Salesforce Stock: High Salesforce Earnings, Low Revenue. Poor guidance causes a sell-off.

With software stocks already struggling, Sales force (CRM) reported first-quarter earnings topped estimates, although revenue was missed. July quarter revenue forecasts for Salesforce stock were well below expectations. Shares fell as investors wait for a boost from artificial intelligence products.

The enterprise software maker released Salesforce’s April earnings report after the market closed Wednesday. Salesforce’s sales growth has slowed despite an acquisition spree that included Slack Technologies and Mulesoft.

Salesforce’s earnings rose 44% on an adjusted basis to $2.44 per share from a year earlier. Additionally, the San Francisco-based company said revenue rose 11% to $9.13 billion.

Analysts had forecast adjusted earnings of $2.37 per share and revenue of $9.15 billion.

“As with other app companies this quarter, the weakening shopping environment seen in the first quarter was to blame,” Bank of America analyst Brad Sills said in the report.

Stock CRM: changing sales channels?

Sills added: “It is not unusual for Salesforce to experience first-quarter weakness as a result of self-implemented changes to its sales organization that are expected to drive growth throughout the rest of the year. These seem to be normal reshuffles and do not indicate major changes to market changes that may affect the implementation of activities in many quarters. We recognize that visibility into the improving software spending environment is currently limited.”

Key financial indicator, current outstanding commitments called CRPO bookings, lost impressions. In the first quarter, CRPO grew 10% to $26.4 billion compared to estimates of an 11.9% increase. CRPO reservations represent the sum of deferred revenue and order backlog.

“The quarter was disappointing, highlighted by the omission of CRPO,” Keith Bachman, an analyst at BMO Capital Markets, said in the report.

He added: “Salesforce has beaten CRPO in the previous five quarters, but this quarter it lost 1.5% to 2%. “Furthermore, while we believe management has inherently lowered total revenue guidance to the lower end of the range by lowering subscription revenue guidance, we believe this still leaves some risk given the weak order fulfillment and purchasing environment observed in the first quarter.”

Salesforce Stocks: No Guidance

Salesforce forecast revenue for the current quarter ending in July in the range of $9.2 billion to $9.25 billion, compared with estimates of $9.345 billion.

“The weaker performance was impacted by a more challenging spending environment and some market entry disruptions, but management remains constructive on strategic growth areas and expects a stronger second half,” TD Cowen analyst Derrick Wood said in the report.

Salesforce now expects adjusted earnings per share of $9.86 to $9.94 per share, up from its prior forecast of $9.68 to $9.76.

On today’s stock market, Salesforce shares fell 19.7% to close at 218.01.

Expectations have been lowered in the context of Salesforce’s earnings report Working dayweak company guidance (WDAY) issued on May 23. CRM stock was also trading below its 50-day moving average.

iShares Expanded Tech-Software Sector ETF (IGV) – industry-wide index Microsoft (MSFT) and many large software companies, are up 4% this year compared to the S&P 500’s 11% gain.

Like many other software companies, Salesforce has been slow to monetize AI tools. Analysts don’t expect revenue growth from AI product updates to start until fiscal year 2026.

CRM Stock: Technical Assessments

Salesforce offers access to business applications in a subscription model. Its software helps companies organize and manage sales operations and customer relationships. In addition, the company has expanded its activities to include marketing, customer service and e-commerce.

In 2023, activist investors pressured management to improve margins by cutting costs.

CRM stock has a relative strength rating of 68 out of a best possible 99, according to IBD Stock Checkup.

Additionally, CRM stock has an accumulation/distribution rating of D+. The rating analyzes stock price and volume changes over the last 13 weeks of trading. The rating, on a scale of A+ to E, measures institutional buying and selling of stocks. A+ indicates heavy institutional buying; E stands for intense selling. Think of Class C as neutral.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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