CRM stock falls as revenue forecast slumps amid $10 billion buyback

sales force (CRM) cut its revenue forecast for fiscal year 2023, citing currency exchange rates and sluggish demand from retail and telecom customers. CRM stock fell on Thursday


Also, Salesforce late Wednesday reported July quarter earnings that fell from a year earlier but beat Wall Street targets.

The enterprise software maker now puts its 2023 revenue forecast in the $30.9 billion to $31 billion range, down from the previous guidance of $31.7 billion to $31.8 billion.

In an earnings call with analysts, Salesforce management noted “a more measured buying environment in the back half of the July quarter, particularly in North America and Europe,” Coin analyst Derek Wood said in a note to clients.

CRM stock fell 4.8% to 171.31 in afternoon trading on stock market today.

Salesforce stock: $10 billion buyback pool

He added: “This includes longer sales cycles, additional approval layers in purchasing decisions and deal pressure dynamics. This was seen most acutely in the retail/consumer goods and telecoms/media sectors, while financial services, technology and energy were more resilient.”

Additionally, Salesforce said its board of directors approved a $10 billion CRM share buyback. It is the first ever CRM stock buyback program.

Including Slack Technologies, which it acquired in 2021, Salesforce’s second-quarter earnings fell 19.6% to $1.19 per share on an adjusted basis. The San Francisco-based enterprise software company said revenue jumped 22% to $7.72 billion.

A year ago, Salesforce reported earnings of $1.48 per share, including investment gains, from sales of $6.34 billion.

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Salesforce stock analysts expected Salesforce to report earnings of $1.03 per share on sales of $7.69 billion.

CRM Inventory: Guidance Estimates Mistakes

The enterprise software maker said the remaining current performance obligations, known as CRPO bookings, rose 15% to $21.5 billion, in line with estimates. CRPO reservations are the total of deferred revenue and order backlog.

For the current quarter ending in October, the company forecast earnings per share in a range of $1.20 to $1.21 versus estimates of $1.28 per share for CRM stock. Also, the software maker expects revenue of $7.825 billion in the middle of the guidance, versus estimates of $8.07 billion. Salesforce forecast third-quarter CRPO growth of 12% versus estimates of 16% growth.

“Management has taken a heavy hit with guidance to cut CRPO growth to 12% versus the street at 16% and top-line growth to 17% versus 20% previously,” Jefferies analyst Brent Till said in a report. “We think this is prudent in an uncertain macro environment.”

before wednesday, CRM stocks fell about 30% in 2022Software growth stocks are generally struggling.

Salesforce sells software under a subscription model. Its software helps companies organize and handle sales and customer relationships. The company has expanded into marketing, customer services and e-commerce.

Heading to the earnings report, CRM stock has a relative strength rating of 36 out of the top 99 possible, according to IBD stock check.

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