The Cloud

Salesforce Tops Estimates as Q1 Sales Rise 30%

"Our results, amidst this global crisis, demonstrated our ability to execute at speed, innovate at scale and the strength of our business model."
Matthew HellerMay 29, 2020
Salesforce Tops Estimates as Q1 Sales Rise 30%

Salesforce shares fell in after-hours trading Thursday after the customer-relationship management software maker reported better-than-expected quarterly results but issued light guidance.

Salesforce had to make major changes during the first quarter in response to the coronavirus crisis, closing 160 offices around the world and having all 52,000 of its employees work from home. It also gave “temporary financial flexibility” to customers most impacted by the pandemic.

The company still managed to post revenue of $4.87 billion, up 30% from a year ago, and adjusted earnings of 70 cents per share. Analysts had expected earnings of 69 cents per share on $4.85 billion in revenue.

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“Our results, amidst this global crisis, demonstrated our ability to execute at speed, innovate at scale and the strength of our business model,” CEO Marc Benioff said in a news release.

Salesforce shares dropped 3.5% to $174.70 in the extended session as the company forecast second-quarter revenue of $4.89 billion to $4.9 billion and adjusted earnings of $0.66 to $0.67 per share, below consensus estimates of $5.04 billion and $0.74 per share.

CFO Mark Hawkins told analysts the guidance reflects in part “the adjustment to incremental new business expectations that we made due to the COVID pandemic.”

“With Salesforce (like other cloud/SaaS software firms) getting much of its revenue in a given quarter from contracts that were inked in prior quarters, COVID-19 didn’t have a massive impact on the April quarter’s top-line growth,” TheStreet noted.

Looking ahead, Benioff said Salesforce stands to benefit as companies respond to the pandemic by  accelerating their digital transformation.

“I’ve been on more sales calls with more CEOs in the last two months than at any time my career,” he said on the earnings call. “And there’s universal agreement among them … Organizations and governments around the world have a digital transformation imperative like never before.”

Benioff highlighted the rapid development of Salesforce’s work.com platform for helping companies to reopen. “No one is better positioned than Salesforce to accelerate out of this crisis and bring customers into the new normal,” he said.

Erik McGregor/LightRocket via Getty Imag-es