Salesforce Reports Q1 Financial Results and Issues Soft Guidance

American cloud-based software company Salesforce saw its shares fall on Friday after the company reported first quarter financial results and soft guidance going forward.

Shares dropped more than 5% Friday before closing down 3.4% as Wall Street digested the dismal outlook.
It was last Thursday that Salesforce said it expects 66 cents to 67 cents in adjusted earnings per share and $4.89 billion to $4.90 billion in revenue in the fiscal second quarter. Analysts polled by Refinitiv had expected 75 cents in adjusted earnings per share and $5.03 billion in revenue.

For the full fiscal year Salesforce sees $2.93 to $2.95 in adjusted earnings per share on about $20 billion in revenue, implying 17% revenue growth. Analysts polled by Refinitiv were expecting $3.09 in adjusted earnings per share on revenue of $20.73 billion.

For the first quarter, the company reported revenue of $4.87 billion, a growth of 30% YOY.

“Our results, amidst this global crisis, demonstrated our ability to execute at speed, innovate at scale and the strength of our business model,” said Benioff on the earnings call. “We made long-term investments in keeping our employees safe, supporting our customers, delivering crucial innovation like Work.com, and helping our communities with PPE, grants, and technology. The pandemic showed us that digital is an imperative for every company, and we’re confident Salesforce will continue to accelerate as we bring our customers into the new normal.”

“This should fuel bear concerns about scaling margins longer-term, which is admittedly hard to refute. That said, we suspect that the cut (which assumes little improvement in IT demand this year) is likely conservative, setting the table for better news as the year progresses,” Raymond James analysts wrote.

“This has been such a challenging quarter,” CEO Marc Benioff told CNBC’s Jim Cramer last week.

Disclaimer: We have no position in salesforce.com, inc. (NYSE: CRM) and have not been compensated for this article.