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Salesforce (CRM - Free Report) 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%. 

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