Salesforce cuts forecasts as COVID-19 bites
- 29 May, 2020 08:57
Salesforce has cut its annual revenue and profit forecasts, as the cloud-based business software maker allowed clients to defer payments and provided its sales team one-time commissions amid the COVID-19 pandemic.
Shares fell 3 per cent in choppy extended trading as investors shrugged off a first-quarter revenue beat.
Most of the expenses were recorded in the first quarter, including US$140 million in sales commissions, CEO Marc Benioff said on an earnings call.
Benioff said organisations around the world are accelerating their plans for work-from-anywhere environment, helping Salesforce sign more deals.
"I've been on more sales calls with more CEOs in the last two months than at any time in my career," Benioff said.
The company has beefed up its cloud business through acquisitions - spending more than US$16 billion last year - to fend off growing competition from rivals such as Oracle Corp and German competitor SAP.
Salesforce now expects revenue of US$20 billion for its fiscal year ending in 2021, down from its prior forecast of a range of US$21 billion to US$21.1 billion.
It projected annual adjusted profit of between US$2.93 and US$2.95 per share, lower than its earlier estimate of between US$3.16 and US$3.18.
The forecast assumes that IT spending growth normalises next year, consistent with learnings from the Global Financial Crisis, CFO Mark Hawkins said.
Net revenue rose 30 per cent to US$4.87 billion in the first quarter ended April 30, slightly above the average analyst estimate of US$4.85 billion.
Excluding items, it earned 70 cents per share, in line with estimates.
(Reporting by Munsif Vengattil in Bengaluru; Editing by Sriraj Kalluvila)