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Salesforce.com, Inc. Q2 2018 Earnings: Another Beat And Raise Expected

Salesforce Q2 2018 earnings are set for release after closing bell tonight. Analysts are expecting the cloud giant to report non-GAAP earnings of 32 cents per share on $2.5 billion in revenue. When reporting the results from its first fiscal quarter, the company gave an outlook of 31 cents to 32 cents per share in adjusted earnings and $2.51 billion to $2.52 billion in revenue. On a GAAP basis, Wall Street expects Salesforce Q2 2018 earnings to come in at 1 cent per share.

In last year’s second quarter, Salesforce reported earnings of 24 cents per share on $2.04 billion in revenue.

Salesforce Q2 2018 earnings
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Salesforce Q2 2018 earnings

Salesforce went on an acquisition spree last year, gobbling up a number of cloud-focused firms. Wall Street generally expects Einstein and Commerce Cloud to take center stage this year, according to MarketWatch. Salesforce CEO Mark Benioff focused on these two companies during his Dreamforce keynote speech in 2016, so investors’ interest was likely piqued then.

Einstein is a personal assistant driven by machine learning and artificial intelligence, while Commerce Cloud is a retail platform that challenges big names such as Oracle and SAP SE in the market for cloud business from retailers. In the last quarter, Commerce Cloud contributed $57 million in revenue and $50 million in deferred revenue, so it quickly became a key part of Salesforce’s product portfolio.

The company has also joined the broader push toward AI and machine learning offerings, utilizing the technology it acquired by buying Krux to inject AI into its products. The Einstein product suite was a direct result of this acquisition.

Second-half setup for Salesforce stock is “attractive”

SunTrust Robinson Humphrey analyst Terry Tillman said in a preview note about Salesforce Q2 2018 earnings that he continues to believe the company can sustain top-line growth greater than 20%. He predicts a solid beat from the company, especially because digital commerce demand trends have been strong. He expects another beat-and-raise quarter across all key financial metrics.

He noted that Salesforce’s billings business has become more and more seasonal over the years with a focus on the fourth quarter. However, he still expects the company to beat his billings estimate of $2.155 billion and even the consensus estimate of $2.173 billion.

Tillman also sees an “attractive” setup for Salesforce stock going into the second half of the year. He cited expectations for accelerating growth in billings and a strong seasonal finish to the fourth quarter. Further, he noted that the annual Dreamforce conference usually serves as a catalyst for Salesforce shares, as the company announces new products and updates current products, partnerships and other areas.

In the hours before Salesforce Q2 2018 earnings are to be released, the company’s stock rose by more than 1% to as high as $93.32 by midday.