Salesforce (NYSE:CRM), the company behind market-leading customer relationship management software, has been one of the biggest wheelers and dealers in tech for years now. And for longtime shareholders, CRM stock has been one of the biggest winners.
Led by forward-thinking and acquisition-happy founder and CEO Marc Benioff, CRM stock has rocketed from under $4 a share in 2004, to all-time highs around $195 a share earlier this year.
The company just released earnings, and while not every analyst loved them, the numbers weren’t disappointing enough to suggest the long-term tailwinds at the company’s back are changing. In fact, some of the numbers were pretty good.
CRM Stock in Light of Q1 Earnings
If all you did was look at CRM stock immediately after fiscal first quarter 2021 results, you’d think its recent numbers just weren’t very good. Shares fell about 4% following the results.
However, let’s get one thing clear: Salesforce’s last quarter was good: the company beat both top- and bottom-line expectations. Revenue rose 30% year-over-year to $4.87 billion, better than the $4.85 billion consensus, and adjusted earnings per share clocked in at 70 cents, better than Wall Street’s expectation for 69 cents per share.
That said, Salesforce stock didn’t fall for no reason. Wall Street took issue with the company’s second-quarter guidance, which called for revenue between $4.89 billion and $4.93 billion, below the $5.04 billion consensus. Analysts also didn’t see their second-quarter EPS estimate of 74 cents matched by the software giant’s guidance, which called for EPS between 66 cents and 67 cents.
Customer Relationship Management
Does guidance matter? Yes. But at the end of the day it’s just a bunch of numbers in the air. It’s the long-term earnings potential, growth potential, and staying power of any business that matters to Salesforce stock investors.
By that measure, it’s been nothing but good news filtering in for the cloud-based customer relationship software company. The same day CRM announced first-quarter earnings, Benioff announced what he called “one of the largest transactions we’ve ever done”: a deal with AT&T (NYSE:T) that will allow the wireless giant to compile customer data into one place and access it from multiple touchpoints.
Another partnership between Salesforce and enterprise cloud software company Workday (NASDAQ:WDAY) further shows that Salesforce has simply become an absolutely vital part of a space that isn’t going away anytime soon. If you’ve got customers — especially if you’ve got a lot of them — Salesforce can make your life easier, strengthen your customer relationships, and optimize your interactions with them.
Workday will integrate more deeply into Salesforce’s Work.com, an incredibly relevant new suite of technologies focused on helping businesses re-open from the coronavirus-induced shutdown.
Short-term gyrations in the wake of earnings reports are par for the course. What’s not par for the course is a $150 billion growth stock like CRM, which has compounded revenue growth above 25% in the past five years and which is expected to continue posting 20% growth for the next five.
Betting against Benioff has never been wise in the past, and with Salesforce firing on all cylinders in an economy facing record-setting unemployment claims and unpredictable business closures, it’ll be a pleasure to watch what happens when the economy gets back on track.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.