Earnings Results: Salesforce results top Wall Street estimates but third-quarter earnings outlook doesn’t

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Salesforce.com Inc. shares declined in the extended session Wednesday after the customer-relationship management software company’s earnings outlook for the third quarter fell short of Wall Street estimates, while quarterly results topped them in the first quarter following the company’s MuleSoft acquisition.

Salesforce CRM, +1.18%  shares, which were down about 2% after hours as the call started, were last down about 3%, following a 1.2% rise to close the regular session at $154.80. At the close, shares were up more than 51% for the year, compared with a 9% gain in the S&P 500 index SPX, +0.57%  and a more than 17% gain in the tech-heavy Nasdaq Composite Index COMP, +0.99%

On the call, Salesforce Chief Financial Officer Mark Hawkins said MuleSoft contributed a more-than-expected $122 million in revenue for the quarter. Hawkins said the company would not update its guidance for MuleSoft but would report its contribution to revenue in future quarters. In its previous earnings report, Salesforce said MuleSoft would contribute $315 million to revenue for the year.

On May 2, the second day of the quarter, Salesforce closed on its $6.5 billion acquisition of MuleSoft, which uses application programming interfaces, or APIs, to help companies access or unlock data across legacy and mobile systems.

Revenue rose to $3.28 billion from $2.58 billion in the year-ago period. Wall Street expected revenue of $3.23 billion from Salesforce, according to 35 analysts polled by FactSet. Estimize expected revenue of $3.26 billion.

“With this strong quarter, we’re well on our way to our next milestone of $23 billion in revenue in FY22,” said Keith Block, co-CEO of Salesforce, in a statement.

Subscription and support revenues rose 28% to $3.06 billion from the year-ago period, while analysts expected $3.01 billion. Professional services and other revenues rose 14% to $221 million, compared with the average $221.3 million that Wall Street expected.

The company reported second-quarter net income of $299 million, or 39 cents a share, compared with $46 million, or 6 cents a share, in the year-ago period. Adjusted earnings were 71 cents a share. Salesforce was expected to post adjusted earnings of 47 cents a share, according to the 38 analysts surveyed by FactSet. Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, had called for earnings of 50 cents a share.

Wednesday’s earnings report comes just weeks before Salesforce’s annual, and already sold-out, Dreamforce convention, which is scheduled to take over downtown San Francisco from Sept. 24 to Sept. 28.

Salesforce estimated adjusted earnings of 49 cents to 50 cents a share on revenue of $3.36 billion to $3.37 billion for the third quarter, and $2.50 to $2.52 a share on revenue of $13.13 billion to $13.18 billion for the year.

Analysts expect earnings of 53 cents a share on revenue of $3.35 billion for the third quarter, and $2.31 a share on revenue of $13.13 billion.