Salesforce reports today’s earnings. What to expect.

Field checks with trading partners paint a mixed picture of demand for the enterprise software company’s products, an analyst said. On the other hand, the first fiscal quarter is seasonally weaker for Salesforce than subsequent ones. And with one-third of sales coming from abroad, recent dollar strength has hampered reported results.

Still, the analyst expects Salesforce to show revenue growth of about 11%, bringing its quarterly total to $9.15 billion. This is in line with the Wall Street consensus as determined by FactSet. The company’s revenue forecast for the quarter will be between $9.12 billion and $9.17 billion.

In recent years, the company has focused on improving profit margins. Schwartz anticipates Salesforce will match its January quarter operating profit margin of 33%, excluding non-cash charges. He expects earnings per share to be $2.37 – which is also in line with the consensus. Forecasts are for earnings per share in the range of $2.37 to $2.39.

Salesforce likes to show the dynamics of its business through a measure it calls “current liability of other results,” which combines the company’s deferred revenue and order backlog. The assumptions assume an increase in cRPO of 12% after taking into account currency. That number seems achievable, wrote Guggenheim analyst John DiFucci, who doesn’t like the solution because he thinks the company can control how it’s used by getting customers to renew their subscriptions early. DiFucci has a Neutral rating on the stock.

Today’s emotions are powered by artificial intelligence. Salesforce is still in the early stages of developing AI offerings. Oppenheimer’s Schwartz says there is great interest in this type of devices among the Salesforce installed base, but customers are waiting to find out what the price of these solutions will be after the trial stage.

Schwartz rates Salesforce as an outperformer, in part because the stock sells at a lower multiple than other large-cap software names. This is 29 times estimates of $9.71 per share in earnings for the current year. This compares to 32 times for its large-cap stocks. Schwartz believes that if earnings increase next year, which he expects, Schwartz believes the company’s stock price could increase from its current price of $270 to $325.

Write to Bill Alpert at [email protected]