With software stocks already struggling, Salesforce (CRM) on Wednesday reported first-quarter earnings that topped estimates while revenue missed. July-quarter revenue guidance for Salesforce stock came in well below expectations. Shares tumbled as investors await a boost from artificial intelligence products.
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The enterprise software maker released the April-quarter Salesforce earnings report after the market close. Salesforce’s sales growth has slowed despite an acquisition spree that included Slack Technologies and Mulesoft.
Salesforce earnings rose 44% to $2.44 per share from a year earlier on an adjusted basis. Also, the San Francisco-based company said revenue climbed 11% to $9.13 billion.
Analysts had forecast adjusted profit of $2.37 per share and revenue of $9.15 billion.
A key financial metric, current remaining performance obligations, known as CRPO bookings, missed views. In Q1, CRPO rose 10% to $26.4 billion vs. estimates for 11.9% growth. CRPO bookings are an aggregate of deferred revenue and order backlog.
Salesforce Stock: Guidance Misses
For the current quarter ending in July, Salesforce projected revenue in the range of $9.2 billion to $9.25 billion vs. estimates of $9.345 billion.
For the full fiscal year, Salesforce now expects adjusted earnings of $9.86 to $9.94 per share, up from its earlier forecast of $9.68 to $9.76.
On the stock market today, Salesforce stock tumbled more than 16% to 226.34 in extended trading. Shares were up 2% in 2024 as of Wednesday’s regular session.
Heading into the Salesforce earnings report, expectations were lowered amid Workday‘s (WDAY) weak guidance issued on May 23. Also, CRM stock traded below its 50-day moving average.
The iShares Expanded Tech-Software Sector ETF (IGV), an industry index that includes Microsoft (MSFT) and many big-cap software companies, has climbed 4% this year vs. the S&P 500’s 11% gain.
Like many software companies, Salesforce has been slow to monetize AI tools. Analysts do not expect revenue growth related to AI product upgrades to kick in until fiscal 2026.
CRM Stock: Technical Ratings
Salesforce offers access to business software applications based on a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. In addition, the company has expanded into marketing, customer services and e-commerce.
In 2023, activist investors pressured management to improve margins by cutting costs.
CRM stock owns a Relative Strength Rating of 68 out of a best-possible 99, according to IBD Stock Checkup.
In addition, CRM stock has an Accumulation/Distribution Rating of D+. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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