Salesforce.com Inc forecast current-quarter profit below Wall Street estimates on Tuesday as it faces stiff competition from rivals including Microsoft Corp, sending its shares down 6% in extended trading.
The San Francisco, California-based company also picked insider Bret Taylor to co-lead the company alongside top boss Marc Benioff.
Taylor was named the chairman of Twitter Inc’s board on Monday.He will also be the vice chair of Salesforce’s board, effective immediately, the company said.
Salesforce, a bellwether in the Customer Relationship Management (CRM) sector, has seen a boost in demand due to the pandemic accelerating businesses’ transition to cloud-based platforms.
However, the company continues to face stiff competition from competitors including Microsoft Corp’s Azure, Amazon.com Inc’s Amazon Web Services and Alphabet Inc’s Google Cloud.
Salesforce said it expected adjusted earnings in the fourth quarter to be between 72 cents and 73 cents per share, below estimates of 81 cents per share, according to IBES data from Refinitiv.
The company also forecast first-quarter revenues to be between $7.22 billion and $7.25 billion, compared with estimates of $7.36 billion.
Last month, Microsoft reported strong growth in its Azure segment, its flagship cloud-computing business.While Google Cloud’s third-quarter revenue rose 45% to $4.99 billion.
On a post-earnings call, Taylor touted the performance of Slack, a workplace messaging app Salesforce bought in a $27.7 billion deal, but signaled the company was not keen on any M&A in the near term.
However, Salesforce reported better-than-expected revenue for the third quarter, boosted by strong demand for its cloud-based software.
Revenue rose 27% to $6.86 billion in the quarter ended Oct.31, beating analysts’ estimate of $6.8 billion, according to IBES data from Refinitiv.
Stripping one-time costs, the company reported earnings of $1.27 per share, also above estimates of 92 cents per share.
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