Salesforce shrugs off economic uncertainty with upbeat Q1 results
CEO admits integration of mega-mergers remains an ongoing project
Global CRM giant Salesforce has reported first quarter revenue of $7.41 billion, up 24 percent on the same period last year.
In doing so, the SaaS vendor eschewed some of the market gloom emanating from fellow travelers such as Workday and SAP.
While gross profits increased to $5.37 billion from $4.41 billion, up 22 percent, net income fell to $28 million from $469 million.
On an analyst call, executives noted the foreign exchange "headwinds" and the company lowered its revenue guidance for fiscal 2023 by $300 million to $31.7 billion, representing 20 percent growth year over year.
CEO Marc Benioff was discordantly upbeat about the global economy, reflecting the idea that Salesforce customers somehow live in a world wholly unconcerned with inflation and geopolitical instability.
"All of the customers that I met with were growing. It was just an exciting moment. Everyone is very motivated. These are customers without a lot of debt on their balance sheet: they have flexibility, they're nimble. They know what their product strategies are. They're ready to go," he told analysts.
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However, Benioff also noted the company was also still working to integrate its long list of acquisitions, including Tableau, MuleSoft, and Slack – which Gartner noted this week made the product portfolio "difficult and expensive to govern."
"You can see that with many of these amazing companies that we acquired the reality is there's no finish line. There is lot of work. They're hard to integrate. When you think you're done, you're not done. They can surprise you and you have to take your time with them," Benioff told analysts.
The company was also still working through changes in the way it brings Mulesoft, its API integration platform, to the market. The acquired company revenue was only growing at 9 percent year-over-year, much less than Salesforce as a whole.
Amy Weaver, chief financial officer, said the performance was "driven by lower-than-expected new business as we work through the go-to-market organizational changes."
On the Q4 2022 call, Weaver had noted that MuleSoft continued to "realize the benefits of the go-to-market organizational changes" Salesforce implemented last year. "We're happy with the progress. However, we do not anticipate seeing the full benefit of these changes until the back half of fiscal '23," she told analysts. ®