Published - June 1st, 2023 @ 10:17 AM (GMT+2 )
Salesforce’s Growth Slowest in 13 Years
Salesforce Inc (NYSE:CRM) , the leading CRM company worldwide, recently disclosed its quarterly revenue results. Despite experiencing an 11% increase, Salesforce's growth pace was the slowest in 13 years as businesses scaled back on cloud-based software investments amid a volatile economic climate.
This cautionary shift reflected the pressures major cloud entities like Microsoft Corp and Amazon.com Inc faced, as they also felt the economic pinch.
Economic Impact on Cloud Giants
Salesforce's shares experienced a near 5% decline post-bell, following a significant surge over the year. Prior to this, shares had risen to a 16-month high. The slower growth, however, is wider than Salesforce.
Cloud industry giants such as Microsoft Corp and Amazon.com Inc have also been grappling with market constraints as businesses tighten their belts against rising interest rates and looming economic slowdowns.
Salesforce Battles Demand Slowdown
CFO Amy Weaver revealed that financial services and technology firms' demand slowdown has reportedly contributed to Salesforce's slow growth. This led to a considerable increase in capital expenditure, which leaped by nearly 36% to $243 million as Salesforce aimed to bolster its software products with AI-related tools.
Revenue Beats Analyst Expectations
Despite these challenges, Salesforce's revenue for the quarter ending on April 30, totaled $8.25 billion, slightly surpassing analysts' expectations of $8.18 billion. Rishi Jaluria, an RBC analyst, suggests the post-market decline is partly due to the stock's recent rise and the company's modest revenue beat.
Stiff Competition and Activist Investors
Oracle, a well-funded legacy vendor, presents robust competition in the saturated cloud-computing market. Salesforce also attracts the attention of activist investors like ValueAct, Inclusive Capital, and Starboard Value, all advocating for enhanced cost-control measures and efficiencies.
Forward-Looking Revenue Growth
Looking forward, Salesforce anticipates its revenue to be between $8.51 billion and $8.53 billion for the current quarter, an approximately 10% increase from the previous year. Adjusted earnings were $1.69 per share, surpassing the estimated $1.61 per share
