Salesforce Posts Record Sales -- Update
February 25 2021 - 6:11PM
Dow Jones News
By Aaron Tilley
Salesforce.com Inc. posted record sales and lifted its outlook
for the current year as the business software provider benefits
from a broader embrace during the pandemic of software services
among enterprise customers.
The San Francisco-based company Thursday reported revenue of
$5.82 billion, up 20% from the year-ago period. The company had a
net income of $267 million. Results topped Wall Street's
expectation of $5.68 billion in quarterly sales and a net income of
$46 million, according to FactSet.
"We never could have predicted a year ago what was in store,
which makes me incredibly proud of how well we pivoted our company
to adapt to this pandemic world," Salesforce Chief Executive Marc
Benioff said in a statement.
Salesforce stock had closed down 3.9% before results were
posted. Shares fell more than 2% further in after-hours
trading.
"Some investors would have preferred to see more business
acceleration," said Pat Walravens, equity research analyst at
investment firm JMP Securities. Though growth in the Americas and
the Asia-Pacific regions gained pace, activity in Europe
decelerated from 26% last quarter to 20% this quarter, he said.
Salesforce, which was founded more than 20 years ago largely as
a provider of customer relationship management software, has been
expanding the services it offers as it tries to challenge rivals
such as Microsoft Corp. The company in December struck its
biggest-ever acquisition, the $27.7 billion proposed acquisition of
Slack.
Investors have been wary about the deal for Slack, which loses
money. Salesforce shares have slumped around 10% since The Wall
Street Journal first reported deal talks. The Justice Department is
putting the acquisition through a detailed antitrust review, the
two companies said in regulatory filings this month. Salesforce has
said it expects the deal to close by July 31.
Salesforce said Slack would help boost its top line for this
fiscal year by around $600 million. The company lifted its
full-year sales outlook to a range of $25.65 billion to $25.75
billion, or $200 million above the earlier forecast.
Brent Thill, an analyst at Jefferies, said Salesforce's
financial figures underscored the "fundamental health" of its
business. The negative investor reaction, he said, likely reflected
a broader downbeat mood among investors toward tech after a period
of strong growth.
Salesforce's upbeat outlook echoes Microsoft, which last month
posted record sales and forecast more growth in the coming
months.
Salesforce also issued its first guidance for operating margins
for the current year that reflect the addition of Slack. The
company said its adjusted operating margins should remain flat at
17.7% compared with the year just ended. Before the earnings
release, Keith Weiss of Morgan Stanley expected adjusted operating
margin for fiscal 2022 of around 16.2%.
Slack separately reported preliminary quarterly sales of $250.6
million for the three-months ended in January, up about 37% from a
year earlier. The company said it added a record 14,000 new paying
customers, a 180% gain from a same year-earlier quarter. The
company said it would disclose quarterly earnings figures March
4.
Write to Aaron Tilley at aaron.tilley@wsj.com
(END) Dow Jones Newswires
February 25, 2021 17:56 ET (22:56 GMT)
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