Salesforce (CRM) shares slumped lower Thursday after it said co-CEO Bret Taylor will leave the enterprise software group, clouding a firmer-than-expected third quarter earnings report.
Taylor, who had been with Salesforce for the past six years but began serving as co-CEO only a year ago, will step down the group on January 31, leaving Marc Benioff as the sole CEO and chairman.
"After a lot of reflection, I've decided to return to my entrepreneurial roots," Taylor said. "Salesforce has never been more relevant to customers, and with its best-in-class management team and the company executing on all cylinders, now is the right time for me to step away.”
Taylor's departure cast a pall over an otherwise solid third quarter earnings release for Salesforce, which reported a Street-beating bottom line of $1.40 per share as demand for its work-flow solutions remained solid. Group revenues, Salesforce said, rose 14% from last year to $7.84 billion, essentially matching analysts' estimates.
The group's remaining performance obligation, or RPO, a tally of its total deferred revenue and product backlog and a key industry metric, rose 11% from last year to $20.9 billion.
Salesforce repeated its forecast for full-year revenues in the region of $30.9 to $31.00 billion with non-GAAP earnings are expected to come in between $4.92 to $4.94 per share, a 19 cent bump from its August forecast.
"Starting in July of this year, the buying environment became more measured and foreign exchange headwinds were becoming increasingly complex," Benioff told investors on a conference call late Wednesday. "And we're not assuming that this economy gets any better anytime soon."
"We're following our playbook to make sure it works well positioned to gain market share, to increase our profitability, to focus on our operating margin, to focus on the growth of our revenue, and be able to continue to invest, especially when the economy recovers," he said, adding the group needs to adopt a "beginner's mind" as it navigates “an even more challenging buying environment”.
Salesforce shares were marked 10.7% lower in early Thursday trading to change hands at $142.98 each, a move that would extend the stock's year-to-date decline to around 44%.
