TICKER ALERT: CRM
Salesforce.com: Color on Qtr (92.95)
Mizuho Securities raises tgt to $110 from $100. Salesforce.com's results beat consensus. In particular, deferreds and off-balance sheet backlog performance was very strong, owing to ongoing share gains and sustained penetration of the installed base. While the company raised its FY18 revenue outlook, margin expansion targets were re-affirmed, which may have disappointed some investors looking for incremental profitability to fall to the bottom line. However, firm continues to see favorable fundamental data points indicating sustained performance through F2H, with potential upside to estimates.
BMO Capital raises tgt to $105 from $100. Firm believes that CRM reported a quarter that will likely be a proxy for future quarters. More specifically, firm is making modest positive revisions to future estimates. While BMO thinks CRM could experience a near-term modest decline, it believes that the results of the Q, including guidance, will move the shares higher over time.
RBC Capital notes F2Q18 was a decisive beat across all main metrics. The lack of margin/ CFFO raise and F3Q18 implied billings may weigh in the short term, but firm sees scope for more positive surprises in F2H18. CRM delivered 26% Y/Y billings growth (vs. Street at +17% Y/Y) and total bookings growth of +39% Y/Y. CRM also beat across revenue, EPS and cash flows. It's clear to firm that mgmt. is making a decision to re-invest revenue upside back into the business (op margin guide remains 125-150bps), but with higher billings/ revenue growth driven by international and sales cloud re-acceleration, it can't argue against the strategy.
Stifel Research raises tgt to $110 from $105. CRM reported F2Q18 financial results that came in ahead of consensus across all key metrics. Total revenue of $2.56bn (+26% y/y) came in ahead of consensus of $2.52bn, with subscription revenue of $2.37bn (+26% y/y) and professional services revenue of $193mn (+28% y/y). Calculated bookings of $2.34bn (+26% y/y) came in well ahead of consensus of $2.17bn, while non-GAAP EPS of $0.33 beat consensus by a penny. The company once again showed reacceleration in its Sales Cloud business (to 17%), with strength in core sales force automation and successful upsell of CPQ.
Needham Research notes Salesforce reported 2Q results that it believes were nominally better than 1Q results on better sales. Total bookings increased 39.2% Y/Y (vs. 1Q up 16.7%) while billings increased 26% (vs 1Q up 15.7%). Although the company's bookings, billings, and deferred commissions results suggest 2Q sales were better than expectations, firm expects unchanged FY18 margin leverage and operating cash flow guidance could weigh on the stock over the next several weeks as the perceived sales outperformance does not flow through to bottom-line results near term. Given CRM's organic revenue growth rate decline below 20% Y/Y for the first time in FY18, firm continue to believe investor focus is more on margin and cash flow given the company's valuation is more driven by cash flow multiples today. |
