The 10-second takeaway
For the quarter ended April 30 (Q1), Salesforce beat expectations on revenues and earnings per share.
Compared to the prior-year quarter, revenue increased significantly.
Margins shrank across the board.
Salesforce reported revenue of $695.5 million. The 37 analysts polled by S&P Capital IQ expected revenue of $678.2 million on the same basis. GAAP reported sales were 38% higher than the prior-year quarter's $504.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.37. The 41 earnings estimates compiled by S&P Capital IQ predicted $0.34 per share. GAAP EPS were -$0.14 for Q1 versus $0.00 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 78.2%, 140 basis points worse than the prior-year quarter. Operating margin was -3.2%, 260 basis points worse than the prior-year quarter. Net margin was -2.8%, 290 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $728.5 million. On the bottom line, the average EPS estimate is $0.39.
Next year's average estimate for revenue is $3.00 billion. The average EPS estimate is $1.65.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Salesforce is outperform, with an average price target of $158.59.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of salesforce.com. Motley Fool newsletter services have recommended buying shares of salesforce.com. Motley Fool newsletter services have recommended creating a bear put spread position in salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.