Shares in Salesforce sank Thursday after the software maker reported April-quarter earnings and revenue that topped analyst estimates but its sales outlook only edged by views. Operating margins for CRM stock improved amid cost-cutting spurred by activist investors.
For the quarter ended April 30, Salesforce earnings rose 72% to $1.69 per share on an adjusted basis. San Francisco-based Salesforce said revenue climbed 11% to $8.25 billion.
CRM stock analysts expected Salesforce to report earnings of $1.61 a share on sales of $8.18 billion. A year earlier, Salesforce reported profit of 98 cents a share on sales of $7.41 billion.
April quarter operating margin was 27.6%, with restructuring boosting margin by nearly 9%, the company said. However, one concern for CRM stock amid cost-cutting is that it could impact sales growth. For example, the software maker may not have enough resources to expand internationally.
"We think macro headwinds and the restructuring push remain near-term growth headwinds, and while new GenAI (artificial intelligence) initiatives are compelling, it seems like time is needed for any revenue impact," TD Cowen analyst Derrick Wood said in a note to clients.
Salesforce Stock Falls On Results
Salesforce stock fell 4.7% to close at 212.90 on the stock market today. The enterprise software maker reported first-quarter earnings after the market close on Wednesday.
For the current July quarter, Salesforce said it expects revenue of $8.52 billion, edging by estimates of $8.49 billion. Before the Salesforce earnings release, CRM stock had advanced about 67% thus far in 2023.
Salesforce sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. The company has expanded into marketing, customer services and e-commerce.
CRM stock owns a Relative Strength Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. Activist investors include Elliott Management, Starboard Value, Third Point, ValueAct Capital and Inclusive Capital.
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