Salesforce fourth quarter guidance misses Wall Street expectations

Salesforce reported fiscal third-quarter earnings on Tuesday for the period ending Oct. 31, beating Wall Street expectations on earnings and sales. But shares fell over 6% in extended trading after earnings guidance for the fourth quarter fell short of expectations.

Salesforce also named current President and COO Bret Taylor to be co-CEO alongside current CEO Marc Benioff. Benioff said in a statement that Taylor would help lead the company through “the next chapter.”

Salesforce stock fell over 6% in extended trading.

Here’s how the company did versus Refinitiv consensus expectations:

• Earnings: $1.27 per share, adjusted, vs. 92 cents per share expected, up 27% year-over-year.
• Revenue: $6.86 billion, versus $6.80 billion expected

Sales were up 27% from $5.42 billion in the same period a year earlier. The company expects between $7.22 billion and $7.23 billion in revenue in its fiscal fourth quarter, raising its previous guidance, and coming in on par with analyst expectations of $7.22 billion.

But Salesforce said that it forecast earnings per share for the December quarter would be between 72 and 73 cents, lower than Refinitiv analyst expectations of 81 cents.

Sales Cloud, the company’s core product that salespeople use to track leads and opportunities, reported $1.54 billion in sales, up 17% from last year. Salesforce’s Service Cloud business was up over 20% from last year to $1.66 billion in sales.

The Platform and Other unit reported $1.27 billion in sales during the quarter, although the company said it had re-classified sales from its Tableau and Mulesoft acquisitions into its Data unit, which reported $900 million in sales.

In July, Salesforce closed its acquisition of enterprise chat app Slack for over $27 billion. It said that the app contributed $276 million in sales to the company’s Platform unit, which previously reported Tableau and Mulesoft sales.