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.