Wall Street investors can be fickle animals. to take Sales force For example. The CRM giant announced $ 5.82 billion quarterly when it reported earnings yesterday. Revenue grew 20% year-on-year. The company reported $ 21.25 billion in total revenue for the year 2012-2021, which was 24% yo. If that was not enough, he raised his guidance (upcoming fiscal year) of FY 201522 over $ 25 billion. What not to like
You want higher quarterly revenue, Salesforce has given you higher revenue. You want high growth and solid projected revenue – check and check. In fact, it is difficult to find anything to complain about in the report. The company is performing and growing at a rate that is notable for an organization of its size and maturity – and its performance is expected to grow further.
How did Wall Street react to this stellar report? It penalized the stock with a price of over 6%, a very disappointing day considering the company brought home such a promising report card.
So what is going on here? It may be that investors do not believe that growth is sustainable or the company is overpaid When it bought Slack at the end of last year For more than $ 27 billion. It could be people overreacting to a cold market just this week. But if investors are looking for a high growth company, Salesforce is delivering.
While Slack was expensive, it reported revenue of more than $ 250 million yesterday, pushing it to a rate of over $ 1 billion, with more than 100 customers paying more than $ 1 million in ARRs. Those numbers will eventually be added to the bottom line of Salesforce.
Canaccord Genuite analyst David Hines Jr. wrote that he was surprised by investors’ reaction to the report. Like me he saw a lot of positivity. Yet Wall Street decided to focus on the negative, and look at the “glass half-empty”, as they gave it to investors in their note.
“The stock is clearly in the Show-Me camp, meaning investors are likely to pick up another pair to buy the idea that the fundamentals are actually fairly solid here, and that Slack is opportunistic (and yes, Pricey), but Hines did not suddenly attempt to spoil growth.
During a call with analysts yesterday, Brad Zelik of Credit Suisse asked how the company could cope with the epidemic-induced economic malaise, and Gavin Patterson, Salesforce President and Chief Revenue Officer, says that the company will grow whenever it moves beyond the world. A universal pandemic is ready.
“And I assure you, we are building capacity in terms of sales force. You will be pleased to hear that we are making significant investments in terms of our direct sales force to take advantage of that demand. And I am confident that we will be able to complete it. So I think you are telling a message to all of us today that the business is strong, the pipeline is strong and we are confident that the year is going on, ”said Patterson.
Although Salesforce’s execution was clearly pumped up yesterday with good reason, Investor Land still doubts that the stock manifested itself in starting and staying down all day. It would be, as Hines suggested, up to Salesforce to prove them wrong. As long as they continue to produce quarters like this week, they will remain alright, regardless of what the Wall Street Nayyars are thinking today.