Salesforce tops Q2 estimates, raises outlook on software demand

Salesforce reported $5.15 billion in revenue for the second quarter -- a first for the software company -- topping the Street's estimate of $4.9 billion. The company also reported an adjusted EPS of $1.44, crushing the Street's estimate of $0.67. Myles Udland breaks down the details on The Final Round.

Video Transcript

SEANA SMITH: Want to get to some breaking news that we've had after hours. Big 24 hours for Salesforce, getting added to the Dow stock, touching an all-time high today, and now they're out with earnings. Myles Udland has the numbers for us. Myles.

MYLES UDLAND: Yeah, the stock up another 6% here, Seana, the company reporting better than expected results on the top and the bottom line. Let's start with the bottom line. Adjusted earnings per share for Salesforce in its most recent quarter $1.44. The Street was looking for something closer to $0.67, so basically double the expected per share profit there.

Revenues, $5.15 billion in the most recent quarter. $4.9 billion is what the Street was looking for. And really, the guidance seems to be the most positive part of a very positive overall report, $20.7 to $20.8 billion for the full fiscal year is what Salesforce now expects. The company had seen revenues closer to $20 billion for the full year.

So again, 29% growth in the second quarter, company guiding for 21% to 22% growth for the full year. And the stock, again, up 6% here-- more than 6% now, 6 and 1/2%, $230 a share the day after it was added to the Dow and enjoyed a 3% rally during the session to a record high. So again, as you mentioned, good 24 hours here for Marc Benioff and the team at Salesforce.

SEANA SMITH: Yeah, Akiko, it's been a very strong 24 hours here for Salesforce. But taking a look at some of those numbers, I mean, we've seen so many companies pull their guidance, but this is a company that has had-- has performed very well over the last several months and competent enough to give it these-- to give guidance here that's better than what the Street was expecting, on many fronts.

AKIKO FUJITA: Yeah, and it's easy to see why, right? When you think about some of these stocks that have benefited, and Sales-- Salesforce certainly one of them, especially given just the migration to the cloud. We've talked so much about companies that are accelerating their digitization. This is the kind of company that will only benefit from the back of that.

And certainly, there is a lot of competition, I think increasingly, in this space. You know, we've talked about other cloud players, as well, from the likes of Google, obviously AWS. But there's enough-- what we've seen over the last few months, there's enough demand to go around. And really, if you think about just the demand alone, I mean, right now it seems like the sky's the limit, right, because we have just seen the kind of growth over the last few months. And even before that we saw strength in this space.

So you know, Salesforce certainly coming off of another really strong quarter. And I think it's just interesting to see how these stocks have performed throughout the pandemic, because they have really become sort of these safe havens that we have seen sort of investors crowd into when everything else is uncertain. Because that growth story, no matter what you say about the valuation of tech, the growth story still remains intact.

RICK NEWMAN: You know, Akiko, I would just add to that Salesforce is not a-- it's not a Zoom. It has not massively benefited from the shift to remote work. And obviously, it serves other businesses. So these outstanding results, on the surface anyway, suggest-- suggest maybe business is getting back to normal, at least for a lot of Salesforce's customers. So maybe this is a bullish sign for a lot of other companies, as well, just in terms of getting back to normal.

SEANA SMITH: Yeah, Rick, that's an interesting point there, because that was something that analysts had said ahead of these results that they would be monitoring, just in terms of what this means more broadly for the broader economy, and then, of course, for so many other companies out there. But again, shares moving to the upside on the heels of these results, up another 6% here after hours, right around $2.30 a share.