Cloud-based software company Salesforce reported second-quarter earnings results for the fiscal year of 2023 that surpassed the expectations of analysts. The company’s stock, however, slid 7 percent in Wednesday’s extended trading on weak guidance for the ongoing quarter and the fiscal full year. The company also announced a $10 million buyback program, its first ever. Its CEO Marc Benioff emphasized that this wouldn’t stop the company from embarking on more acquisitions.
For the second quarter, the company reported earnings of $1.19 per share, surpassing analysts’ expectations of $1.02 per share, according to Refinitiv. Revenue for the quarter stood at $7.72 billion beating the $7.69 billion that analysts had expected, according to Refinitiv.
Revenue was up 22 percent in the quarter ended July 31st from the same period last year, the company said in a statement. Quarterly net income was down from the $535 million reported in the same period last year at $68 million.
Salesforce expects adjusted earnings of between $1.20 and $1.21 per share, and revenue of between $7.82 billion and $7.83 billion for the ongoing fiscal third quarter. Analysts expect adjusted earnings per share of $1.29 and revenue of $8.07 billion, according to Refinitiv. Salesforce said that the revenue guidance would have been higher by $250 million had it not been for the challenges posed by exchange rates.
The company also reviewed its fiscal 2023 guidance and now expects earnings per share to come in between $4.71 and $4.73 and revenue of between $30.9 billion and $31 billion. The company cited $800 million in negative foreign exchange impact. Its former forecast had been earnings of between $4.74 and $4.76 per share and revenue of between $31.7 billion and $31.8 billion. Analysts’ expectations for adjusted earnings per share and revenue are $4.75 and $31.73 billion respectively.
Commenting on the weak guidance, the company’s co-founder and CEO Marc Benioff mentioned that Salesforce had survived weaker economic cycles in the past. “Sales cycles can get stretched, deals are inspected by higher levels of management, and all of this we began to start to see in July. Nearly everyone I’ve talked to is taking a more measured approach to their business. We expect these trends to continue in the near term, and we’ve reflected this in our guidance” he said.