Dell, Salesforce Struggle as Crowdstrike Reveals IT Bright Spot: US Earnings Week Ahead

(Bloomberg) -- Zscaler Inc. and Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth when they report next week, as overall corporate IT expenditure tightens.

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Quarterly results from other names on the slate next week, including Foot Locker Inc. and Intuit Inc., will continue to reinforce the theme of a broader retreat in business and consumer spending.

Canadian bank earnings will reveal the impact of higher-for-longer interest rates and a weaker economy. Demand for both personal and business loans remain weak while bank-deposit growth has slowed, Bloomberg Intelligence said.

Monday: Zscaler (ZS US) could raise its full-year outlook, shrugging off a slowdown in IT spending affecting its peers, Guggenheim said. Billings growth could stay above 30% and the security software firm’s expanding product suite could help bolster order sizes from enterprise customers looking to consolidate providers, BI said.

Tuesday: Crowdstrike’s (CRWD US) remaining performance obligation growth could come in better than the projected 32% given the cybersecurity provider’s ability to sell new tools to its existing customer base, BI said. Billings growth should hold up better than its peers despite shorter contract durations.

• Workday’s (WDAY US) revenue likely grew 15% amid resilient demand for its human-resources management tools. The firm, which has trimmed its long-term forecast for annual subscription revenue growth, still has “material cross-sell opportunity” and could benefit from “some competitor churn,” BMO said.

• Despite slashing its headcount by 7%, Splunk Inc. (SPLK US) is due to report its slowest earnings growth in two years amid a looming acquisition by Cisco Systems.

• Intuit’s (INTU US) revenue likely rose 11%, down from 29% a year ago, but the payroll processor’s new offerings in payments and HR information services will support customer growth, BI said.

• Bank of Nova Scotia’s (BNS CN) adjusted earnings per share declined for the fifth straight quarter to fall 17%. The bank has said it will record an after-tax gain of about C$319 million in the quarter from the sale of its stake in Canadian Tire Corp.

Wednesday: Okta’s (OKTA US) win rates and large-deal growth will come under scrutiny in its first earnings report since its latest security breach by hackers, BI said. The reputational damage could lead to a longer sales cycles even as customer acquisitions are estimated to slow to 10%, compared to 22% the same time last year. Billings growth is expected to continue slowing.

• Snowflake (SNOW US) sales rose 28% but the pace of growth slowed for the eighth straight quarter on a dearth of new products, BI said. Jefferies says Snowflake is well-positioned to nab a larger share of AI workloads.

• Foot Locker’s (FL US) revenue will fall for its sixth quarter in a row to slip 10%, dragged down by a weaker back-to-school season, store closures as well as a pared-down partnership with Nike. Gross margins will narrow as promotions are stepped up to clear inventory, BI said.

• Dollar Tree’s (DLTR US) adjusted earnings will fall 16% despite a 6.6% rise in sales due to higher import and distribution costs. The easing of global supply-chain challenges should reduce pressure on its profit margin, BI noted. Five Below (FIVE US), another beneficiary of deal-seeking shoppers, is set to post a 13% rise in sales when it reports results the same day.

Thursday: Salesforce (CRM US) may struggle to meet expectations given the deteriorating business environment, Guggenheim said. Quarterly revenue is seen expanding at its slowest pace since the firm’s public listing in 2004. Operating margin could easily top expectations given the curb in new hires in the quarter, BI noted.

• Dell (DELL US) will see adjusted earnings slide 36% from a year ago on continued weakness in its traditional server and storage business. A cautious recovery in the PC market along with interest in its AI servers augur well, BI said. Sales are set to slip 7%, compared to a 13% drop in the prior quarter.

• Ulta Beauty’s (ULTA US) third-quarter sales could come in higher than the consensus estimate of a 5.8% rise on the back of still-strong cosmetics demand in the US, BI said. Profitability remains a focus as adjusted earnings per share falls 6.6% alongside a retreating operating margin.

• Royal Bank of Canada (RY CN) will report a 5.1% fall in adjusted earnings per share for the quarter which will also see the impact of charges arising from its recent round of job cuts, BI said. Net interest income could shrink in the quarter for the first time in over two years along side a moderation in loan growth.

• Toronto-Dominion Bank’s (TD CN) net interest margin could rise slightly from the previous quarter though growth in its wholesale banking will still be challenging despite the addition of recently acquired financial services firm Cowen, BI said. TD’s wealth-management unit will also have to grapple with volatile asset prices and industry outflows.

• Canadian Imperial Bank of Commerce’s (CM CN) adjusted earnings could grow for the first time in seven quarters. Versus its peers, CIBC is exposed to the most commercial real estate risk relative to book value, BI said, and would take the largest hit to profitability were it to write off 10% of its office exposure.

Friday: Investors will be looking to see if Bank of Montreal’s (BMO CN) integration of Bank of the West in the US results in further restructuring and charges on top of the already disclosed C$45 million real estate reduction charge, BI said. BMO’s interest income could be driven higher by a larger balance sheet, with stabilizing US net interest margin helping to mitigate pressure in Canada.

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