CRM Salesforce Inc

By Jay Greene 

Salesforce.com Inc. is scheduled to report fiscal fourth-quarter earnings after the market closes Tuesday. Here is what to expect:

EARNINGS FORECAST: Analysts surveyed by Thomson Reuters expect Salesforce to report adjusted earnings of 25 cents a share for the quarter ended Jan. 31, up from 19 cents a year earlier. Adjusted results exclude items such as amortization and stock-based compensation.

REVENUE FORECAST: Analysts expect Salesforce to post revenue of $2.28 billion, up from $1.81 billion a year ago.

WHAT TO WATCH:

SCATTERED CLOUDS: While still posting double-digit revenue growth in its sales-force automation business in the fiscal third quarter, the Sales Cloud category has become "more mature," Nomura Securities Co. analyst Frederick Grieb wrote in a recent research note. But Salesforce has used that business to cross-sell its other web-based, on-demand computing services, such as its Service Cloud, which helps companies run customer-service operations and Marketing Cloud, used for email and advertising campaigns, Mr. Grieb noted. In the fiscal third quarter, Service Cloud revenue grew 26% and Marketing Cloud revenue gained 46%.

CURRENCY HEADWINDS: Like many tech companies with significant international operations, Salesforce's results are hampered by the strong U.S. dollar. Revenue in Europe, which accounted for 16% of the company's sales in the third quarter, grew 11% in the period. But in constant currency, a measurement used to eliminate the effects of exchange-rate fluctuations, the growth was 27%. In a conference call with analysts after last quarter, Salesforce finance chief Mark Hawkins said he expected $100 million to $150 million of foreign- exchange headwind this fiscal year.

ACTIVIST INVESTORS: Recent securities filings showed that three hedge funds, known for sometimes taking on activist roles, accumulated Salesforce shares. The funds -- Corvex Management, Jana Partners and Sachem Head -- have amassed 8.75 million shares among them, but they haven't disclosed their intent. But Salesforce faced some investor concern when it considered acquiring Twitter Inc. last year, a bid it ultimately decided not to pursue. UBS Group AG analyst John Byun wrote in a recent research note that the activist stakes "could lead to a greater focus on improving relatively low operating margins -- a frequent bear argument."

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

February 28, 2017 09:07 ET (14:07 GMT)

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