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Updated February 29th, 2024 at 13:50 IST

Salesforce misses annual revenue estimates, new dividend announced

Salesforce anticipates full-year 2025 revenue to be in the range of $37.7 billion to $38 billion, falling short of analysts' projections of $38.62 billion.

Reported by: Business Desk
Salesforce
Salesforce.com | Image:Salesforce
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Salesforce stock buyback: Salesforce has announced an expansion of its stock buyback program by $10 billion and the initiation of a new dividend. However, its shares experienced a decline of approximately 2 per cent in after-hours trading following the release of an annual revenue forecast that fell below expectations.

The company's cautious outlook suggests a potential deceleration in cloud and technology spending as clients contend with higher interest rates and increasing inflation, prompting them to exercise restraint on expenditures. Salesforce anticipates full-year 2025 revenue to be in the range of $37.7 billion to $38 billion, falling short of analysts' projections of $38.62 billion, according to LSEG data.

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Concerns about an economic slowdown led Salesforce to reduce its workforce by approximately 700 employees, constituting around 1 per cent of its global staff, last month, contributing to the wave of layoffs across the technology and media sectors.

Commenting on the lower growth forecast, Gil Luria, an analyst at DA Davidson, remarked, "Salesforce is guiding for only 8-9 per cent growth (for the full year), which moves it out of the high growth category. In order to make up for that, it is introducing a dividend, which is appropriate for the lower level of growth."

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In addition to Salesforce, cloud data analytics company Snowflake also forecasted first-quarter revenue below estimates, further exacerbating concerns within the cloud sector amidst uncertainty this year.

Despite the subdued outlook, Salesforce exceeded fourth-quarter revenue and profit estimates, benefiting from increased cloud spending, aligning with the performance of other cloud giants such as Amazon.com and Microsoft.

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For the quarter ended January 31, the company reported revenue of $9.29 billion, surpassing analysts' estimates of $9.22 billion. On an adjusted basis, earnings per share stood at $2.29, compared to estimates of $2.26 per share.

In early 2023, Salesforce attracted the attention of activist investors seeking changes, resulting in cost reductions, expanded share buybacks, and the dismantling of the mergers and acquisition committee. Salesforce anticipates adjusted profits for the full year to range between $9.68 and $9.76 per share, surpassing estimates of $9.57 per share.

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(With Reuters inputs)

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Published February 29th, 2024 at 13:50 IST

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