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Salesforce (CRM) to Report Q4 Earnings: What's in the Offing?

Salesforce CRM is scheduled to release fourth-quarter fiscal 2024 results on Feb 28.

For the fiscal fourth quarter, the company projects total revenues between $9.18 billion and $9.23 billion (midpoint $9.205 billion). Non-GAAP earnings are expected between $2.25 and $2.26 per share.

The Zacks Consensus Estimate for revenues is pegged at $9.21 billion, indicating an increase of 9.9% from the year-ago quarter’s reported figure. The consensus mark for earnings is pegged at $2.26 per share, implying a year-over-year increase of 34.5%.

Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.9%.

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Let’s see how things have shaped up before this announcement.

Salesforce Inc. Price and EPS Surprise

Salesforce Inc. price-eps-surprise | Salesforce Inc. Quote

Factors to Consider

Salesforce’s quarterly performance is likely to have benefited from the robust demand environment as customers are undergoing a major digital transformation. The customer relationship management (CRM) software provider’s focus on introducing more aligned products per customer needs is expected to have boosted its top line in the quarter.

Salesforce’s ability to offer integrated solutions for customers’ business problems is likely to have been a key growth driver. The firm’s products, like Trailhead and myTrailhead, are helping companies through their transformation processes and increasing business scale with modern technology.

Furthermore, the growing demand for generative artificial intelligence (AI)-enabled cloud-based solutions is anticipated to have aided Salesforce’s top-line growth in the fourth quarter. The company is currently focusing on incorporating generative AI tools across its products as it looks to keep its business ahead of rivals.

Additionally, Salesforce’s fourth-quarter performance may have gained from its focus on building and expanding relationships with leading brands across industries and geographies. Also, significant growth opportunities in the public sector are expected to have been a tailwind in the fiscal fourth quarter.

Also, the acquisitions of Spiff and Airkit.ai are anticipated to have aided CRM’s top line during the to-be-reported quarter. Growth across its cloud service offerings — Sales, Service, Platform & Other, Marketing & Commerce and Data — is anticipated to have boosted Salesforce’s subscriptions and supported its revenues.

Our fourth-quarter revenue estimate for Sales, Service, Platform & Other, Marketing & Commerce and Data cloud services is pegged at $1.98 billion, $2.11 billion, $1.72 billion, $1.27 billion and $1.46 billion, respectively. We expect the company to report revenues from the Subscription and Support segment of approximately $8.53 billion and the Professional Services division of $666.1 million.

However, a decline in software spending by small and medium businesses amid the macroeconomic uncertainty due to the pandemic and geopolitical issues across different parts of the world may have affected Salesforce’s fiscal fourth-quarter performance. Further, stiff competition from Oracle and Microsoft is a concern, along with forex headwinds.

However, the ongoing restructuring initiative, which includes trimming the workforce, is likely to have boosted Salesforce’s profitability in the fourth quarter. The company’s third-quarter non-GAAP operating margin expanded 850 basis points to 31.2% from 22.7% in the year-ago quarter, mainly driven by an improved gross margin and the benefits of restructuring initiatives.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though CRM currently carries a Zacks Rank #3, it has an Earnings ESP of -0.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Synchronoss Technologies SNCR, Guidewire Software GWRE and JD.com JD have the right combination of elements to post an earnings beat in their upcoming releases.

Synchronoss sports a Zacks Rank #1 and has an Earnings ESP of +157.14%. The company is expected to report fourth-quarter 2023 results on Mar 5. Its bottom-line result surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing on two occasions, the average surprise being -16.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Synchronoss’ fourth-quarter bottom line is pegged at a loss of 11 cents per share, significantly narrower than the year-ago quarter’s loss of 72 cents. The consensus mark for revenues stands at $43.8 million, calling for a year-over-year decline of 29%.

Guidewire Software is expected to report second-quarter fiscal 2024 results on Mar 4. The company has a Zacks Rank #3 and an Earnings ESP of +4.76% at present. Guidewire Software’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being -42.22%.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 21 cents per share, suggesting a strong improvement from the year-ago quarter’s loss of 21 cents. Guidewire Software’s quarterly revenues are estimated to improve 3.6% to $240.9 million.

JD.com carries a Zacks Rank #3 and has an Earnings ESP of +0.78%. The company is anticipated to report fourth-quarter 2023 results on Mar 14. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 14.5%.

The Zacks Consensus Estimate for JD.com’s fourth-quarter earnings stands at 65 cents per share, indicating a year-over-year decline of 7.1%. It is estimated to report revenues of $42.56 billion, which implies a decrease of approximately 0.7% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Salesforce Inc. (CRM) : Free Stock Analysis Report

Synchronoss Technologies, Inc. (SNCR) : Free Stock Analysis Report

Guidewire Software, Inc. (GWRE) : Free Stock Analysis Report

JD.com, Inc. (JD) : Free Stock Analysis Report

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