Tech Giant stock under pressure: salesforce.com, inc. (NYSE: CRM)

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Salesforce.com, inc. (NYSE: CRM) stock lost over 0.5% in the pre-market session of 4th December, 2019 (as of 9:15 am GMT-5; Source: Google finance) after the company revenue outlook missed expectations for the fourth quarter. For the third quarter of FY 20, Q3 non-GAAP operating margin was 19.4%, which had expanded by 250 basis points year-over-year. The growth in the Q3 non-GAAP operating margin is due to the timing of Dreamforce in Q3 last year compared to Q4 this year as well as the variations in the timing of sales and marketing and other investments in the quarter. The company has generated the third quarter operating cash flow of $298 million, which had increased by 108% year-over-year. This increase in operating cash flow in the quarter is due to, one, the timing of collections due to a number of renewals which occurred earlier than planned, and number two, cash contributions from Tableau in terms of operating cash. The CapEx for the third quarter was $170 million, and had generated the free cash flow of $128 million

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CRM in the third quarter of FY 20 has reported the adjusted earnings per share of 75 cents, beating the analysts’ estimates for the adjusted earnings per share of 66 cents. The company had reported the adjusted revenue growth of 33 percent to $4.51 billion in the third quarter of FY 20, beating the analysts’ estimates for revenue of $4.45 billion. This includes approximately $327 million from Tableau and $80 million from Salesforce.org. The company has posted strong subscription and support revenue growth with year-over-year growth for Sales Cloud at 15%, Service Cloud growth of 24%, Marketing and Commerce Cloud growth of 32% and Platform and Other at 73%. The acquisition of Tableau had added approximately $308 million to Platform and Other while MuleSoft grew 77% year-over-year, which had contributed approximately $185 million to Platform and Other.

The company anticipates the revenue to be in the range of $4.74 billion and $4.75 billion in its fourth quarter and to be in the range of $20.80 billion and $20.90 billion in the fiscal year 2021. The analysts were projecting the revenue of $4.72 billion and $20.93 billion, respectively. For the fourth quarter, Salesforce expects earnings to be in the range of 54 cents and 55 cents per share, which fell short of the consensus earnings estimate of 62 cents per share, according to Refinitiv.

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