Salesforce Sales Jump 24%, Easing Concerns About Business Demand

The San Francisco-based company reported revenue of $7.41 billion, up from $5.96 billion in the year-ago quarter and above the estimates by the company and analysts. While inflation and economic concerns have made some consumers and companies more cautious about spending, Salesforce said demand for its software has remained strong as businesses looked for ways to boost efficiency and sales.

“Our customers are still investing in digital technology,” Salesforce co-Chief Executive

Bret Taylor

said in an interview.

The cloud-based business services provider and its competitors saw sales jump during the Covid-19 pandemic after millions of workers around the world set up home offices and their employers rushed to expand and improve their use of digital tools. At Salesforce, revenue soared more than 50% from fiscal year 2020 to fiscal year 2022.

Salesforce’s share price rose quickly along with its sales, leaping more than 50% in calendar years 2020 and 2021. It has since given up a lot of that ground, falling 37% from the end of last year through Tuesday’s close, as inflation and the Russian invasion of Ukraine have raised concerns about future growth in tech and other sectors.

The company’s sales outlook for the current quarter fell below Wall Street estimates. Salesforce sees second-quarter revenue of $7.69 billion to $7.70 billion; the average analyst estimate on FactSet was for $7.77 billion.

Salesforce raised its profit guidance and lowered its sales outlook for the year. It said it expects per-share adjusted earnings of between $4.74 and $4.76, up from the range of $4.62 to $4.64 it cited in March. Salesforce tempered its sales outlook for the year because of an uncertain macroeconomic environment, including volatile currency rates, dropping it to between $31.7 billion and $31.8 billion from a range of $32 billion to $32.1 billion.

“I believe that our guidance is appropriately conservative under the circumstances,” said Salesforce Chief Financial Officer

Amy Weaver.

The company completed the $27.7 billion purchase of messaging company Slack Technologies Inc. last July, broadening the range of products it offers clients. The company reiterated its guidance for Slack to add about $1.5 billion to sales in fiscal 2023.

Amid the growth, a pullback in some spending has come to Salesforce. Managers of the company received internal memos this month outlining shifts in hiring plans, said a person familiar with the memos. The company will give priority to hiring for sales functions over other positions and focusing spending on essential travel for meetings with customers, the person said.

“We’re really going across the business to become more disciplined and more focused,” Mr. Taylor said.

Salesforce’s main business software rival,

Microsoft Corp.

, has also slowed its hiring plans. Last week, Microsoft said it would be reducing the pace at which it is hiring people for the software group developing Windows, Office and Teams products. The move was in response to growing economic uncertainties as the company approaches the end of the financial year that ends in June, a company spokesman said.

Salesforce reported earnings of $28 million, or 3 cents a share, in the three months through April 30, compared with $469 million, or 50 cents a share, a year earlier. After adjusting for items like amortization and stock-based compensation, the company reported adjusted per-share earnings of 98 cents, down from $1.21 in the year-ago quarter.

Write to Aaron Tilley at [email protected] and Jeffrey T. Lewis at [email protected]