Salesforce expects annual revenue to fall below estimates due to

Salesforce expects annual revenue to fall below estimates due to weak cloud demand

By Zaheer Kachwala

(Portal) – Salesforce expanded its share buyback program by $10 billion and declared a new dividend, but its below-estimates annual revenue forecast pushed shares down around 2% in after-hours trading.

The company's pessimistic forecast points to a likely slowdown in cloud and technology spending as customers grapple with high interest rates and rising inflation, forcing them to keep costs under control.

The company expects full-year 2025 revenue between $37.7 billion and $38 billion, compared to analysts' estimate of $38.62 billion, according to LSEG data.

Warnings of a weakening economy prompted Salesforce to lay off about 700 employees, or about 1% of its global workforce, last month, adding to scores of layoffs across the technology and media industries.

“Salesforce is only forecasting 8-9% growth (for the full year), which puts the company out of the high growth category. To offset this, it is introducing a dividend that is in line with lower levels of growth,” said Gil Luria, analyst at DA Davidson.

Cloud data analyst Snowflake also predicted first-quarter revenue would come in below estimates, compounding worries for cloud companies as they face uncertainty this year.

However, Salesforce beat fourth-quarter revenue and profit estimates as the company benefited from higher cloud spending and joined other cloud giants such as and Microsoft.

The company reported revenue of $9.29 billion for the quarter ended Jan. 31, beating analysts' estimate of $9.22 billion.

On an adjusted basis, the company earned $2.29 per share, compared to estimates of $2.26 per share.

By early 2023, Salesforce had become the target of activist investors pushing for changes that included cost cuts, increased stock buybacks and a disbanded mergers and acquisitions committee.

Salesforce expects full-year adjusted earnings between $9.68 and $9.76 per share, compared with estimates of $9.57 per share.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Maju Samuel and Shailesh Kuber)