SAP - Recent Acquisitions And Steady Streams Of Cash Flow Commands Further Premium
Operating profitability continues to disappoint even as topline grows
Salesforce.com (CRM) announced upbeat first quarter (Q1’21) results on the topline (+30% YOY). However, it had its share of woes from the ongoing pandemic, suffering a negative operating margin of 2.9%. A one-time commission guarantee, cancellation of events, and office space lease payments shaved off an additional 450 bps from its profitability, increasing the overall operating profit margin impact to a negative 850 bps. Despite achieving the operating scale with an acquisitive strategy, CRM’s operating margins have remained stable over the past 4-5 quarters.