Salesforce FQ1 ’24 Earnings Preview: Consensus Up, But Beat Still Likely

Summary:

  • Estimates for Salesforce earnings have been revised upwards significantly (22.9%) in response to its most recent quarter but are still not too aggressive in terms of their assumptions.
  • Calculating through the numbers, we see that they imply margins that are significantly higher YoY, but only about half of what we saw in the last quarter.
  • The question here becomes a matter of what portion of Salesforce margins are going to be durable QoQ versus how much they will revert to YoY norms.
  • Given the company’s aggressive push towards profitability, I think we will see more margins preserved QoQ than may be expected, which should amount to a beat against consensus EPS estimates.
  • CRM stock has also had excellent momentum this year and should continue appreciating as it grows earnings, making Salesforce a buy for the near term.

Salesforce Building, Tysons Corner, Virginia (<a href='https://seekingalpha.com/symbol/USA' title='Liberty All-Star Equity Fund'>USA</a>)

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Overview

Salesforce (NYSE:CRM) has continued its run of growth and increasing profitability throughout this year, with a particularly strong 23.4% beat against consensus EPS for its Q4 2023. On the latest conference call management

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CRM GAAP Net Margin, Seeking Alpha

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CRM GAAP EPS, Seeking Alpha

FQ 2 ’23

FQ 3 ’23

FQ 4 ’23

Op Margin

2.50%

5.87%

14.13%

Net Margin

0.88%

2.68%

-1.17%

Margin Loss

-1.62%

-3.19%

-15.30%

Average

-6.70%

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CRM GAAP Op. Margin, Seeking Alpha

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CRM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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