Salesforce shares rose 8% in extended trading on Tuesday after the enterprise software maker reported fiscal first-quarter results that beat analysts’ expectations and raised its full-year earnings guidance.
This is how the company did it:
- Profits: 98 cents a share, adjusted, versus 94 cents a share as analysts expected, according to Refinitiv.
- Income: $7.41 billion, versus $7.38 billion as analysts expected, according to Refinitiv.
Salesforce revenue rose 24% year over year in the quarter, which ended April 30, according to a statement. Net income fell 94% to $28 million. The company saw lower investment gains in the quarter and increased sales and marketing expenses.
Salesforce said its Service Cloud revenue from handling customer service inquiries generated $1.76 billion in revenue, up nearly 17%. Revenue from the core product Sales Cloud for lead management contributed $1.63 billion, an increase of about 18%.
“We’re just not seeing a material impact in the broader economic world that you’re all in,” Marc Benioff, co-founder and co-CEO of Salesforce, said on a conference call with analysts. Still, the company is aware of macroeconomic uncertainty, including volatility in exchange rates, said Amy Weaver, the company’s chief financial officer.
In the quarter Salesforce said its Sales Cloud, Service Cloud, and Marketing Cloud integrations for Slack have launched in beta. Salesforce acquired Slack for $27.1 billion in July. the company too Announced the launch of Safety Cloud for the organization of face-to-face events during the quarter, and its legal name change to Salesforce Inc. from Salesforce.com Inc. Salesforce was founded in 1999, in the midst of the dotcom craze.
The bursting of the dot-com bubble almost brought Salesforce to an end, Benioff said.
“In 2001, I think it really hit us, we almost lost our business, because we had monthly contracts, we didn’t have the right cash flow structure, investors just weren’t giving us money, so we made a lot of change then, and it really strengthened our business and made us more durable over time,” he said.
In early March, after Russia invaded Ukraine, Salesforce said began ending customer relationships it has built up in Russia through resellers and other channels.
Salesforce said it had $13.64 billion in unearned revenue, mostly from subscription billing. The figure was slightly below StreetAccount’s consensus of $13.76 billion.
Regarding guidance, Salesforce said it sees fiscal second-quarter earnings of $1.01 to $1.02 per share on an adjusted basis and revenue of $7.69 billion to $7.70 billion. Analysts surveyed by Refinitiv had expected $1.14 in adjusted earnings per share on $7.77 billion in revenue.
Salesforce lowered its full fiscal 2023 revenue guidance while raising its earnings outlook. It now sees $4.74 to $4.76 per share in adjusted earnings and $31.7 billion to $31.8 billion in revenue. Analysts surveyed by Refinitiv had expected $4.65 in adjusted earnings per share and $32.06 billion in revenue. Salesforce previously expected adjusted earnings of $4.62 to $4.64 per share on $32.0 billion to $32.1 billion in revenue for the full year.
The higher earnings guidance is “driven by continued focus on disciplined decision-making throughout the organization, and as a company we are committed to continuing to improve long-term profitability,” Weaver said on Tuesday’s call.
She said the higher adjusted operating margin guidance is not tied to any single change.
“It’s really driven by disciplined decision making and it unlocks incremental efficiencies across the business,” Weaver said. “We’ve asked every leader to step up, really look through their business and strategically prioritize their investment, and this is just to make sure we’re getting the most return for every dollar we spend.”
The company is slowing down hiring, Well-informed person reported earlier this month, citing a memo.
“We’re hiring, but we’re doing it at a much more measured pace and focusing the majority of new hires that will support customer success and execution of our top priorities,” Weaver said.
The company is not looking to make another big purchase at this time, Benioff said.
“We may see a downsizing in a number of valuations that I think we’ve all been pretty suspicious of for quite some time, but for us, you know, we’ve set our acquisition strategy and we’re done.” for a while,” he said.
Despite the after-hours move, Salesforce shares have moved around 36% lower since the start of the year, while the broader S&P 500 Index is down 13% over the same period.
This is breaking news. Please check back here for updates.
CLOCK: Salesforce was born in the 2001 recession, says President and Co-CEO Marc Benioff
Reference-www.cnbc.com