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Salesforce beats growth expectations, as investors digest the Slack acquisition
Today after the bell, Salesforce reported its third-quarter earnings for its fiscal 2021, a period that ended October 31, 2020. The CRM giant reported top-line revenue of $5.42 billion, up 20% from the year-ago period. Salesforce also had net income of $1.08 billion and earnings per share of $1.15.
Analysts had expected the company to earn $0.75 per share, off of revenues of $5.25 billion, according to Yahoo Finance.
Shares of Salesforce were off after-hours, falling around 3.6% at the time of writing. It was not clear if the company’s share price performance was due to its Q3 results, its raised Q4 guidance, or its new fiscal 2022 expectations, or the newly announced Slack deal.
As TechCrunch reported moments ago, Salesforce will buy Slack for $27.7 billion, in a cash and stock deal that was fully priced into shares of the smaller company, which dropped a little over a point on the news, having risen by nearly 50% since the deal’s existence first leaked.
Holders of Slack will be rewarded for their patience. Now it’s up to Salesforce leadership to prove that the huge buy will help boost the company’s growth.
Salesforce told investors today that it anticipates Q4 fiscal 2021 revenues of $5.665 billion to $5.675 billion, which works out to growth of around 17% from the year-ago period. The company also anticipates that it will grow around 17% in Q1 of its fiscal 2022.
But Salesforce expects to grow 21% in all of its fiscal 2022. How does it intend to accelerate? Its projections include Slack:
Full Year FY22 revenue guidance includes contributions from Slack Technologies, Inc. of approximately $600 million, net of purchase accounting, and assumes a closing date in late Q2 and Acumen Solutions, Inc. of approximately $150 million, net of purchase accounting, and assumes a closing date within Q2.
So, Salesforce investors, after two anticipated quarters of 17% growth coming up, your company will accelerate up to 21% growth for the next fiscal year. Is that worth $27.7 billion?