Salesforce Stock Falls As Earnings Top Views But CRM Stock Guidance Disappoints Amid Slack Deal

Salesforce stock tumbled Wednesday after the software maker reported third-quarter earnings and revenue that topped estimates but guidance disappointed. CRM stock reported earnings that for the first time included a full quarter of financials from Slack Technologies.

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CRM stock tumbled nearly 6% to 268.20 in morning trades on the stock market today. In Tuesday’s regular session, Salesforce stock fell 4% amid a broad market sell-off.

Salesforce reported October-quarter earnings after the market close on Tuesday. San Francisco-based Salesforce.com (CRM) promoted Bret Taylor to act as co-chief executive alongside current CEO Marc Benioff. Taylor has served as Salesforce’s president and chief operating officer since 2019.

Before that, he was chief product officer. Twitter (TWTR) named Taylor its new chairman on Monday.

Salesforce had a co-CEO structure earlier. Keith Block, viewed as a possible successor to Benioff, stepped down as co-CEO in early 2020.

Meanwhile, Salesforce earnings fell 27% to $1.27 on an adjusted basis, including the Slack acquisition. The deal closed in July.

CRM Stock: Revenue Tops Estimates

Revenue climbed 27% to $6.86 billion, including Slack.

A year earlier, Salesforce earnings were $1.74 a share, including investment gains, on sales of $5.42 billion. Analysts expected Salesforce to report earnings of 92 cents a share on sales of $6.8 billion.

The enterprise software maker said current remaining performance obligations, or CRPO bookings, rose 23% to $18.8 billion. That edged by analyst estimates of $18.71 billion.

Meanwhile, CRPO bookings are an aggregate of deferred revenue and order backlog. The Salesforce CRPO growth included acquisitions.

Salesforce Guidance Misses Expectations

For the current quarter ending in January, Salesforce’s revenue outlook met expectations. The software maker expects revenue in a range of $7.224 to $7.234 billion vs. estimates of $7.23 billion.

But the company forecast earnings in a range of 72 cents to 73 cents a share, missing estimates. Analysts had projected a profit of 82 cents a share.

In addition, Salesforce projected CRPO growth of 19% in the January quarter, below estimates of 21% growth. Management said business has slowed at its MuleSoft unit, acquired in 2018.

„We believe the MuleSoft headwinds are a combo of elevated expectations/execution related and should be resolved in the near-term,“ Jefferies analyst Brent Thill said in a report.

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.

CRM stock had gained 27% in 2021, heading into the earnings report. Salesforce stock owned a Relative Strength Rating of 83 out of a best possible 99, according to IBD Stock Check-up.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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