Salesforce Erupts on Earnings BeatDec 04, 2023
While some spending slows, the public sector is stepping up for companies like CRM
It's a great day for software as Salesforce added billions to their market cap on the back of a brilliant earnings call. Tech firms are still limiting how much they spend, but Salesforce is winning thanks to other sources. Let's break it down:
The SaaS emperor managed to generate a huge $2.11 EPS from $8.72 billion in revenue for Q3. Revenue came in a millimeter ahead of expectations while CRM's profits were basically a blowout. Investors genuinely weren't expecting results this strong from a software play like Salesforce, so where did they find all this success?
GO WHERE THE MONEY IS
Management noted this during their earnings call last night. Typically, Salesforce has thrived off of spending from tech companies, but those budgets are still coming in pretty light. Salesforce generated a beat this large thanks to spending from the public sector and a single massive contract they secured in Q3. So this beat is really a reflection of an agile team at Salesforce finding revenue drivers wherever they can.
WHY IT MATTERS
With the market still concerned about declines in spending, seeing a big player like Salesforce succeed here is a huge multiplier for bull sentiment. SaaS companies like CRM are becoming more efficient every quarter, and it's really exciting that there's new competition brewing on the enterprise services side of the economy. Consumers may be losing their stride a little, but businesses appear to be ready to pick up the slack while we ease into this soft landing. Salesforce stock surged 8% on all this news.