Salesforce Q3 Results: More of the Same, But Why?

Salesforce's upcoming third quarter results are expected to be more of the same, with analysts predicting a continuation of the company's consistent growth trajectory. But why is this the consensus, and what factors are driving this expectation? Let's delve into the numbers and expert opinions to understand the market's anticipation for Salesforce's Q3 results.

The consensus among analysts is that Salesforce will report quarterly earnings of $2.45 per share, up from $2.11 a year ago, and revenue of $9.35 billion, compared to $8.72 billion in the same period last year. This growth is in line with the company's historical performance, as Salesforce has a track record of delivering consistent results quarter after quarter.

One of the key drivers behind this expectation is Salesforce's focus on cloud-based solutions and artificial intelligence (AI) integration. The company's strategic acquisitions, such as Slack and Tableau, have expanded its product offerings and customer base. Additionally, Salesforce's strong brand and reputation for innovation contribute to its ability to maintain market leadership and attract new customers.

Salesforce's geographic revenue distribution has also played a role in analysts' expectations. The Americas accounted for 74.8% of total revenue in Q3 FY2024, up from 73.7% in the same period last year, reflecting a 11.5% year-over-year (YoY) increase to $6.54 billion. Meanwhile, Asia Pacific's revenue grew by 7.8% YoY to $926.76 million, accounting for 10.6% of total sales. However, Europe experienced a decline of 6.3% YoY, with revenue reaching $1.87 billion, representing 21.3% of the total. These shifts indicate a continued focus on the Americas, with Asia Pacific showing promising growth and Europe facing challenges.



Analysts also expect Salesforce's operating margin and EPS to continue their upward trend. The company's GAAP operating margin was 17.2% and non-GAAP operating margin was 31.2% in Q3 FY2024, up from 16.6% and 30.7% respectively in the same quarter last year. EPS also grew, with GAAP diluted EPS at $1.25 and non-GAAP diluted EPS at $2.11. Analysts anticipate that these trends will continue, with EPS expected to reach $2.45 per share for Q3.

Forward guidance for full-year FY24 revenue is $34.75 billion to $34.8 billion, up 11% Y/Y, indicating continued growth. The company raised its full-year FY24 GAAP operating margin guidance to 14.5% and non-GAAP operating margin guidance to 30.5%, signaling enhanced profitability. Additionally, Salesforce raised its full-year FY24 operating cash flow growth guidance to 30% to 33% Y/Y, reflecting strong cash generation.



In conclusion, analysts expect Salesforce's Q3 results to be 'more of the same,' with consistent growth and strong performance across key financial metrics. The company's focus on cloud-based solutions, AI integration, and strategic acquisitions, combined with its strong brand and reputation, drive this expectation. As Salesforce continues to execute on its growth strategy, investors can expect more of the same strong performance in the coming quarters.