Wall Street investors can be capricious beasts. Salesforce (Sales Force) is an example. The company, a major CRM (customer relationship management) company, announced on February 25 that it had quarterly sales of $ 5.82 billion (about 620.4 billion yen). It is up 20% year-on-year. The company also revealed that its just-closed fiscal year 2021 had total sales of $ 21.25 billion, up 24% year-on-year. In addition, the guidance for the 2022 fiscal year was set at $ 25 billion. I can’t complain.
If you want more quarterly sales, Salesforce will outperform it. If you want higher growth rates and solid sales forecasts, do so too. In fact, the quarterly results are impeccable. The company is doing well and is growing at a remarkable rate for an organization of this size and age. And it is expected that good results and growth will continue in the future.
How did Wall Street react to this glittering financial result? Stock prices have fallen by more than 6%. It’s a pretty disastrous day, given that the company has announced financial results that promise the future.
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What is happening? Investors may simply have thought the company’s growth was unsustainable, or they overpaid when it bought Slack for $ 27 billion at the end of 2020. .. It may also be that people just overreacted to this week’s cold market. But if investors are looking for a fast-growing company, Salesforce is responding.
Related article: Salesforce acquired Slack for about 2.9 trillion yen, the corporate valuation before the acquisition was over 2.6 trillion yen
Slack was expensive, but it reported sales of more than $ 250 million on February 25. The run rate is 1 billion dollars (about 106.5 billion yen), and it has more than 100 paying customers with an annual balance of payments of over 1 million dollars (about 100 million yen). Those numbers will eventually add to Salesforce revenue.
David Hynes Jr., an analyst at Canaccord Genuity, wrote that investors were confused by the reaction to the earnings. Like me, he found many positive elements. Still, Wall Street turned his attention to the negatives, as he wrote in a note to investors, “the glass isn’t half full, it’s half empty.”
“Stock prices are clearly a mode of disbelief until you see the evidence. That is, the fundamentals were really solid and Slack was looking for opportunities but not intended to cover the (certainly high) sharp deterioration in growth. That means it’s going to take a few quarters for investors to accept the idea, “Hines wrote.
During a press conference with analysts on February 25, Credit Suisse’s Brad Zelnick asked how Salesforce could accelerate its escape from the pandemic economic stagnation. The company’s chief executive officer and chief executive officer, Gavin Patterson, said Salesforce is ready whenever the world breaks out of the pandemic.
“In my opinion, we are building that capability in terms of sales force. We are investing heavily in direct sales force to take advantage of that demand. I’m confident, so you’ll get a message from us today that your business is strong, your pipeline is strong, and you’re confident for the next year, “Patterson said. talked.
Salesforce executives were clearly confident for good reason, but investors remained concerned, which manifested itself in a fall in stock prices and weakness throughout the day. As Hines pointed out, it’s up to Salesforce to continue to prove that investors were wrong. Despite what Wall Street denialists were thinking about today, it should be okay for the duration of the quarter of results announced this week.