Published - June 1, 2022 @ 3:22 PM (EET)
On Tuesday, shares of the cloud-based customer relationship management company, Salesforce (NYSE:CRM), jumped around 9% in extended trading after posting a better-than-expected increase in fiscal first-quarter revenue.
Revenue of $7.41 billion was up 24% from $5.96 billion in the year-ago quarter, which eased concerns about demand for its business software.
Salesforce said there was strong demand from companies looking to improve efficiencies and incorporate modern-day workflows, despite four-decade high inflation and an economic slowdown.
"Macroeconomic or geopolitical headwinds may show up sooner or later, but Salesforce is well-positioned to capitalize on enterprise spending on digital transformation, and the company has a fairly resilient model." - SMBC Nikko Securities analyst, Steven Koenig.
EARNINGS
For Fiscal 2023, Salesforce lowered its revenue guidance and now expects revenue between $31.7 billion to $31.8 billion compared with previous projections of $32 billion to $32.1 billion.
Subsequently, the company expects revenue of $7.69 billion to $7.70 billion for the July quarter, with non-GAAP profits of $1.01 to $1.02 per share.
Salesforce said subscription revenue gained 55% to $1.42 billion, the fastest growing division in the quarter.
Revenue from its Service Cloud for handling customer-service inquiries and the core Sales Cloud product for managing business opportunities generated $1.76 billion and $1.63 billion, respectively.
Meanwhile, adjusted net income came in at $982 million, down from $1.14 billion in the year-earlier quarter. Management also decreased its sales forecast for the year, citing foreign exchange challenges as the primary cause.
With regards to hiring, a pullback in some spending has come to Salesforce.
Managers of the company received internal memos this month outlining shifts in hiring plans, prioritizing hiring for sales functions over other positions, and focusing its spending on essential travel for meetings with customers.
"We are hiring, but we're doing it at a much more measured pace," said Chief Financial Officer Amy Weaver.
While Salesforce came into its earnings report as one of the worst performers in the Dow in 2022, the stock now seems poised for a rebound.
