San Francisco-based customer relationship management (CRM) leader Salesforce reported its first quarter fiscal 2024 results, reflecting an 11 per cent rise in revenue, which marked the company’s slowest pace of growth in 13 years.
Shares of Salesforce fell nearly 5 per cent in after-hours trading following the results announcement, despite having surged by over two-thirds since the beginning of the year. The stock had reached its highest point in about 16 months during regular trading on the same day.
Salesforce Chief Financial Officer Amy Weaver attributed the modest revenue growth to ongoing macroeconomic pressures in the United States. The demand from financial services and technology companies also experienced a slowdown during the quarter.
The company’s capital expenditure witnessed a significant jump of nearly 36 per cent, amounting to USD 243 million. This increase was primarily driven by Salesforce’s investment in AI-related tools aimed at enhancing its software products.
For the first quarter ended 30 April, Salesforce reported revenue of USD 8.25 billion, narrowly surpassing analysts’ expectations of USD 8.18 billion. While this growth was slower than anticipated, it demonstrated the company’s resilience in the face of challenging market conditions.
Salesforce operates in a highly competitive cloud-computing market and faces strong competition from established players such as Oracle. Additionally, the company has been a target of activist investors, including ValueAct, Inclusive Capital, and Starboard Value, who have been advocating for improved cost control initiatives and enhanced operational efficiencies.
Looking ahead, the San Francisco-based company said it expects revenue for the current quarter to be in the range of USD 8.51 billion to USD 8.53 billion, representing approximately 10 per cent growth compared to the previous year. This projection slightly exceeded analysts’ estimates of USD 8.49 billion.
On an adjusted basis, Salesforce reported earnings of USD 1.69 per share, surpassing expectations of USD 1.61 per share.
While the first quarter results reflected a slowdown in growth, Salesforce remains optimistic about its future prospects as it continues to navigate the evolving economic landscape and invest in AI-powered solutions to drive innovation and support its customers’ needs.