Salesforce Q4 results: ‘this is one massive opportunity to own it’

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Salesforce.com Inc (NYSE: CRM) on Tuesday reported market-beating results for its fiscal fourth quarter. Its revenue outlook also topped Street estimates but earnings forecast was a bit dovish. Shares are up nearly 4.0% in extended trading.

Key takeaways from Salesforce Q4 results

Salesforce swung to a loss of $28 million versus the year-ago $267 million in income.
Per-share loss printed at 3 cents – a significant decline from last year’s 28 cents of EPS.
Adjusted earnings came in at 84 cents, beating the FactSet consensus for 75 cents.
Revenue jumped 26% YoY to handily beat analysts’ forecast, as per the earnings press release.

Commenting on the earnings report, Wedbush Securities’ Dan Ives said on CNBC’s “Closing Bell”:

If you look at subscriptions, billings growth, it shows they’re hitting their next level of growth in this cloud environment. A lot of it will also be Slack driven. I just think this is as oversold as I’ve seen Salesforce relative to the growth and margins in probably about four to five years.

Salesforce guides for lower-than-expected earnings

For fiscal Q1, Salesforce expects roughly $7.38 billion in revenue on 94 cents of EPS. In comparison, analysts were at a dollar of per-share earnings on a lower $7.27 billion in revenue. The cloud company’s full-year guidance was the same – lower-than-expected for earnings but better for revenue.

The NYSE-listed company is guiding for continued growth in fiscal 2023. Salesforce is aiming for a 22% YoY increase in operating cash flow and non-GAAP operating margin at 20% this year. Ives added:

The free cash flow at Salesforce is just massively attractive. I think the Slack deal alone is probably $50 to $60 overhang on the stock. We’ll look out to the next six to nine months. I think this is one massive opportunity to own it. They’re showing fundamentals to back up the story.

Ives reiterated his confidence in CEO Marc Benioff and said the risk-reward in CRM at current valuation is an eye popper. The stock is still down 30% from its high in November.

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