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Salesforce.com: What You Need To Know For Earnings

Summary

Biggest near-term driver will be making numbers - I've produced consensus estimates for you.

Investors will care about how long core product growth will last.

Investors will care about how will new products will expand TAM.

Salesforce.com (NYSE:CRM) is expected to report FY2Q17 earnings on 8/31, after the close. Below are the key metrics, debate points and my thoughts on how one should analyze these data points. If you find this article helpful, please follow me and leave a comment below.

The biggest immediate driver of the stock will be making consensus numbers, followed by commentary that supports or detracts from bulls' and bears' thesis, or possibly introducing an alternative view (which is inherently unpredictable). The impact of making or missing numbers will be immediate, but the effects of the harder to quantify commentary will likely drive the stock until next quarter. Let's walk through some of the key points to prepare you for earnings.

First, investors must be equipped with what Wall Street is expecting. Q2 consensus expectations are as follows: $2.02B sales ($1.87B subscription, $147M services), $0.22 non-GAAP EPS, 12.8% non-GAAP operating margin, and $1.896B billings. Historically, CRM only beats by sales by 1-2% so one would not be shocked given smaller tech companies tend to beat by mid-to-high digits. On EPS, the historical result...


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