Salesforce.com Inc. produced a big earnings beat in its first full quarter with Slack Technologies Inc. on board, but projections for the end of the year slammed the stock in after-hours trading Tuesday.
Salesforce
CRM,
reported a fiscal third-quarter profit of $468 million, or 47 cents a share, on sales of $6.86 billion, up from $5.42 billion a year ago. After accounting for stock-based compensation and other effects, the cloud-software company reported earnings of $1.27 a share, a decline from adjusted earnings of $1.72 a share in the year-ago quarter but well ahead of estimates.
Analysts on average expected adjusted earnings of 92 cents a share on sales of $6.8 billion, according to FactSet.
For the fiscal fourth quarter, Salesforce projected adjusted earnings of 72 cents to 73 cents a share on sales of $7.22 billion to $7.23 billion. Analysts on average were expecting earnings of 82 cents a share on sales of $7.24 billion, according to FactSet.
Salesforce raised its full-year expectations, just as it did in its first-quarter and second-quarter reports; management now expects full-year revenue of $26.39 billion to $26.4 billion and adjusted earnings of $4.68 to $4.69 a share, after projecting earnings of $4.36 to $4.38 a share on sales of $26.25 billion to $26.35 billion three months prior.
Salesforce shares fell more than 6% in after-hours trading immediately following release of the results, after closing with a 3.9% decline at $285.25.
Salesforce closed on its big-money acquisition of workplace-communications software Slack in late July, just before the third quarter began in August. The customer-relationship-management software company then made Slack the focus at its annual Dreamforce conference in September, showing off how it plans to integrate Slack with other large acquisitions, such as MuleSoft and Tableau, as well as its different verticals focused on specific industries.
For more: Salesforce’s deal for Slack creates a bigger threat to Microsoft
“Salesforce foresees a significant land-and-expand runway ahead for Slack, while the young platform now has the added benefit of an ‘army’ at its disposal to sell the product,” Monness, Crespi, Hardt & Co. analyst Brian J. White wrote in an earnings preview, while maintaining a buy rating and $328 price target.
Salesforce did not break out Slack’s quarterly performance in Tuesday’s release, but Chief Financial Officer Amy Weaver said, “Slack saw another strong quarter, and we are pleased with Slack’s representation in our largest deals.”
Salesforce shares received a boost around Dreamforce time, but have fallen back in recent weeks after hitting record highs in early November. The stock suffered a six-session losing streak — its longest in nearly two years — that pulled prices down 7.7% before breaking that run Monday.
See also: For Salesforce investors, Slack must start supercharging growth — and the stock price
Overall, Salesforce shares have gained 28.4% so far this year, while the S&P 500 index
SPX,
has increased 23.9%.
This post was originally published on Market Watch
