Salesforce Shares Tumble 16% After Revenue Miss
Earnings Performance
Salesforce reported adjusted earnings of $2.44 per share, slightly above the $2.38 per share expected by analysts surveyed by LSEG. However, the company’s revenue for the quarter came in at $9.13 billion, missing the anticipated $9.17 billion. This revenue shortfall was a key factor in the sharp decline in Salesforce’s stock price.
Guidance Disappoints
Looking ahead, Salesforce provided guidance for the current quarter that also disappointed investors. The company expects adjusted earnings per share to be between $2.34 and $2.36 on revenue of $9.2 billion to $9.25 billion. Analysts had forecasted adjusted earnings per share of $2.40 on revenue of $9.37 billion, according to LSEG. This conservative outlook further pressured Salesforce’s stock in after-hours trading.
Quarterly Revenue and Income Growth
Despite the revenue miss, Salesforce reported an 11% increase in revenue compared to the same period last year, with the fiscal first-quarter revenue rising from $8.25 billion to $9.13 billion. Net income saw a significant increase, jumping to $1.53 billion, or $1.56 per share, from $199 million, or 20 cents per share, a year ago. This substantial improvement in net income highlights the company’s ability to increase profitability despite revenue challenges.
Impact on the Dow Jones Industrial Average
As a member of the Dow Jones Industrial Average, Salesforce’s performance can influence the broader market index. The significant drop in Salesforce’s share price could weigh on the Dow, reflecting investor sentiment and potentially leading to broader market repercussions.
Market Forecast
Given the weaker-than-expected revenue and cautious guidance, Salesforce’s short-term outlook appears bearish. Traders and investors may see continued volatility in the stock, especially as the company navigates through its revenue challenges and market expectations. The upcoming analyst call will be crucial for providing further insights into Salesforce’s strategic responses to these financial pressures.
