Shares of Salesforce (CRM 3.60%) climbed as much as 9.6% early Thursday, then settled to trade up 7.5% as of 2 p.m. ET after the customer relationship management (CRM) platform provider announced better-than-expected quarterly results and strong forward guidance.
On the former, Salesforce's quarterly revenue grew 11% year over year to $8.72 billion, translating to net income of $1.22 billion, or $1.25 per share, under generally accepted accounting principles (GAAP). On an adjusted (non-GAAP) basis, which excludes one-time items like stock-based compensation and restructuring expenses -- Salesforce's earnings were $2.07 billion, or $2.11 per share. Most analysts were only modeling earnings of $2.06 per share on roughly the same revenue.
NYSE: CRM
Key Data Points
Salesforce is executing on its profitable growth plan
Remaining performance obligation (RPO) -- a key metric to help gauge future growth -- grew 21% year over year, ending the quarter at $48.3 billion. Salesforce also saw massive increases in cash-flow generation during the quarter; operating cash flow nearly quintupled on a year-over-year basis to $1.53 billion, while free cash flow skyrocketed by more than tenfold to $1.37 billion.
CEO Marc Benioff called it "another strong quarter of executing on our profitable growth plan we set in motion last year." He added that the company is now the world's third-largest enterprise software company in terms of revenue, as well as the No. 1 AI-enabled CRM platform and the No. 1 enterprise apps company.
What's next for Salesforce investors?
For the current fiscal fourth quarter, Salesforce expects revenue of $9.18 billion to $9.23 billion, up 10% year over year and well above consensus estimates for revenue of $8.36 billion.
As such, Salesforce also narrowed its full-year outlook to call for revenue of $34.75 billion to $34.8 billion (compared to $34.7 billion to $34.8 billion previously), up 11% year over year, and raised its full-year operating margin guidance to 14.5% on a GAAP basis and 30.5% on a non-GAAP basis (up from its old outlook for 13.3% and 30%, respectively).
