Salesforce.com Inc. on Tuesday forecast its current quarter profit below Wall Street estimates as it faces stiff competition from rivals including Microsoft Corp, sending its shares down 6% in extended trading.
The San Francisco, California-based company also picked insider Brett Taylor to co-lead the company with top boss Marc Benioff.
Taylor was on Monday appointed chairman of the board of Twitter Inc. The company said he would also be a vice chairman of Salesforce’s board, effective immediately.
Salesforce, a bellwether in the customer relationship management (CRM) sector, has seen a surge in demand as businesses transition to cloud-based platforms accelerating the pandemic.
However, the company faces stiff competition from competitors including Microsoft Corp’s Azure, Amazon.com Inc’s Amazon Web Services and Alphabet Inc’s Google Cloud.
Salesforce said fourth-quarter adjusted earnings are expected to be between 72 cents and 73 cents per share, down from estimates of 81 cents per share, according to IBES data from Refinitiv.
The company expects first-quarter revenue to be between $7.22 billion and $7.25 billion, compared to estimates of $7.36 billion.
Last month, Microsoft posted strong growth in its flagship cloud-computing business, the Azure segment. While Google Cloud’s third-quarter revenue rose 45% to $4.99 billion.
On the post-earnings call, Taylor touted the performance of Slack, a workplace messaging app Salesforce bought in a $27.7 billion deal, but indicated that the company wasn’t looking forward to any M&A in the near-term.
However, Salesforce reported better-than-expected revenue for the third quarter, fueled by strong demand for its cloud-based software.
Revenue rose 27% to $6.86 billion for the quarter ended October 31, beating analysts’ estimates of $6.8 billion, according to IBES data from Refinitiv.
Excluding one-time costs, the company reported earnings of $1.27 per share, which also exceeded estimates of 92 cents per share.
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