What’s happening: Salesforce.com, Inc is scheduled to release its second-quarter results after the closing bell on Tuesday, August 25.
What happened: While the pandemic has forced companies to curtail their budgets and change buying decisions, the dependence on enterprise tech solutions has been rising.
Meanwhile, Salesforce is set to replace Exxon Mobil in the 30-stock Dow Jones index, with effect from before the market opens on August 31. The news sent the shares of the PaaS (platform-as-a-service) based customer relationship management software provider higher by 4% in extended trading on Monday.
What were the expectations: With various enterprise tech companies scheduled to release their results in the coming days, investors will monitor Salesforce’s report to gain some insight into how the sector is faring during the crisis.
- The company’s quarterly revenues are expected to grow by 22.5% year-over-year to $4.9 billion.
- Quarterly earnings are projected at 67 cents per share, representing a 1.5% year-over-year growth.
Why it matters: The San Francisco, California-based company has maintained a track record of reporting strong results over the past two years, exceeding expectations in every quarter.
However, the latest quarter has been unique, with most Wall Street analysts lowering their estimates for Salesforce over the past three months due to the impact of the pandemic on the economy.
Recent research also signals a mixed bag for the company’s results, with products including Service Cloud witnessing higher demand, but productivity tools not featuring in the priority list for customers.
Analysts project Salesforce’s billings growth, which is considered a key indicator of the health of enterprise software companies, at around 14% for the latest quarter.
During the quarter, Salesforce sold its stake in Zoom, with an estimated 600% return in 14 months, given the recent rally in the video-conferencing company’s stock. Salesforce has also sold its stakes in Dropbox and SurveyMonkey.
How shares performed recently: Investors are optimistic heading into Salesforce’s earnings call, sending the stock higher by 6% over the past five days. The stock has gained 11% over the past month. Shares are not far from their 52-week high of $210.11, which could be breached if earnings exceed views.
What to watch: Investors will monitor whether the company beats expectations again and closely watch management’s comments on how the pandemic has impacted its various businesses. Markets also look forward to the company issuing its guidance for the near term.