Let’s dig into the relative performance of Salesforce (NYSE:CRM) and its peers as we unravel the now-completed Q2 sales software earnings season.
Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.
The 4 sales software stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.2% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Sales Software stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Salesforce (NYSE:CRM)
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information.
Salesforce reported revenues of $9.33 billion, up 8.4% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a decent beat of analysts’ billings estimates.
“In Q2, we delivered strong performance across revenue, cash flow, margin and cRPO, and raised our fiscal year non-GAAP operating margin and cash flow growth guidance,” said Marc Benioff, Chair and CEO, Salesforce.
Interestingly, the stock is up 7.1% since reporting and currently trades at $277.28.
Is now the time to buy Salesforce? Access our full analysis of the earnings results here, it’s free.
Best Q2: Freshworks (NASDAQ:FRSH)
Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium-sized businesses.
Freshworks reported revenues of $174.1 million, up 20% year on year, outperforming analysts’ expectations by 3%. The business had a very strong quarter with accelerating growth in large customers and an impressive beat of analysts’ billings estimates.
Freshworks scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The company added 1,195 enterprise customers paying more than $5,000 annually to reach a total of 21,744. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 17.2% since reporting. It currently trades at $11.
Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: ZoomInfo (NASDAQ:ZI)
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ:ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
ZoomInfo reported revenues of $291.5 million, down 5.5% year on year, falling short of analysts’ expectations by 5.3%. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.
ZoomInfo delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The company added 37 enterprise customers paying more than $100,000 annually to reach a total of 1,797. Interestingly, the stock is up 1.7% since the results and currently trades at $9.99.
Read our full analysis of ZoomInfo’s results here.
HubSpot (NYSE:HUBS)
Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.
HubSpot reported revenues of $637.2 million, up 20.4% year on year. This number surpassed analysts’ expectations by 2.9%. It was a satisfactory quarter as it also logged a decent beat of analysts’ billings estimates.
HubSpot scored the fastest revenue growth among its peers. The company added 11,214 customers to reach a total of 228,054. The stock is up 11% since reporting and currently trades at $511.50.
Read our full, actionable report on HubSpot here, it’s free.
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