Investing.com - Salesforce climbed on Wednesday as "tremendous demand" for its offerings helped the company deliver blowout earnings. But not everyone on Wall Street is giving the company the thumbs up, as Nomura cut its price target on the company, citing "indications of a less robust environment."
Salesforce.com (NYSE:CRM) reported first-quarter earnings of $0.93 a share on revenue of $3.74 billion, above estimates from Investing.com for earnings of $0.61 on revenue of $3.68 billion, sending its shares nearly 3.7% higher. They're up about 14.2% this year.
But a deeper dive into the above-consensus results showed a slowing Remaining Performance Obligation (RPO), a recently adopted metric similar to deferred revenue, which has Nomura spooked somewhat.
Nomura cut its price target on Salesforce to $180 from $184.
Salesforce reported a total RPO of $24.9 billion, an increase of 22% year on-year, but that was below 25% year-on-year growth seen in the fourth quarter. Current remaining performance obligation, which represents the future revenues under contract expected to be recognized over the next 12 months, ended the first quarter at about $11.89 billion, an increase of 23% year over year.
Billings, a sales growth metric and closely-watched financial metric for software companies, rose 22% to $2.71 billion, slightly outpacing the company's target of 20%.
Salesforce co-CEO Keith Block attributed the better-than-expected results to "tremendous demand" for its offerings as companies "are undergoing a digital transformation to better serve their customers, and they are choosing Salesforce as their partner."
The outlook suggest the path for growth in the near term will not be smooth, but it should improve over the ensuing quarters.
Salesforce expects to generate second-quarter revenue of $3.94 billion to $3.95 billion, in line with estimates from Capital IQ. But non-GAAP earnings per share of $0.46 to $0.47 would fall well short of expectations of $0.68.
Still, the company upgraded its outlook on the full year, forecasting revenue in the range of $16.10 billion to $16.25 billion, up from $15.95 to $16.05 billion previously. Adjusted earnings are expected between $2.88 and $2.90, up from a prior outlook of $2.74 to $2.76.