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Salesforce beats on earnings, trims full-year guidance

Yahoo Finance anchors discuss Salesforce earnings, its $10 billion stock buyback program, and some potential catalysts for the company.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: Let's talk about Salesforce, too, and those shares here this morning. Those shares are trading lower by about 7.6%. Earnings beat estimates at Salesforce, but the company trimmed its full-year forecast for earnings and revenue. And addition to its earnings, by the way, Salesforce announced its board approved a buyback authorization of $10 billion. But that's not really helping the shares here this morning.

So basically, the company is saying that it saw a shift in tone among its customers as the quarter went on. There's some talk within the industry, not just with consumer relationship management software, but just software more broadly, longer purchase cycles. In other words, people are waiting longer before renewing their contracts, for example, for some of this stuff that's subscription. So that seems to be putting pressure on the company.

BRIAN SOZZI: Yeah, I think you saw some of that language or tone over at Zoom when we talked to them earlier in the week, some weakness in enterprise. So Salesforce coming out here kind of just playing, I think, off of that Zoom, noting some weakness on the conference call about deals slipping out or just being delayed. But again, like we were just talking about with Nvidia, a couple of potential catalysts here that the Street is pointing to on Salesforce.

First, you have Marc Benioff at the Goldman Sachs tech conference middle of next month and then Dreamforce back in person and later in September. We're going to be there for the whole week, expect a lot more, I think, bullishness from the Salesforce team. I wouldn't be surprised if they come out, put out some even longer-term revenue and operating margin targets.

BRAD SMITH: Yeah, I believe the exact words that we had actually heard from the Zoom CFO Kelly Steckelberg was the "renormalization" of some of the sales cycles that we're seeing. And that, essentially, also weaving itself into the chatter right now and the conversation over at Salesforce, saying that sales cycles can get stretched at a time like this when you have more people that have to review any type of major purchase decision, whether it be for an individual higher or whether that be for a major application that a company is running. And that's just what they had to address saying, nearly everyone that they've talked to in their customer base and some of their partners is taking a more measured approach to their business right now, and they expect that trend to continue in the near term.

JULIE HYMAN: One other thing to mention that we've also seen as a trend is the effect of the stronger dollar, right. And the company says that's going to cost them $800 million of sales this year because of the stronger dollar. So there's not much they can do about that, I guess, unless they do a lot of dollar hedging. But that's a consistent trend that we've been seeing also.

BRIAN SOZZI: On a happy note, the Red Hot Chili Peppers is going to be at Dreamforce. I just saw them.

BRAD SMITH: Really?

BRIAN SOZZI: I'm very excited to see them again.

BRAD SMITH: Hey.

BRIAN SOZZI: Yes, I'm pumped. Love Chili Peppers.

BRAD SMITH: My cousin, Chad Smith.

BRIAN SOZZI: Yeah, love them. Really? No, don't do that. Come on, man.