Salesforce Sees Stock Drop Despite Earnings Beat

By Anirudh Menon - Published on August 30, 2017
Anirudh Menon

Anirudh Menon | I have adorned multiple hats during my professional journey. My experience of 14 years comes in areas like Sales, Customer Service and Marketing. My journey as a professional writer started 5 years back, when I started writing for an in-house magazine for my employer. Having successfully delivered many in-house projects, it encouraged me to tak...

Salesforce Sees Stock Drop Despite Earnings Beat

Cloud computing company Salesforce saw declines in its stock price after hours of trading on Tuesday. Despite beating all odds and expectations of Wall Street investors and showing positive earnings for second quarter 2017, the stock price slid by 0.8% to $92.20 per share.

During the period of quarter ending July 31, Salesforce reported earnings of 33 cents per share, which exceeded investor forecasts by a penny. Even the revenue increased by 26% reaching a value of $2.56 billion, which surpassed investors’ projection of $2.52 billion. Wall Street forecast a deferred revenue of $2.17, but the company knocked it off by recording $4.82 billion.

Although the company exceeded Wall Street’s expectations on 10 straight quarters since 2015, it did not stop the decline in stock price. The possibility of this decline could be the high expectations of investors ahead of second quarter results.

Further, Salesforce forecasted adjusted earnings between $1.29 and $1.31 for the entire year 2017. This forecast is in line with the expectations of analysts who forecasted adjusted earnings of $1.30. Salesforce forecasted revenue to rise at a rate of 23% to 24% year-on-year, which will be in the range of $10.35 billion to $10.4 billion, which again might beat Wall Street expectations of $10.29 billion.

In May, the company gave a forecast of 16% growth in billings for the second quarter. However, investors will have few questions on billings on the company’s earnings. This will be a part of the call scheduled later this evening, where there will be discussions on Einstein, the Artificial Intelligence platform, and Service Cloud, the CRM business.

Focus will also be on Commerce Cloud, which was a product resulting from last year’s acquisition of Demandware. Salesforce does face stiff competition from companies like Adobe and Oracle.

Sources indicate these questions will be answered during the upcoming Dreamforce Conference in November.

Anirudh Menon

Anirudh Menon | I have adorned multiple hats during my professional journey. My experience of 14 years comes in areas like Sales, Customer Service and Marketing. ...

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