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Summary
- Salesforce stock price down by 3.9 per cent on account of low 2022 profit projections.
- Salesforce - Slack deal seen through the lens of skepticism.
- Its Q4 revenue rose 20 per cent year-over-year to US$5.82 billion.
Stock of world’s largest CRM (Customer Relationship Management) software company and one of the largest cloud-based application provider Salesforce.com Inc (NYSE: CRM, CRM:US) took a plunge on Thursday by 3.9 per cent.
The fall came on two accounts:
- Below expectation 2022 revenue and profit
- Skepticism revolving around its biggest 2020 acquisition of workspace messaging company Slack Technologies at a whopping U.S. $27.7 billion.
The disappointment of the investors came at a time when the full year adjusted earnings per share was revealed somewhere between US$3.39 and US$3.41. This fell short of the estimated value of US$3.49 per share.
The impact of COVID-19 is far from over with new strains of virus popping up every now and then, posing a hurdle to capital spending by businesses.
Salesforce lately has been facing a tough competition after Microsoft Corp ramps up its very own CRM and associated cloud offerings.
@Kalkine Image 2021
Salesforce is known in the industry for making strategic business acquisitions that adds value to its existing portfolio offerings.
The addition of Slack enterprise messaging application with Salesforce Customer 360 is seen as transformative for its clientele.
However, the Justice Department has put the acquisition deal under an antitrust review.
Investors have since been wary about the deal between Slack and Salesforce, which is supposedly one of the reasons why its stock price has been sliding since July 2020 by almost 10 per cent.
According to official statements, the full acquisition process of Slack would be completed by July 31.
Salesforce scrips are up about four per cent year-to-date, outperforming the S&P 500 index that has gained two per cent in the same time frame.
Salesforce Financials
According to Salesforce’s official release, it recorded US$5.82 billion in revenue for the quarter ended January 31, 2021, a 20 per cent year-on-year (YoY) increase.
The software developer also reported US$21.25 billion revenue for the fiscal year 2020-21, up by 24 per cent YoY.
It suffered a dip of 11 per cent YoY in its revenue from subscription of key sales cloud software in Q4. It generated US$2.17 billion cash from operations, an increase of 33 per cent YoY.
Net income stood at US$ 267 million in Q4, up from a net loss of US$ 248 million a year ago.
For entire FY21, net income was US$ 4 billion, a massive surge from US$ 126 million in FY 20.
However, the company projected GAAP (loss) in the range of US$0.44 to US$0.42 in FY22, down from
