Cloud Adoption, Buyouts to Aid Salesforce (CRM) Q2 Earnings

Salesforce CRM is scheduled to report second-quarter fiscal 2023 results on Aug 24. The company’s quarterly results are likely to reflect the benefits of the increased adoption of cloud-based solutions and the accelerated digital transformation. Moreover, strategic acquisitions and partnerships are anticipated to have helped it win new customers.

Click here to know how CRM’s overall fiscal second-quarter results are likely to be.

Cloud Adoption to Aid Salesforce Revenues

The rapid adoption of software-as-a-service-based platforms amid the ongoing hybrid working trend is expected to have spurred demand for Salesforce’s cloud-based solutions. Salesforce’s diverse cloud offerings are likely to have helped expand its clientele, fueling the top line.

Salesforce Inc. Price and EPS Surprise

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

Salesforce’s initiatives to capitalize on the overseas demand for cloud-based applications are anticipated to have bolstered the top line during the period in discussion. Further, the improved customer experience is anticipated to have aided the cloud segment.

Salesforce’s ability to provide an integrated solution for customers’ business problems is expected to have been the key driver. The company’s Customer 360 Truth platform, which helps connect the data from sales, service, marketing and commerce and build a single Salesforce ID for each customer, is likely to have boosted its performance. Also, its focus on AI and the substantial progress in its Einstein Analytics platform make it optimistic about the upcoming quarterly results.

However, a decline in software spending by small & medium businesses amid the macroeconomic uncertainty due to inflationary pressure, supply chain and logistics issues and the ongoing Russia-Ukraine war might have affected CRM’s fiscal second-quarter performance. Also, the increasing investments in international expansions and data centers might have eroded the company’s profitability during the to-be-reported quarter.

Acquisitions to Boost Q2 Performance

Salesforce’s strategic acquisitions over the past 12 months are anticipated to have brought incremental revenues in the quarter under review. On Jul 21, 2021, the company announced that it completed the buyout of Slack, which positioned it as a leader in the enterprise team collaboration solution space.

Salesforce completed the acquisition of Traction on Demand in April this year. Salesforce anticipates revenues from the newly acquired Slack and Traction on Demand businesses of approximately $1.5 billion and $75 million, respectively, in fiscal 2023.

Additionally, CRM’s focus on building partnerships is anticipated to have fueled the top line. These strategic partnerships not only helped it grab new deals but also expanded the firm’s operations internationally.

Further, partnership agreements with the likes of Apple, Amazon, Google parent Alphabet, Microsoft, HP, Dell, International Business Machines and others for the firm’s cloud services are likely to have aided Salesforce’s performance during the fiscal second quarter.

Zacks Rank & Stocks to Consider

Salesforce currently carries a Zacks Rank #3 (Hold). Shares of CRM have decreased 27.7% year to date (“YTD”).

Some better-ranked stocks from the broader Computer and Technology sector are Clearfield CLFD, Silicon Laboratories SLAB and Taiwan Semiconductor TSM. While Clearfield and Silicon Laboratories each sport a Zacks Rank #1 (Strong Buy), TSM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past 30 days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past 30 days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 46.3% YTD.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past 30 days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past 30 days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 33.1% YTD.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised a penny southward to $1.69 per share over the past 30 days. For 2022, earnings estimates have moved 37 cents north to $6.30 per share in the past 60 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 27.5% YTD.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.