2022 – Salesforce raises profit guidance for 2023 despite tough business conditions By Reuters

© Reuters. FILE PHOTO: People walk past the Salesforce Tower and Salesforce.com offices in New York City, US, March 7, 2019. REUTERS/Brendan McDermid

(Reuters) – Salesforce Inc raised its full-year adjusted earnings guidance after beating quarterly revenue estimates on strong demand for corporate software as companies increasingly adopt mixed business models.

Shares of the San Francisco-based company are up about 7% in extended trading after falling about 37% this year, as investors battled a string of bad news, including rising inflation in the United States and the Ukraine crisis, and dumped growth stocks.

Despite inflation rising to its highest levels in four decades and consumer demand declining in a number of sectors, many companies are spending generously on programs to improve efficiencies and integrate modern workflows, including hybrid work.

Arjun Bhatia, an analyst at William Blair & Company, said the upgrade to the company’s earnings guidance is a big plus because it’s a key area for investors to focus on, particularly in the current market environment.

The company raised its adjusted earnings estimate for the year to $4.75 per share from its previous guidance of $4.63 per share.

In the past two quarters, the company has seen revenue jump more than 25%, but operating margins have fallen sharply as costs have risen.

The company slightly lowered its revenue estimate for the fiscal year ending in January 2023 to $31.7 billion to $31.8 billion from its previous guidance of $32 billion to $32.1 billion.

Excluding special items, the company earned 98 cents per share for the quarter ended April 30, compared to analysts’ average estimate of 94 cents.

Net income fell to $28 million from $469 million last year.

According to IBES data from Refinitiv, revenue rose 24% to $7.41 billion, topping analysts’ average estimate of $7.38 billion.