Salesforce shares plunge 16% on first revenue miss since 2006

Salesforce
shares
plummeted
as
much
as
17%
in
extended
trading
on
Wednesday
after
the
cloud
software
vendor
reported
weaker-than-expected
revenue
and
issued
guidance
that
trailed
Wall
Street’s
expectations.

Here’s
how
the
company
did,
compared
to
the
LSEG
consensus:

• 
  Earnings
  per
  share:
  $2.44
  adjusted
  vs.
  $2.38
  expected
• 
  Revenue:
  $9.13
  billion
  vs.
  $9.17
  billion
  expected

Salesforce
called
for
adjusted
earnings
per
share
in
the
current
quarter
of
$2.34
to
$2.36
on
$9.2
billion
to
$9.25
billion
in
revenue.
Analysts
surveyed
by
LSEG
had
expected
$2.40
in
adjusted
earnings
per
share
on
$9.37
billion
in
revenue.

Revenue
in
the
fiscal
first
quarter,
which
ended
April
30,
increased
11%
from
$8.25
billion
a
year
earlier,
Salesforce
said
in
a

statement.
It
is
the
first
time
since
2006
that
Salesforce
fell
short
on
revenue,
according
to
LSEG
data.

Salesforce
saw
budget
scrutiny
and
longer
deal
cycles
than
usual
during
the
quarter,
president
and
operating
chief
Brian
Millham
told
analysts
on
a
conference
call.
Management
implemented
go-to-market
changes
that
cut
into
bookings,
Millham
said.

All
five
of
Salesforce’s
product
areas
contributed
to
the
growth.
But
revenue
from
the
Professional
Services
and
Other
category,
at
$548
million,
was
down
9%
and
under
the
StreetAccount
consensus
of
$572.9
million.

Net
income
jumped
to
$1.53
billion,
or
$1.56
per
share,
from
$199
million,
or
20
cents
per
share
a
year
ago.

Salesforce
lifted
its
earnings
forecast
for
the
2025
fiscal
year.
The
company
now
expects
adjusted
earnings
of
$9.86
to
$9.94
per
share,
compared
to
$9.68
to
$9.76
three
months
ago.
Its
revenue
guidance
remains
at
$37.7
billion
to
$38
billion.
Analysts
polled
by
LSEG
were
looking
for
$9.76
in
adjusted
earnings
per
share
and
$38.08
billion
in
revenue.

Amy
Weaver,
Salesforce’s
finance
chief,
said
she
expects
deal
compression
and
slowing
projects
in
the
professional
services
business
through
the
current
fiscal
year.

During
the
quarter,
Salesforce
started
selling
its

Einstein
Copilot
assistant
sales
and
customer
service
representatives.
The
company
also

said
all
paid
Slack
customers
were
gaining
access
to
artificial
intelligence
features
such
as
conversation
summaries
and
daily
recaps.
The
Wall
Street
Journal
reported
that
Salesforce
was
in
talks
to
buy
data-integration
company


Informatica,
but
weeks
later,
the
newspaper
said
talks

had
collapsed.

Weaver
said
Salesforce
acquisitions
would
need
“a
clear
timeline
to
value
accretion.”

Before
the
after-hours
move,
Salesforce
shares
were
up
3.5%
so
far
this
year,
trailing
the
S&P
500
index,
which
is
up
around
11%
during
the
same
period.
A
drop
of
this
magnitude
on
Thursday
would
mark
Salesforce’s
worst
day
on
the
market
since
the
2008
financial
crisis.

—
CNBC’s
Robert
Hum
contributed
to
this
report.

WATCH:

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