Photo Credit: City of Indianapolis | Mayor’s Office /Flickr.com
 

Salesforce (NYSE: CRM) recently announced its third-quarter results that outpaced market targets. Despite the strong results, the departure of its Co-CEO, Bret Taylor, and a decline in demand sent the stock falling 5%.
 

Salesforce’s Financials

Salesforce’s revenues for the third quarter grew 19% to $7.84 billion, above analyst estimates of $7.81 billion. Adjusted earnings of $1.40 per share were also better than the market’s forecast of $1.21 per share.

By segment, Subscription and support revenues grew 13.4% to $7.23 billion, and Professional services and other revenues grew 24.8% to $604 million.

For the fourth quarter, Salesforce forecast revenues of $7.932-$8.032 billion and an EPS of $1.35-$1.37. The market was looking for $8 billion and an EPS of $1.34. Salesforce expects to end the current fiscal year with revenues of $30.9-$31 billion and an EPS of $4.92-$4.94. The market was looking for revenues of $30.99 billion and an EPS of $4.73.
 

Salesforce’s Growth Focus

Recently, Salesforce announced the expansion of its partnership with Snowflake, allowing customers to now securely collaborate with data in real time between Salesforce Customer Data Platform (CDP) and Snowflake, thus minimizing risks and costs associated with traditional sync methods. The expansion allows companies to share data in real time between Salesforce and Snowflake, enrich CDP profiles, unify analytics across data platforms for faster insights, and visualize data from both Salesforce and Snowflake in Tableau.

It also announced a partnership with WhatsApp that allows Salesforce customers to connect with their own customers and build new messaging experiences on WhatsApp. The integration will allow customers to work through Salesforce Genie, a new data platform powering the world’s first real-time CRM that delivers seamless, highly personalized experiences across sales, service, marketing, and commerce, allowing companies to target audiences with real-time data that informs Click-to-WhatsApp ads on Facebook and Instagram, driving customers to a one-on-one messaging experience.

Additionally, Salesforce deepened its partnership with AWS, allowing Salesforce customers to use Amazon SageMaker, AWS’s machine learning modeling service, along with Salesforce’s AI technology Einstein to create new AI models tailored to the unique needs of their business. Amazon SageMaker complements existing Einstein AI capabilities by solving the needs of data scientists and developers who want to use their preferred tools and ML frameworks within Amazon SageMaker to build, train, and deploy AI models that drive predictions across the Salesforce Platform.
 

Why is Salesforce Stock down?

Salesforce delivered strong results, but when compared with players like Workday and Service now, it reported a much steeper decline in demand. During the same period, ServiceNow registered a 6% reduction in RPO, and Workday reported a 3% decline in its 24-month backlog vs Salesforce’s 10% reduction in RPO. The departure of Bret Taylor was also unpleasant news to the market as he has been known for being instrumental in driving change and greater product focus within Salesforce.

Salesforce’s stock is trading at $133.93 with a market capitalization of $133.9 billion. It had touched a 52-week high of $270.57 in December last year. The stock fell to a 52-week low of $136.04 in October.

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