Salesforce cuts annual estimates on COVID-19 hit
30 May, 2020, 6:15 am
(Reuters) – Salesforce.com Inc cut its annual revenue and profit forecasts on Thursday, 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% in choppy extended trading as investors shrugged off a first-quarter revenue beat.
Most of the expenses were recorded in the first quarter, including $140 million in sales commissions, Chief Executive Officer Marc Benioff said on an earnings call.
Benioff said organizations 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 $16 billion last year – to fend off growing competition from rivals such as Oracle Corp and German competitor SAP.
Salesforce now expects revenue of $20 billion for its fiscal year ending in 2021, down from its prior forecast of a range of $21 billion to $21.1 billion.
It projected annual adjusted profit of between $2.93 and $2.95 per share, lower than its earlier estimate of between $3.16 and $3.18.
The forecast assumes that IT spending growth normalizes next year, consistent with learnings from the Great Financial crisis, Chief Financial Officer Mark Hawkins said.
Net revenue rose 30% to $4.87 billion in the first quarter ended April 30, slightly above the average analyst estimate of $4.85 billion.
Excluding items, it earned 70 cents per share, in line with estimates.