The stock of Salesforce (CRM) is down 16% after the cloud computing giant missed its quarterly revenue target for the first time since 2006.
The San Francisco-based cloud software vendor reported earnings per share (EPS) of $2.44 U.S. compared to $2.38 U.S. that was expected among analysts.
Revenue in the quarter totaled $9.13 billion U.S. versus $9.17 billion U.S. that had been forecast on Wall Street. Despite the miss, sales increased 11% from a year earlier.
Salesforce blamed the results on longer deal cycles during the quarter and the implementation of a new go-to-market strategy that cut into bookings.
All five of Salesforce’s product categories contributed to the Q1 financial results. However, revenue from the Professional Services unit fell 9% to $548 million U.S.
During Q1, Salesforce started selling its Einstein Copilot digital customer service representative, and customers were given access to artificial intelligence (A.I.) features such as conversation summaries.
Looking ahead, the company provided forward guidance that missed analysts’ forecasts.
Salesforce said it expects earnings in the current quarter of $2.34 U.S. to $2.36 U.S. on $9.20 billion U.S. to $9.25 billion U.S. in revenue.
Analysts had expected $2.40 U.S. in earnings and $9.37 billion U.S. in revenue.
Management said on an earnings call that they expect deal compression and slowing projects in the professional services business to weigh on the company’s financial performance for the remainder of this year.
Prior to today (May 30), Salesforce’s stock had risen 24% over the last 12 months and was trading at $271.62 U.S. per share.
