Salesforce fourth quarter guidance misses Wall Street expectations

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  • Salesforce reported fiscal third-quarter earnings on Tuesday.
  • Salesforce named Brett Taylor as co-CEO along with current CEO Marc Benioff.
  • Salesforce said earnings per share for the December quarter would be between 72 and 73 cents, lower than Refinitiv analysts’ expectation of 81 cents.

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Salesforce reported fiscal third-quarter earnings on Tuesday for the period ending October 31, beating Wall Street’s expectations on earnings and sales. But shares fell more than 6% in extended trading after earnings guidance for the fourth quarter fell short of expectations.

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Salesforce named current chairman and COO Brett Taylor as co-CEO, along with current CEO Marc Benioff. Benioff said in a statement that Taylor will help lead the company through “the next chapter.”

Salesforce stock fell more than 6% in extended trading.

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Here’s how the company fared against Refinitiv consensus expectations:

  • Earnings: $1.27 per share, adjusted, versus 92 cents per share expected, up 27% year-over-year.
  • Revenue: $6.86 billion, versus $6.80 billion expected

Sales were up 27% from $5.42 billion in the same period a year ago. The company expects between $7.22 billion and $7.23 billion in revenue in its fiscal fourth quarter, surpassing its previous guidance and coming in on par with analyst expectations of $7.22 billion.

But Salesforce said earnings per share for the December quarter would fall between 72 and 73 cents, lower than Refinitiv analysts’ expectation of 81 cents.

Sales Cloud, the company’s core product that salespeople use to track leads and opportunities, reported $1.54 billion in sales, up 17% from last year. Salesforce’s Service Cloud business reached $1.66 billion in sales, up 20% over the previous year.

“No other software company of our size or scale is really performing at this level,” Benioff said on a call with analysts. “We know that because we’re talking to other cloud CEOs every day.”

The Platforms and Others unit reported $1.27 billion in sales during the quarter, though the company said it reclassified sales from its Tableau and Mulesoft acquisitions into its data unit, which reported $900 million in sales.

In July, Salesforce closed its acquisition of enterprise chat app Slack for more than $27 billion. It said the app contributed $276 million to sales of the company’s platform unit, which previously reported sales of Tableau and Mulesoft.

“Slack as a part of the Salesforce family outperformed our expectations in the first full quarter,” Taylor said. “The number of customers who spent more than $100,000 on Slack increased 44% year over year.”

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