Salesforce Stock Plunges on Q1 Revenue Miss, Soft Outlook
Salesforce stock is down after reporting weak first-quarter revenue and a soft Q2 outlook. Here's what you need to know.
Salesforce (CRM) stock plunged more than 20% in early trading Thursday, easily making it the worst Dow Jones stock of the day. The slide comes after the software-as-a-service (SaaS) provider came up short of revenue expectations for its fiscal first quarter and issued a soft outlook for the second quarter.
In the three months ended April 30, Salesforce's revenue was up 11% year-over-year to $9.13 billion and its earnings per share (EPS) increased 44.4% to $2.44.
"Our profitable growth trajectory continues to drive strong cash flow generation," Salesforce CEO Marc Benioff said in a statement. "We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI. As the world's #1 AI [artificial intelligence] CRM, we're incredibly well positioned to help companies realize the promise of AI over the next decade."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results were mixed compared with analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $9.17 billion and earnings of $2.38 per share.
For the second quarter, Salesforce said it expects revenue in the range of $9.2 billion to $9.25 billion and EPS to land between $2.34 to $2.36. The guidance is lower than the $9.4 billion in revenue and $2.40 per share in earnings Wall Street is expecting.
This is due in part to "ongoing headwinds from professional services," said Amy Weaver, chief financial officer of Salesforce, in the company's earnings call, amid "deal compression and customers delaying or slowing projects."
For the full year, Salesforce maintained its revenue guidance of $37.7 billion to $38 billion and raised its EPS guidance to a range of $9.86 to $9.94 from $9.68 to $9.76. Analysts are expecting revenue of $38.1 billion and earnings of $9.76 per share.
Is Salesforce stock a buy, sell or hold?
The tech stock has struggled so far in 2024, and was up a modest 3% year to date through the May 29 close. Still, analysts are upbeat towards CRM stock. According to S&P Global Market Intelligence, the consensus analyst target price for the blue chip stock is $306.51, representing implied upside of over 41% to current levels. Meanwhile, the consensus recommendation is a Buy.
Needham is one of the more bullish firms on CRM stock with a Buy rating and $345 price target. However, in a note released this morning, analyst Scott Berg said "investors may hesitate" after the weak first-quarter results.
"Salesforce reported a surprising revenue miss in Q1 compared to the guided midpoint as macro dynamics hit bookings, and an EPS beat largely due to lower than expected other income and taxes," Berg wrote in a note to clients. "Guidance was unchanged at the top line, signaling management's confidence in their ability to execute after the miss."
Berg's $345 price target implies upside of nearly 60% to current levels.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Medicare Drug Plans Are Getting Better Next Year. Some Will Also Cost More.
Upcoming changes to the Part D drug benefit, including a $2,000 cap on out-of-pocket medication, will benefit millions of Americans. But higher premiums may also be on the way
By Susan Jaffe | KFF Health News Published
-
The Worst Credit Cards: Is One in Your Wallet?
If you have one of the worst credit cards, it's time to replace it with a winner. We can help.
By Kathryn Pomroy Published
-
How to Invest at Each Stage of Your Life
Wealth isn’t typically built overnight. It takes a series of moves over time. With that in mind, we’ve crafted a game plan for how best to save and invest at every stage of life.
By Nellie S. Huang Published
-
Five Financial Planning Secrets of Millionaires
You might be surprised: Most millionaires don't feel rich. Instead, they have smart goals, discipline and a little help along the way.
By Kevin Dwyer, CFP®, CLU® Published
-
Financial Hangover Got You Down? Rebalance Your Budget
After overindulging on vacations or other fun, here's how to review your budget and set new goals, without sacrificing the experiences that matter most.
By Frank J. Legan Published
-
Stock Market Today: Dow Climbs 288 Points After Amazon, Intel Earnings
Post-earnings strength from Amazon and Intel helped cushion the blow of a disappointing October jobs report.
By Karee Venema Published
-
Jobs Growth Stalls Amid Hurricanes and Strikes: What the Experts Are Saying
Jobs Report A dismal October payrolls print supports the case for a slow and steady pace of rate cuts.
By Dan Burrows Published
-
Is Intel Stock a Buy, Hold or Sell After Earnings?
Intel stock is moving higher Friday after the embattled chipmaker gave upbeat Q4 guidance, but Wall Street is staying on the sidelines for now. Here's what you need to know.
By Joey Solitro Published
-
Amazon Leads Dow Jones Stocks After Stellar Earnings Report
Amazon stock is higher Friday after the e-commerce and cloud giant reported strong Q3 earnings and Wall Street sees even more upside ahead. Here's why.
By Joey Solitro Published
-
Apple Stock Slips After Earnings. Wall Street Isn't Worried
Apple stock is trading lower Friday despite the iPhone maker beating expectations for its fiscal fourth quarter, but analysts are still bullish.
By Joey Solitro Published