Salesforce Shares Rise as Company Raises Profit Forecast and Beats on Top and Bottom Lines in Q1

Shares of Salesforce were moving higher on Tuesday after the company raised its profit forecast and its CEO said they will be more “measured” in hiring.

Salesforce shares rose 8% in extended trading on Tuesday upon reporting fiscal first-quarter results that surpassed analysts’ expectations and lifted its full-year earnings guidance.

Salesforce earnings will be a big boost to bulls across tech, said. Wedbush’s Dan Ives.

For the first quarter the company reported earnings of 98 cents per share adjusted. This is compared to 94 cents a share that was expected by analysts, according to Refinitiv.

Revenue at $7.41 billion was higher than the $7.38 billion as expected by analysts, according to Refinitiv.

Company revenue rose 24% year over year in the quarter, which ended April 30, according to a statement. Net income fell 94% to $28 million.

Salesforce said revenue from its Service Cloud for handling customer-service inquiries generated $1.76 billion in revenue, up almost 17%.

Revenue from the core Sales Cloud product for managing business opportunities contributed $1.63 billion, up about 18%.

“We’re just not seeing material impact on the broader economic world that all of you are in,” Marc Benioff, Salesforce’s co-founder and co-CEO, said on a conference call with analysts.

Benioff added that the dot-com bubble burst nearly brought Salesforce to an end.

“In 2001 I think it really impacted us, we almost lost our business, because we were on monthly contracts, we didn’t have the right cash flow structure, investors just wouldn’t give us any money — and so we made a lot of changes then, and it really strengthened our business and made us more durable overtime,” he said.

Salesforce said it had $13.64 billion in unearned revenue, which primarily comes from subscription billings. The StreetAccount consensus was $13.76 billion.

Looking ahead the company sees fiscal second-quarter earnings of $1.01 to $1.02 per share on an adjusted basis and revenue from $7.69 billion to $7.70 billion. Analysts polled by Refinitiv had expected $1.14 in adjusted earnings per share on $7.77 billion in revenue.

Salesforce lowered its revenue guidance for the full 2023 fiscal year while boosting its profit view. It now sees $4.74 to $4.76 per share in adjusted earnings and $31.7 billion to $31.8 billion in revenue. Analysts polled by Refinitiv had expected $4.65 in adjusted earnings per share and $32.06 billion in revenue.

The higher earnings guidance is “all driven by continued focus on disciplined decision-making across the organization, and as a company we are committed to continuing to improve profitability over the long-term,” CFO Amy Weaver said.

“It’s really driven by disciplined decision-making, and unlock incremental efficiencies across the entire business,” Weaver said. “We’ve asked each leader to step up, to really look across their business and to strategically prioritize their investment, and this is only to make sure that we’re getting the highest-return for every dollar that we invest.”

The company is slowing down hiring, Insider also reported earlier this month. “We are 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 the execution of our top priorities,” Weaver said.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.