Salesforce cut its fiscal 2023 revenue outlook, citing currency exchange rates and slowing demand from retail and telecom customers. CRM stock tumbled Thursday
Also, Salesforce late Wednesday reported July-quarter earnings that fell from a year earlier but topped Wall Street targets.
The enterprise software maker now puts its 2023 revenue outlook in a range of $30.9 billion to $31 billion, down from earlier guidance of $31.7 billion to $31.8 billion.
On an earnings call with analysts, Salesforce management noted "a more measured buying environment in the back half of the July quarter, especially in North America and Europe," Cowen analyst Derrick Wood said in a note to clients.
CRM stock fell 3.4% to close at 173.91 on the stock market today.
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He added: "This includes longer sales cycles, additional approval layers in purchase decisions and deal compression dynamics. This was seen more acutely in the retail/consumer goods, telecom/media verticals, while financial services, tech and energy were more resilient."
In addition, Salesforce said its board of directors has approved a $10 billion buyback for CRM stock. It's the first-ever repurchase program of CRM stock.
Including Slack Technologies, which it acquired in 2021, Salesforce earnings for the second quarter fell 19.6% to $1.19 a share on an adjusted basis. The San Francisco-based enterprise software maker said revenue climbed 22% to $7.72 billion.
A year earlier, Salesforce reported profit of $1.48 a share, including investment gains, on sales of $6.34 billion.
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Salesforce stock analysts expected Salesforce to report earnings of $1.03 a share on sales of $7.69 billion.
CRM Stock: Guidance Misses Estimates
The enterprise software maker said current remaining performance obligations, known as CRPO bookings, rose 15% to $21.5 billion, in line with estimates. CRPO bookings are an aggregate of deferred revenue and order backlog.
For the current quarter ending in October, the company forecast earnings per share in a range of $1.20 to 1.21 vs. estimates of $1.28 a share for CRM stock. Also, the software maker expects revenue of $7.825 billion at the midpoint of guidance, vs. estimates of $8.07 billion. Salesforce projected third quarter CRPO growth of 12% vs. estimates of 16% growth.
"Management has taken a blow torch to guidance lowering CRPO growth to 12% vs. street at 16% and top line growth to 17% vs. 20% prior," said Jefferies analyst Brent Thill in a report. "We believe this is prudent in an uncertain macro environment."
Prior to Wednesday, CRM stock had retreated about 30% in 2022, as software growth stocks generally are struggling.
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.
Heading into the earnings report, CRM stock owned a Relative Strength Rating of 36 out of a best-possible 99, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
