Salesforce (CRM.N) shares dropped more than 16% after trading hours on Wednesday following the company’s projection of second-quarter profit and revenue below Wall Street expectations. The shortfall was attributed to reduced client spending on cloud and enterprise products amid concerns over high interest rates and inflation.
Salesforce forecasted revenue between $9.20 billion and $9.25 billion, lower than the $9.37 billion expected by analysts. The company’s growth appears to be slowing, with projected single-digit quarterly revenue growth—the slowest in its history. First-quarter adjusted earnings per share exceeded expectations at $2.44, but revenue fell short at $9.13 billion. Salesforce maintained its fiscal 2025 revenue forecast but reduced its operating margin expectations to 19.9%. COO Brian Millham noted prolonged deal cycles and budget scrutiny among clients, while analysts expressed concerns about potential mergers and acquisitions to drive growth, despite promising AI initiatives.