Salesforce reported October-ended quarter earnings that topped estimates while guidance for CRM stock came in mixed. Salesforce stock dived as the company also said co-Chief Executive Bret Taylor will depart amid other management changes.
Taylor, who had been co-CEO for about one year, will stay on until Jan. 31, 2023. Taylor intends to pursue entrepreneurial interests, Salesforce said. Marc Benioff will remain as the sole CEO of the company.
"We believe this announcement will craft questions and represent a surprise move for investors that could take time to digest," said Truist Securities analyst Terry Tillman in a report.
Taylor's departure is the latest management shift for CRM stock.
"The Street will view this as a shocker with Taylor one of the mainstays in the CRM strategy although Benioff remains the core hearts and lungs of the Salesforce story," said Wedbush analyst Daniel Ives in a report.
CRM Stock: Management Changes
He added: "With Taylor leaving we can see Benioff potentially getting more aggressive on M&A in the cloud landscape as more private and public vendors struggle in a softer macro backdrop. This is all about the battle vs. Microsoft for market share in the cloud and collaboration space with CRM in a strong position to further build out its product footprint over the coming years."
Salesforce on Aug. 8 announced the appointment of Brian Millham as president and chief operating officer. Gavin Patterson, who had been president and chief revenue officer, was shifted to chief strategy officer. Patterson left the company in early November.
At Bank of America, analyst Brad Sills said in a report: "The departure of co-CEO Bret Taylor is unexpected, though with COO Brian Millham in place, we do not expect disruption to sales productivity efforts which are critical to long-term margin expansion."
Salesforce had a co-CEO structure earlier. But Keith Block, viewed as a possible successor to Benioff, stepped down as co-CEO in early 2020.
Salesforce reported third quarter earnings after the market close on Wednesday.
Including Slack Technologies, acquired in 2021, Salesforce earnings rose 10% to $1.40 on an adjusted basis. San Francisco-based Salesforce said revenue climbed 14% to $7.84 billion.
Salesforce Stock: Earnings Beat
A year earlier, Salesforce reported profit of $1.27 a share, including investment gains, on sales of $6.86 billion. CRM stock analysts expected Salesforce to report earnings of $1.22 a share on sales of $7.83 billion.
Salesforce stock fell 8.3% to close at 147 on the stock market today.
The enterprise software maker said current remaining performance obligations, known as CRPO bookings, rose 11% to $20.9 billion versus estimates of $21 billion. CRPO bookings are an aggregate of deferred revenue and order backlog.
CRM Stock: Guidance Mixed
For the current quarter ending in January, the company forecast earnings per share in a range of $1.35 to $1.37 vs. estimates of $1.34 a share for CRM stock. Also, the software maker expects revenue of $7.98 billion at the midpoint of guidance, vs. estimates of $8.03 billion.
CRM stock has retreated about 39% in 2022, as software growth stocks generally struggle.
Salesforce sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. The company has expanded into marketing, customer services and e-commerce.
Salesforce stock owns a Relative Strength Rating of 24 out of a best-possible 99, according to IBD Stock Checkup.
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