Salesforce.com cuts revenue and profit forecasts

Salesforce.com has cut its annual revenue and profit forecasts on Thursday, as the cloud-based business software maker allowed clients to defer payments and provided its sales team one-time commissions amid the COVID-19 pandemic.
Salesforce.com CEO Marc BenioffMost of the expenses were recorded in the first quarter, including $140 million in sales commissions, Salesforce.com CEO Marc Benioff said on an earnings call.

Marc Benioff said organizations around the world are accelerating their plans for work-from-anywhere environment, helping Salesforce sign more deals.

“I’ve been on more sales calls with more CEOs in the last two months than at any time in my career,” Marc Benioff said.

The company has beefed up its cloud business through acquisitions – spending more than $16 billion last year – to fend off growing competition from rivals such as Oracle and German competitor SAP, Reuters reported.

Salesforce now expects revenue of $20 billion for its fiscal year ending in 2021, down from its prior forecast of a range of $21 billion to $21.1 billion.

It projected annual adjusted profit of between $2.93 and $2.95 per share, lower than its earlier estimate of between $3.16 and $3.18.

The forecast assumes that IT spending growth normalizes next year, consistent with learnings from the Great Financial crisis, Salesforce.com CFO Mark Hawkins said.

Net revenue rose 30 percent to $4.87 billion in the first quarter ended April 30, slightly above the average analyst estimate of $4.85 billion.

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