Earnings Alert: CRM & CRWD Beat, OKTA Stumbles

as we look for Salesforce OCTA crowd strike and net app here so Salesforce going to hit first let's get straight into it guys here we go over the next uh 30 minutes we're going to get through a lot the Salesforce closed down 2% by the way 256 bucks and right now train around 260 so uh a little bit of a net positive move after some good chop there the Outlook uh seems a little light compared to the estimates of analyst surveyed by Bloomberg the Salesforce sees Revenue up to 9.36 billion whereas the average was 9.4 note I said up to so their next quarter third quarter Revenue estimate is between 931 936 that's a little bit shy the trailing though was good a second quarter revenues of 9.33 billion beat 9.23 and you can't complain I guess if you beat one miss one is in a neutral Caroline they beat the trailing earnings too so it looks like just the forward look not quite as juicy um as the uh trailing numbers yeah I'm just taking a look here at at how the the markets receiving this as you said shares were down about 2% but looks like it's getting a little bit of a pop right now uh you mentioned that the uh next quarter current quarter guidance uh could be seen as a little light but they did maintain their full year 25 Revenue guidance of 37.7 to $ 38 billion that's up about 8 to 9% year-over-year they also maintain their full year uh 2025 subscription Revenue uh in terms of the actual uh the trailing number second quarter revenue of 9.33 billion that was up 8% year-over-year and slightly ahead of estimates actually a little bit of estimates the estimate was for 9.23 billion in terms of current remaining performance obligation that's a key metric for uh the the sales forces of the world uh that was expected to be about $6.3 billion and I'm taking a look here and it looks like it was 26.5 billion so a little bit of a beat there as well up 10% year-over-year up 11% in constant currency uh and then in terms of uh adjusted EPS $256 that easily topped what analysts were looking for for $2.35 so a beat on both the top and bottom line uh F your guidance maintained so no boost there I think uh what's helping Salesforce is that it's gone a whole lot of nowhere this year shares were down about 2% year to date heading into this report so uh you know expectations certainly weren't that high but this is all going to be about commentary about you know monetizing Ai and uh you know that's really what we'll be looking for on the earnings call here so uh you know a pretty solid report here at least from what I can see yeah not not bad certainly uh could have gone worse the uh overall slowing of the top line is obviously expected knew that coming in but it still is a pretty big deal to see sales for sub 10% total sales 9.3 what they hit lowest ever um but you know Market knew that was coming Kevin right it did but actually the bright spot in this report which is another reason why I think the Stock's actually getting a little bit of a boost is the operating margin and gross margin guidance they actually did improve that so even though see pretty much flat uh Revenue when I say flat they did not adjust their revenue guidance moving forward they did adjust their profitability metrics and that has been the theme from last earnings uh they have put a lot of initiatives in and be able to reduce expenses here and if they can reduce expenses and revenue still stays a little bit light we have single digit growth that's actually going to improve profitability that's going to improve uh the bottom line number there and we already know that they have a pretty robust uh share buyback program that's actually taking place here so it's a it's a decent report a little bit light on the guide but when you're looking at the the areas that it had to hit expense management has been a key one that investors wanted them to focus on and it looks like that's what they're doing I mean that is the critical uh point that fits with the sales slowdown is that okay just ring more out then you know if you're not going to be booming uh and going stratospheric with the new Big customers then at least uh get as much as you can and uh make the business more efficient so they've been in this process for a while but the market hasn't quite rewarded them in the same way as their pure growth days but I think the clearer this picture becomes then the more likely maybe uh that they will reward it Caroline because it's you know there's no surprise in this um uh from the sales side it's Kevin's point if they can squeeze more out of the lemon then all right yeah and and I think that could be why analysts are largely bullish on this name as well obviously the fact that you know it's it's underperformed this year what S&P is up what something like 18% and Salesforce is down uh you know about 1 and a half% year to date but I've seen analysts talk about that it's really one of the few software companies that can um is well positioned to uh you know capitalize on AI monetization and see uh Topline growth from that so I think uh commentary is going to be important for uh Salesforce we'll see if uh Benny off can can impress and if we can see further gains other than what we're seeing because right now it's pretty modest yeah also side point there um as you mentioned uh leadership the CFO is also going to be stepping down uh that uh that'll be a rle a process though a transition period that's going to start right now uh okay Amy Weaver stepping down as a Salesforce CFO let's talk crowd strike uh Shares are trying to Rally here in the uh aftermarket their uh fiscal year Revenue Outlook they say could reach 3.9 billion they had previously guided for a minimum of 3.98 with the possible extension above $44 billion for the fiscal year so they Dro that down now uh by about1 million so that seems like uh you know pretty much the impact I guess you know lowering down your fiscal year when you're heading into the third quarter obviously uh a little bit of disappointment there but considering what could have been that doesn't seem like a guidance revision kg that screams customers out the door no and they actually do call this out and this is exactly what they needed to do they wanted to be able to identify at least a number in order to make uh their customers or try to satisfy their customers it's not for the lack of volume flow or new contracts being brought into the market or bring being brought into the company it's the fact that they're going to give out incentives in order to retain those customers or try to make them whole if you will uh because of that outage and they explicitly call that out this is is one way that they could have done this they could have taken a non-cash charge against the company right and then uh basically over time as they do have these uh incidents come up because of legal issues or what have you they can utilize that non-cash charge and kind of have it as a one-time issue or they could adjust the guidance moving forward this is they they did the adjustment when it comes to guidance now here's the thing they better hope that they made that they hit that number and they actually are better than that $100 million slide because if they continue to have issues in a quarter over quarter BAS basis continue to reduce their guidance because this is the method how they want to really track the impact from July that can be a problem but I at least they made an acknowledgement that the incentive that they're going to have to provide them is the real driver for the lack of Revenue growth and not the fact that volume has been light or they're not able to bring on new contracts very key difference there tough one to yeah tough one to know how the Market's going to deal with this uh because some of their uh profit and income uh estimates also are a little bit uh off uh their trailing second quarter uh income actually was pretty good operating income 227 and change million versus the 206 million expectation but then their earnings for next quarter as high as 81 cents Street was looking for 96 so this is definitely costing them a little bit here Carolina in a in a way that all right uh damage control costs money so fine maybe they get a pass for that but it makes it kind of hard to figure out if the Market's you know we'll just find out I guess if the Market's ready to give them a pass and this one I think that the earnings call is going to be so key because it's really the first time that they're facing analysts in terms of having to answer some of those tough questions about the Fallout the initial impact to me doesn't seem all that bad considering Delta's blaming uh you know crowd strike in Microsoft for some $500 million in Damages so obviously they have a lot of lawsuits up their sleeve as well so the chaos certainly isn't over I have seen analysts point out they're largely bullish but I have seen analysts point out the fact that this happened obviously at the end of the quarter only two weeks left and it takes quite a long time from what I understand for companies to actually change up their cyber security offerings so there could be a lag doesn't seem like there's going to be all that much of an impact based on the guidance that was given but I do think that's important to know and it is important to note it was still a beat on both the top and bottom line when you take a look at last quarter but uh I think uh commentary is going to be uh you know very key for this one it looks like right now the market is pretty pleased with the results it was lower today and heading into this report and then pairing some of those losses but uh we'll see after the call based on what the team has to say okay uh good point going to be a lot in that call I think for sure kg if you got a last thought on it welcome to add it or we can talk OCTA where Shares are down go ahead yeah I would say uh you know I wouldn't be too conc conc ered about that margin or that bottom line adjustment Oliver once again they have a subscription model and they have a pricing model so as they raise up prices it drives Top Line and then it also expands uh margins out and so if they're taking a hit because of the incentives then rightfully so we should see almost a one for one adjustment when it comes to margins I don't think that should be a concern okay also right it's a you know a bridge to get to the other side when you've got recurring customers as long as you keep them in it's going to pay for itself over time so the retention is what's crucial here an expected kind of hit to some of the Outlook fine so shar's doing all right here the only one that's down so far is OCTA uh which of course uh kind of has a penchion for slippage over the last couple years but uh still had regained the good graes of the market by the first quarter when they had a big rally back one of the biggest in a while uh so given some of that up here is the shares finished the session at 96 bucks we're dropping right now closer to 90 which does put us in kind of a downtrend for Octon now from the highs however that wasn't awful in terms of just the beats and misses uh the report for the bottom line did come in quite a bit ahead of the estimates uh 72 cents stre was looking for 61 cents they did 31 a year ago so their adjusted earnings and they are adjusted are moving in the right direction a free cash flow at 78 million too pretty big beat compared to the estimate closer to 30 in a decent climb kind of a volatile number they're still spending a good bit on research and R&D but it looks like they're making progress I mean a lot of these things do look like progress to me uh Caroline but the market not really satisfied right now yeah it doesn't seem to be the case I mean it was up about 6% year to date heading into this report so it was you know pretty modest games compared to the overall Market but you mentioned the bottom line Beat easy beat there in terms of Top Line Revenue did increase 16% year-over-year subscription Revenue was a 177% increase for year-over-year sequential declines though because those numbers were up about 19 and 20% when they last reported subscription backlog was an increase of 16% uh the the subscription backlog expected to be recognized over the next 12 months was up 133% that's a crpo um and then I'm just looking here in terms of financial Outlook because that might be uh what's Weighing on shares for third quarter fiscal 2025 the company expects 648 to 650 million in Revenue that's growth rate of about 11% year-over year so continued uh slow down there and then for the full year total revenue of 2.55 for 56 billion to 2.57 billion so that's represent uh a 133% year-over-year growth rate just taking a look at what they offered in May it was 2.53 to 2.54 so they did uh raise that a little bit previously they were expecting a 12 % year-over-year growth so uh raise that a little bit uh doesn't seem to be uh rewarded though for that for that uh ful year boost if you will okay um yeah it's just kind of like uh it's in the dogghouse still you know uh analysts don't love it there's actually more an to say to hold it than to buy it which is kind of a rarity uh kg you got that yeah I think it's the deceleration of the arpo or remaining performance obligations for the quarter they had that at around 16% year-over-year but when you're looking at their guidance uh they're looking for next quarter for that to come in at 9% so that deceleration of remaining performance obligations which is the expected uh uh realized Revenue that they could see within a 12-month period uh is decelerating so even though their guidance looks really decent um that arpu number actually missing probably is signifying that their backlog is getting worked through and they're not replenishing that backlog which is a sign of near-term slowing and that might be AAS why uh the stock is sliding just a little bit on those news because the the rest of the the numbers look really good it just seems like their backlog is is kind of flushing out here and they're just not able to um refill that bucket and you really want to actually see that bucket being refilled if you are a software player or cyber security player okay well said good eyes all right uh well look I mean just a lot of these are never going to really get back to their ha it I think that's kind of where we're at uh that's a fact and uh that the AI stuff is adding a little bit of disruptive element like we've talked about before it's not obviously positive for a lot of these companies now that you can use AI to create pretty powerful programs without a massive team of people so you know not saying that that's like what's going on here but the idea is that at this point we know their sales growth is peaked for almost everything in the sector so it's more about who's got the most reliable profit uh system and it seems like that still airs more on the side of like uh Salesforce even crowd strike too as we just discussed uh this is a company that's targeting further slowing as well down to single digits so uh single digits for Salesforce I think a little bit more palatable than single digits for uh OCTA uh we've got net app to the last one kind of on our list here we only got about a minute and we're going have to jump to get ready for NVIDIA but uh the shares are trying to move uh this afternoon beat the estimate Buck 56 versus a buck 45 uh isn't there a little potential strain on their business kg is uh there's a little ethernet competition like uh not exactly a uh win or take all Market anymore between this company and Cisco yeah there's a lot of competition within this space and they continue to go back and forth I think it's also about the the technology that's being brought to Market and then how they're going to be really integrated with um you know on prise systems and and also potentially data uh data centers I haven't seen the actual report here uh it does look like for the most part they were actually able to uh beat the Street's expectations here when it comes to guidance for Q2 coming in at a173 to a183 Street was looking for a170 uh net revenue guidance a dollar 1.56 billion to 1.71 billion Street was looking for 1.63 billion so that's pretty decent there and if you're looking for this quarter for q1 they beat both on the top and bottom line so this is actually a pretty decent report uh from the looks of it it looks like they're also maybe announcing maybe some adjustments uh when it comes to leadership uh that could be another mover for this stock but uh a very competitive space when you're looking at the hardware and and ethernet capabilities out there okay uh CEO George krian who's here earlier this year was really talking up the AI connections too so potentially a winner uh if you hear it their way all right uh thanks guys very good stuff very much appreciate the help Caroline woods and Kevin green when we come