Salesforce Posts Strong 4Q Earnings But FY22 Guidance Disappoints; Shares Drop 4.8%

Shares of Salesforce dropped 4.8% in extended trading on Thursday even after posting strong 4Q earnings as the cloud-based software provider guided for FY22 non-GAAP earnings per share of $3.39 to $3.41, below analysts’ estimates of $3.46.

Salesforce’s (CRM) revenue guidance for FY22 of between $25.65 billion to $25.75 billion includes a $600 million contribution from Slack Technologies, with the acquisition expected to close in the second quarter of next year. In December of last year, Salesforce announced the acquisition of Slack, an enterprise communications platform, for $27.7 billion.

The company reported non-GAAP diluted 4Q earnings per share (EPS) of $1.04, which came in ahead of analysts’ estimate of $0.75. Revenue for the quarter came in at $5.82 billion, up by 20% year-on-year, versus the consensus estimate of $5.68 billion.

The growth in revenues in 4Q was driven by subscription and support revenues that increased 20% year-on-year and came in at $5.48 billion.

Salesforce’s Chairman and CEO Marc Benioff said, “We never could have predicted a year ago what was in store, which makes me incredibly proud of how well we pivoted our company to adapt to this pandemic world. We had a record quarter and year by innovating more and faster than ever, enabling our customers to be successful from anywhere, and becoming more relevant and strategic than ever. And we continued to serve all of our stakeholders in a time when they needed it most.”

In the first quarter of FY22, CRM has forecasted revenues to range from $5.87 billion to $5.88 billion and non-GAAP EPS to land between $0.88 to $0.89. (See Salesforce stock analysis on TipRanks)

Around three days ago, Cowen & Co. analyst Derrick Wood reiterated a Buy and a price target of $290 on the stock. Wood said his survey indicated that CRM may post strong 4Q results. The analyst also noted that the stock is cheap in the large-cap software sector as it is trading at a low multiple.

“Margins could be above guidance and that upside on bookings growth will be higher than last quarter,” Wood stated.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 19 Buys and 7 Holds. The average analyst price target of $273.78 implies around 18.5% upside potential to current levels.

Related News:
Beyond Meat Posts Mixed 4Q Results; Street Says Hold
Moderna 4Q Revenues Jump To $571M On Back Of COVID-19 Vaccine; Shares Rise 4%
Five9 4Q Pops 10% Pre-Market On Blowout Quarter