What To Watch In Salesforce Earnings Report

Salesforce (CRM) is scheduled to report results of its first fiscal quarter after the market close on Thursday, May 27, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its fourth quarter earnings report, Salesforce guided to fiscal year 2022 adjusted earnings per share of $3.39-$3.41. Consensus for EPS, which was $3.50 at the time, has since dropped to $3.43. The company also forecast 2022 revenue of $25.65B-$25.75B. Consensus, which was $25.41B at the time, has inched up to $25.76B. In addition, the company provided first-quarter adjusted EPS guidance of 88c-89c on revenue of $5.875B-$5.885B. Consensus for earnings, which was at 76c at the time, has risen to 88c, and consensus for revenue, which was at $5.72B, has increased to $5.89B.

PARTNERSHIPS, FEATURES: In February, Insperity (NSP) announced a partnership with Salesforce to digitally transform its business. The strategic collaboration aims to maximize marketing campaigns, optimize customer acquisition and retention and enhance productivity. Additionally in February, Salesforce announced Ferguson (FERG) will leverage the Salesforce Customer 360 platform for a more comprehensive view of customers.The company also announced a partnership with Coca-Cola (KO) bottlers in North America to deploy Salesforce Consumer Goods Cloud. RingCentral (RNG) also announced in February the release of in-app calling for Salesforce. The new feature enables sales agents to make, transfer, and control phone calls directly from Salesforce. In March, MuleSoft announced MuleSoft Composer for business teams to integrate apps and data and the company introduced the next generation of Sales Cloud. The company also announced that Boys & Girls Clubs of America had selected its technology to deliver more personalized experiences. Additionally in March, MuleSoft announced TAB Bank is using its technology to build an open banking strategy. Salesforce also announced the next generation of Service Cloud in April and a collaboration with Sonos (SONO) to transform its digital shopping capabilities. 

SLACK ACQUISITION: In December, Salesforce and Slack Technologies (WORK) announced they had entered into a definitive agreement under which Salesforce will acquire Slack. Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7B based on the closing price of Salesforce's common stock on November 30, 2020. The transaction is conditioned on the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On December 14, 2020, the companies each filed a notification and report form with respect to the transaction, and on January 13, the companies each voluntarily withdrew its HSR filing, and re-filed such forms on January 15. Pursuant to the HSR Act, on February 16, the companies each received a request for additional information and documentary material, often referred to as a "Second Request," from the Antitrust Division of the Department of Justice. Issuance of the second request extends the waiting period under the HSR Act until 30 days after the companies have each substantially complied with the second request, unless the period for review is extended voluntarily by the parties and the DOJ or is terminated earlier by the DOJ. The companies continues to anticipate completing the transaction during its fiscal quarter ending July 31.

ANALYST VIEWS: On Tuesday, Jefferies analyst Brent Thill said his latest survey of survey of 55 partners along with recent checks indicate "sustained strong fundamental demand" for Salesforce. Of those surveyed, 80% saw their Salesforce pipelines improve over the past three months versus 73% last quarter, Thill said in a research note titled "This Ship Is Not Slowing Down." The analyst expects the company to unlock value from Slack over time and finds the risk/reward favorable at current share levels. He kept a Buy rating on Salesforce with a $300 price target.

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