Salesforce Stock Slides as Weak Guidance Offsets Q2 Earnings Beat
Shares fall over 4% in after-hours trading after the cloud giant's cautious Q3 revenue forecast signals slowing demand.
Salesforce, Inc. (CRM) shares slid more than 4% in after-hours trading Wednesday, as a cautious third-quarter revenue forecast overshadowed strong quarterly results and raised full-year guidance. The negative investor reaction highlights growing concerns over slowing demand for cloud software amid persistent macroeconomic uncertainty.
The cloud software giant announced a Q3 revenue projection between $10.24 billion and $10.29 billion, with the midpoint falling just shy of Wall Street's consensus estimate of $10.29 billion. This outlook soured the market's mood, despite the company . For the quarter ending July 31, Salesforce reported revenue of $10.24 billion and adjusted earnings of $2.91 per share, beating analyst expectations.
The weak forecast reflects a broader trend of reduced client spending and longer deal cycles. Enterprises are scrutinizing large IT investments, a headwind noted by company executives. Salesforce's performance is often seen as a bellwether for the software industry, and its challenges mirror those of peers who have also issued cautious outlooks. The stock has struggled this year, , trailing many of its large-cap tech peers.
In response to shareholder concerns, Salesforce is focusing on profitability and strategic investments. The company increased its share buyback program by $20 billion and is investing heavily in artificial intelligence, particularly its Agentforce platform. While CEO Marc Benioff has touted AI as a key to future growth, analysts note that these investments have yet to significantly boost top-line results. The market is now watching closely to see if Salesforce's can re-accelerate growth and restore investor confidence in the coming quarters.