By Aaron Tilley

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 29, 2020).

Salesforce.com Inc. cut its full-year earnings outlook as the company said it provided payment relief to some customers and made new investments in the face of the coronavirus pandemic.

The provider of subscription-based business software said Thursday that first-quarter sales rose 30% from a year earlier to a record $4.87 billion. Earnings per share fell to 11 cents -- aided by accounting adjustments -- from 49 cents. Wall Street expected sales of $4.85 billion and per-share earnings of 1 cent, according to analysts surveyed by FactSet.

The San Francisco company lowered its full-year outlook at a time of economic uncertainty from the global health crisis that has caused many companies to withdraw full-year projections. Salesforce said it now expects full-year sales of roughly $20 billion. It previously forecast revenue in the range of $21 billion to $21.1 billion. This year's expected full-year sales growth of 17% would represent Salesforce's slowest pace of expansion. Sales advanced 29% in the most recent fiscal year.

The company also forecasts a 6-cent to 4-cent per-share loss for the year, compared with the earlier outlook of breaking even at a per-share basis or generating a 1-cent profit.

Shares fell more than 3% in after-hours trading.

During the pandemic, many customers of cloud software providers have increased usage as more companies have embraced remote working and the tools that facilitate such operations. But many software service providers also have said that signing new contracts has slowed during the pandemic, as negotiations drag on with customers grappling with how to adjust to the economic downturn. Workday Inc., another enterprise software provider, on Wednesday cut its subscription-revenue forecast for the current fiscal year because of the market uncertainties.

Salesforce Chief Financial Officer Mark Hawkins told analysts that revenue attrition is expected to increase slightly from its low level in the first quarter in the rest of the financial year. A target to reach $35 billion in sales in 2024 that the company set last year also is under review given the effects of the Covid-19 outbreak, he said.

Salesforce this month announced a new suite of services for companies and governments seeking resources to help manage the return of their employees as economies exit quarantining measures. The company signed on New York City, California and other governments for its service to aid authorities with their contact-tracing efforts during the pandemic. Salesforce Chief Executive Marc Benioff said these government partnerships have become a significant part of the company's sales pipeline, without putting a figure on their value.

Salesforce has spurred growth in part through acquisitions, including the more than $15 billion deal for data analytics provider Tableau Software, which closed last year, and was the largest in its history. Mr. Benioff said in February that the company would take a pause from deal-making even as it announced the purchase of cloud-software provider and Salesforce partner Vlocity Inc. That deal is due to close June 1, Mr. Hawkins said Thursday.

Salesforce's revenue outlook for the current quarter of $4.89 billion to $4.9 billion came in short of the $5 billion that analysts surveyed by FactSet have been expecting.

Write to Aaron Tilley at aaron.tilley@wsj.com

(END) Dow Jones Newswires

May 29, 2020 02:47 ET (06:47 GMT)

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