpassed $7 billion.

The double-digit revenue growth with each passing quarter has enabled Salesforce to raise its guidance. Looking at its fiscal 1Q17 results, Salesforce seems well on its way to achieving the $10 billion revenue milestone by fiscal 2018. Sales Cloud, the top contributor, earned 41% of Salesforce’s subscription and support revenue in fiscal 1Q17.

However, Piper Jaffray is not very optimistic about Salesforce’s impending fiscal 2Q17 results. According to Investor’s Business Daily, Alex Zukin, an analyst with Piper Jaffray, stated that “our checks indicate a somewhat lighter new business quarter than prior periods with typical Q2 seasonality combining with a few one-time factors.”

However, the research house clarified that it does “not believe these issues to be structural or competitive in nature.” As a result, it did not adjust the rating or price target on Salesforce stock. Piper Jaffray has an “overweight” rating on Salesforce’s stock, with a $100 price target.


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