Salesforce
shares were on the rise late Wednesday after the provider of cloud-based customer relationship management software posted quarterly profits that inched past Wall Street estimates.
While it continues to grapple with soft conditions in some parts of the economy, the company is seeing signs of improving customer sentiment. That could provide at least a modest boost to investors’ expectations about the outlook for IT spending.
Salesforce stock was 7.2% higher at $247 in late trading.
For its fiscal third quarter, ended Oct. 31, Salesforce reported revenue of $8.72 billion, up 11% from a year earlier. It came in at the top of the range of $8.7 billion to $8.72 billion management had forecast and above the Wall Street consensus call for $8.7 billion.
Adjusted profits were $2.11 a share, ahead of the company’s forecast of $2.05 to $2.06 and six cents ahead of the Street consensus. Under generally accepted accounting principles, the company earned $1.25 a share.
Current remaining performance obligations, a measure of work to be performed in the next 12 months, stood at $23.9 billion, up 14%, three points better than the company’s forecast for 11% growth.
For the January quarter, Salesforce projected revenue of between $9.18 billion and $9.23 billion, with non-GAAP profits of between $2.25 and $2.26 a share. The consensus call had been for $9.2 billion in revenue and profits of $2.18 a share.
Salesforce now sees revenue for the full year of between $34.75 billion and $34.8 billion, slightly raising the bottom of the range from $34.7 billion, with adjusted profits of $8.18 to $8.19 a share, up from a previous forecast of $8.04 to $8.06 a share. The company now sees full-year operating cash flow growth of between 30% and 33%, above its previous forecast of 22% to 23%.
Mike Spencer, the company’s executive vice president for investor relations, said in an interview with Barron’s that the company had a strong quarter in the Americas, aided by “a large deal.” He said that demand from the tech sector remained weak, as it has been in recent quarters, while public-sector demand was strong.
Salesforce repurchased $1.9 billion of common stock in the quarter, consistent with its recent pattern. The company has about $10 billion remaining on its previously announced stock repurchase authorization
Asked about the economic environment, Spencer said that “a lot of the same themes have stayed consistent,” including continued weakness from small businesses. But he said one change this quarter is that conversations with customers had a more optimistic tone about the outlook.
As for AI, he said the company is seeing early adoption of its new data-cloud offering, and that some customers are beginning to test AI application features. AI isn’t really a contributor to management’s guidance for the current year, he said, noting that it will take some time for that to become a meaningful source of revenue growth.
Write to Eric J. Savitz at [email protected]
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