Salesforce Shares Slip on Weak Guidance for the First Quarter

Shares of American cloud-based software company Salesforce saw its shares slide on Monday after the San Francisco-based company reported earnings and an outlook for the first quarter.

The company reported fourth quarter financial results that beat on both the top and bottom line. Wall Street was more focused however on first quarter guidance that was weaker than expeted. Full-year guidance was in line with expectations.

Shares of the stock fell as much as 4% in after-hours trading on Monday.

For the fourth quarter, Salesforce saw earnings of 70 cents per share, excluding certain items. Analysts according to Refinitiv were expecting just 55 cents.

Revenue $3.6 billion was better than the $3.56 billion that was expected by analysts. Full-year revenue reached $13.28 billion.

Subscription and support revenue was $3.38 billion in the quarter, with professional services at $228 million.

For the first quarter, the company has projected earnings per share of 60 cents to 61 cents and revenue of $3.67 billion to $3.68 billion. Wall Street was waiting for earnings per share of 63 cents and revenue of $3.7 billion.

For the full year, the company expects $2.74 to $2.76 in earnings per share, excluding certain items and $15.95 billion to $16.05 billion in revenue. Refinitiv estimates were $2.75 in earnings per share, excluding certain items, and revenue of $15.99 billion.

CEO Marc Benioff said during the earnings call, “As you can see from our results, Q4 topped off another record year for Salesforce. Revenue in the quarter rose to more than $3.6 billion, up 27% in constant currency. Truly amazing for a company of our size. And for the full year, we delivered more than $13.2 billion in revenue, making Salesforce the fastest enterprise software company ever to reach $13 billion. Based on our outstanding fiscal year ’19 results, we’re raising our fiscal year ’20 revenue guidance to $16.05 billion at the high end of the range, representing 21% projected growth year-over-year. And we expect this incredible growth to continue which is why we’re now initiating a revenue target for fiscal year ’23 of $26 to $28 billion, organically doubling our revenue again in the next four years. I’ve never been more excited about the opportunity ahead for Salesforce. Around the world, more and more companies are investing in their digital transformations which start and end with the customer.”

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