Salesforce shares slump the most in 20 years after weak forecast
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The news: Salesforce shares slumped the most in nearly 20 years after the cloud-based software firm forecast its lowest-ever quarterly revenue growth.
The numbers: First quarter revenue came in at USD9.1 billion ($13.7 billion), falling short of analyst estimates. It expects revenue to rise up to 8% in the second quarter to USD9.25 billion — its first quarter of single-digit sales growth in almost two decades.
The stock fell nearly 20% to USD218.01 in New York trading, the biggest single-day decline since July 2004.
The context: Salesforce's forecast raised fears that high interest rates and rival AI offerings were hampering demand. The company pointed to clients scaling back spending as the possibility of higher-for-longer interest rates and elevated inflation prompt them to keep costs under control.
Salesforce has been heavily investing in AI for months and integrating the technology into the workflows of its large suite of products to drive revenue and margins.
Salesforce's AI-focused data cloud business contributed to 25% of the deals valued above $1 million in the first quarter, unchanged from the prior quarter. It did not disclose more financial details about the business, which was nearing $400 million in annual recurring revenue in its last fiscal year.
The sources: Salesforce, Reuters
