Salesforce cuts forecasts for lower IT and foreign exchange spending

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The Salesforce logo is pictured on a building in San Francisco, California, U.S. October 12, 2016. REUTERS/Lily Jamali/

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Aug 24 (Reuters) – Salesforce Inc (CRM.N) slashed its full-year revenue and profit forecast on Wednesday amid “measured” customer spending and the hit of a stronger dollar, sending its shares tumbling 7% in extended conversations.

Salesforce also announced a stock buyback of up to $10 billion, its first-ever takeover, while warning of challenges in North America and major European markets for some of its products.

The company’s moderate expectations mark a significant shift in its stance from May, when it shrugged off any significant impact of an uncertain macro environment on its earnings. Read more

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“We’re seeing customers become more measured in the way they buy. Sales cycles can stretch…we started to see that in July,” Chairman and Co-CEO Marc Benioff said during an interview. a conference call.

Analysts had warned that macroeconomic factors such as inflation and slowing U.S. growth could hurt spending for small and medium-sized businesses that use Salesforce products to manage customer relationships.

Cloud software companies with significant operations outside the United States, including Microsoft Corp (MSFT.O), Accenture Plc and IBM Corp (IBM.N), all tempered their forecasts due to a stronger dollar.

The San Francisco, Calif.-based company cut its revenue forecast to between $30.90 billion and $31.00 billion, below estimates of $31.73 billion according to IBES data from Refinitiv.

It also lowered the adjusted earnings forecast to $4.71-$4.73.

CFRA analyst John Freeman said he expected the company’s large size to help it weather the hit from lower customer spending, adding it was unlikely the share repurchase plan would have a significant impact on the shares, given the lack of clarity on the timing and the exact amount of the repurchase.

Salesforce’s second-quarter results beat Wall Street expectations, with adjusted earnings of $1.19 per share 17 cents above estimates and revenue of $7.72 billion slightly above estimates. $7.70 billion.

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Reporting by Leroy Leo and Akash Sriram in Bengaluru; Editing by Vinay Dwivedi

Our standards: The Thomson Reuters Trust Principles.

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