I’ve seen this company do this for the past decade and always come out ahead, at the end of the proverbial day. Alongside TEAM, CRM is the best publicly traded software company on the market. But tonight’s earnings were a little soft, in terms of guidance, so investors are bailing on the stock–sending it lower by 8%.
- Reports Q2 (Jul) earnings of $0.24 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.22; revenues rose 25.0% year/year to $2.04 bln vs the $2.02 bln Capital IQ Consensus.
- Subscription and support revenues were $1.89 billion, an increase of 24% y/y.
- Professional services and other revenues were $151 million, an increase of 33% y/y.
- Cash generated from operations was $251 million, a decrease of 18% y/y. Total cash, cash equivalents and marketable securities finished the quarter at $1.72 billion.
- Deferred revenue on the balance sheet as of July 31, 2016 was $3.82 billion, an increase of 26% y/y, and 27% in constant currency. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the second quarter at approximately $8.0 billion, up 29% y/y. This includes approximately $300 million related to unbilled deferred revenue from the Demandware acquisition.
- Issues downside guidance for Q3, sees EPS of $0.20-0.21, excluding non-recurring items, vs. $0.24 Capital IQ Consensus Estimate; sees Q3 revs of $2.11-2.12 bln vs. $2.13 bln Capital IQ Consensus Estimate.
- Co issues guidance for FY17, reaffirms EPS of $0.93-0.95, excluding non-recurring items, vs. $0.95 Capital IQ Consensus Estimate; raises FY17 revs to $8.275-8.325 bln (prior $8.26-8.32 bln) but still below $8.35 bln Capital IQ Consensus Estimate.
If I’m a long term investor of CRM, there’s no way I am selling on this tepid guide down in guidance. Year to date, the stock is flat for the year, but higher by 17% over the past 6 months.
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CRM always played a game. Due to there software licensing structure they have always know with a very high degree of certainty what their numbers would be months before they publish. Great company? yes! But they have been the king of making up earnings surprises.
This Co is a juggernaut. Those numbers are insane.