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Author: Alan LittleDate: 2021-12-02

Salesforce (CRM) -7% on “mixed” Q3 report, subdued Q4 outlook

Cloud software company Salesforce (CRM) retreated 7% on Wednesday after investors were left wanting “a bit more” from a solid but unspectacular Q3 report.

Salesforce (CRM) shares ticked 7% lower on Wednesday as analysts reflected on the cloud-based software company’s “mixed” Q3 report and Q4 guidance that fell short of expectations.

For the three months to 31st October, Salesforce delivered $1.27 earnings per share and $6.86bn revenue, which was enough to top the $0.92 and $6.80bn Wall Street consensus.

Sales jumped 27% from a year ago, but Mizuho analyst Gregg Moskowitz said in midweek that investors were expecting “a bit more”, especially as the outlook for the current quarter was weaker than anticipated.

Salesforce has its Q4 profits pegged at $0.72-$0.73 per share against the $0.81 figure that analysts were hoping for, though the $7.22bn revenue is right in line with expectations.

CEO Marc Benioff is pleased with the performance after claiming that “no other” large software company is posting numbers in the same ballpark.

He added: “We know that because we’re talking to other cloud CEOs every day.”

It’s hard to argue with that sentiment after Sales Cloud sales surged 17% to $1.54bn in Q4, while Service Cloud jumped 20% to $1.66bn during the same period.

Salesforce is also reaping the benefits of its $27bn deal to buy Slack, which closed over the summer and added $276m to sales, which “outperformed” internal expectations.

Analysts were not enthused though – UBS analyst Karl Keirstead said that the latest report “lacked the pizzaz” of its very strong Q2 as he lowered his price target from $330 to $315.

Jefferies was satisfied as analyst Brent Thill said that there were “solid results” in Q3 as he reiterated a buy rating and $360 price target.

Salesforce shares dipped into the red in New York on Wednesday and were changing hands for $255.92, a 7% decline by midday.


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