Salesforce posts slowest quarterly revenue growth since 2010
6:29 pm Wednesday, May 31st, 2023
By Tiyashi Datta
(Reuters) -Salesforce Inc posted an 11% rise in quarterly revenue, its slowest pace of growth in 13 years, as companies dialed back spending on cloud-based software offerings in an uncertain economy.
Shares of the San Francisco, California-based company fell nearly 5% in trading after the bell. They have surged by more than two-thirds so far this year and rose to their highest in about 16 months in regular trading on Wednesday.
Growth at major cloud players from Microsoft Corp to Amazon.com Inc has come under pressure this year as businesses undertake belt-tightening measures to weather the impact of rising interest rates and a potential economic slowdown.
Salesforce Chief Financial Officer Amy Weaver said the company faced continued macroeconomic pressures in the United States and that demand from financial services and technology companies slowed in the quarter.
Capital expenditure also jumped nearly 36% to $243 million as the company invested in AI-related tools to power its software products.
Revenue for Salesforce was $8.25 billion for the quarter ended April 30, while analysts were expecting $8.18 billion, according to Refinitiv IBES.
RBC analyst Rishi Jaluria attributed the stock’s fall in extended trading to its surge this year and the company’s narrow revenue beat relative to its historical performance.
The company faces stiff competition from deep-pocketed legacy vendors such as Oracle in a crowded cloud-computing market.
It has also been a constant target of activist investors such as ValueAct, Inclusive Capital and Starboard Value, which have all separately pushed for better cost control initiatives and improved efficiencies.
Salesforce expects revenue of between $8.51 billion and $8.53 billion for the current quarter, representing growth of about 10% from last year. Analysts were expecting revenue of $8.49 billion.
On an adjusted basis, Salesforce earned $1.69 per share, compared with the estimates of $1.61 per share.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Anil D’Silva)
