Salesforce shares saw their biggest rise in nearly two years on Wednesday after the company raised its full-year profit forecast, signaling that demand for enterprise software is holding up despite a broader slowdown from big tech companies.
Earnings for the year, excluding certain items, are expected to be between $4.74 and $4.76 per share, an increase of 12 cents per share over the company’s previous guidance. Revenue will reach $31.8 billion, San Francisco-based Salesforce said in a statement on Tuesday. Analysts on average estimated full-year earnings at $4.68 per share, according to data compiled by Bloomberg.
“So far, we simply don’t see any material impact from the broader economic world,” Chairman and Co-CEO Marc Benioff said on a conference call after the results. “Our demand environment remains very strong.”
Shares rose 13% to $181.32 each Wednesday morning, the biggest intraday rise since August 2020.
Salesforce, the leader in cloud-based customer management software, has maintained high hiring and revenue growth during the pandemic, and expanded its products for business productivity with the purchase of 27.7 billion dollars from the Slack messaging platform. Last month, however, the company joined its tech peers in slowing hiring and travel to control spending, according to a report from Insider. Salesforce said full-time equivalent positions were up 30% from a year earlier, to 77,810, when the quarter ended April 30.
Approximately 2,000 Salesforce Marketing Cloud employees are based in Indianapolis.
“We’re hiring, but we’re doing it at a much more measured pace,” chief financial officer Amy Weaver said on the call. “We are focusing the majority of our new hires on roles that will support customer success and the execution of our top priorities.”
In the fiscal first quarter, revenue rose 24% to $7.41 billion, beating analysts’ forecasts. The current remaining performance obligation – or contractual sales that have not yet been completed, which is considered by analysts to be a measure of near-term demand – rose 21% to 21.5 billion. of dollars. Earnings, excluding certain items, were 98 cents per share, versus an average analyst estimate of 95 cents.
Salesforce said subscription revenue generated by its platform unit, which includes Slack, rose 55% to $1.42 billion, the fastest growth of any division in the quarter.
“Slack continues to exceed our revenue expectations,” co-CEO Bret Taylor said on the call. “This is the fourth consecutive quarter that we’ve seen over 40% growth in the number of customers spending over $100,000 with Slack each year.”
The shares climbed as high as $173.40 in extended trading after closing at $160.24 in New York. The stock has fallen 37% this year amid a broad tech rout that has hit software companies particularly hard. The downturn has left the company undervalued, JPMorgan analyst Mark Murphy wrote in a research note ahead of earnings.
Salesforce’s 24% constant currency growth in its current remaining performance bond is a positive development as it has remained high even in the face of rising interest rates and inflation, said Bloomberg analyst Anurag Rana. Intelligence. “That’s the power of Salesforce, where you have a very diverse revenue stream,” Rana said in an interview.
The company doubled its expected currency headwinds to $600 million for the year, due to a strong US dollar. Earlier this month, the Bloomberg dollar index hit its highest level since the early days of the pandemic and remains high.
Sales for the Mulesoft division, which helps customers connect their software to the Internet, were up 9%, Weaver said on the call. A slowdown in sales last year for the unit alarmed investors. Weaver said Mulesoft’s revenue is more volatile than other products and growth is expected to accelerate towards the second half of the year.
Management is also under internal pressure to sever ties with the National Rifle Association after the school shooting in Uvalde, Texas. Thousands of employees have signed a petition addressed to the company’s management team, including Benioff, according to SFGate.