Salesforce beats earnings estimates, however stories a drop in gross sales and a poor forecast
Marc Benioff from the USA, Chairman and CEO of Salesforce.com, will give a speech on January 22, 2020 at the World Economic Forum in Davos, Switzerland.
Fabrice Coffrini | AFP | Getty Images
Salesforce shares fell 4% in extended trading on Tuesday after the enterprise software maker reported third-quarter earnings that exceeded analysts' expectations but released a soft forecast for quarterly results.
This is how the company did it:
Merits: According to Refinitiv 1.15 cents per share, adjusted against 75 cents per share, as analysts expected.Revenue: According to Refinitiv, $ 5.42 billion versus $ 5.25 billion as analysts expected.
Salesforce also announced its intention to acquire the Slack work communications app, valued at $ 27.7 billion.
Revenue for the quarter ended October 31 increased 20% from 29% in the previous quarter, according to a statement.
As the coronavirus pandemic persisted, Salesforce decided to consolidate and sublet some of its locations, Hawkins said during a conference call with analysts. The changes will result in a one-time charge of $ 80 million to $ 100 million in the fourth quarter of fiscal year.
In terms of guidance, Salesforce announced fourth quarter adjusted earnings of 73 to 74 cents per share on revenue of $ 5.665 billion to $ 5.675 billion. Analysts polled by Refinitiv had expected adjusted earnings per share of 86 cents and sales of 5.52 billion US dollars.
In the third quarter of fiscal year, Salesforce generated revenue of $ 1.3 billion for its core product, Sales Cloud, for tracking current and prospective customers, up 12% year over year. Service Cloud, which handles customer service, had sales of $ 1.4 billion, up 21%. Salesforce's Platform and Others category, which includes Salesforce Tableau data visualization software, which it acquired last year, returned 24% profit of $ 1.6 billion.
Salesforce was named one of the 30 companies in the Dow Jones Industrial Average for the quarter. Salesforce announced Work.com for Schools, a tool to help educators decide when to return to classrooms, and Salesforce Meetings software, which provides sales-related information to sales reps participating in video calls.
Salesforce issued a full fiscal 2022 revenue forecast that was stronger than expected. The company claimed revenue of $ 25.45 billion to $ 25.55 billion, including a $ 600 million contribution from Slack, if it closes late in the second quarter. The forecast implies an annualized growth of 20.8% compared to the forecasts of Salesforce for the fiscal year 2021. Analysts polled by Refinitiv had targeted a turnover of 24.50 billion US dollars.
"We feel very good about our ability to be successful," said Marc Benioff, Salesforce CEO Marc Benioff, on the conference call.
Salesforce chief financial officer Mark Hawkins, who joined Autodesk in 2014 where he was previously the company's chief financial officer, will retire on January 31st. Amy Weaver, President and Chief Legal Officer of Salesforce, will succeed Hawkins.
Excluding the after-hours switch, Salesforce stock is up roughly 49% year-to-date, compared to a 13% growth in the S&P 500 index over the same period.