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· Posted on
June 3, 2024

Salesforce's first revenue miss in 20 years leaves the CRM market heartbroken and investors distressed

Salesforce has now warned that its first quarter would miss its revenue estimates for the first time since 2006.

What's the key learning?

  • Between 2014 and 2018, only 16.75% of S&P500 companies that issued quarterly guidance reported results within their guided range.
  • Salesforce is now in a race with every other company to monetise the AI opportunity in their business.
  • These results don’t give investors a heap of confidence that Salesforce are best positioned to deliver on the opportunity.

👉 Background: Salesforce is one of the OG software companies that launched back in 1999. It specialises in the very unsexy industry of “CRM software” - everything from customer service, marketing automation and analytics.

👉 What happened: Salesforce has now warned that its first quarter would miss its revenue estimates for the first time since 2006.

👉 What else: On top of that, Salesforce warned of a weaker earnings guidance for the upcoming quarter too. As a result, its shares dropped more than 20% in its worst day of trading since 2004.

What's the key learning?

💡When a company misses its guidance, it can means they're either failing to execute on their plans or bad at predicting industry trends. And this can really hurt investor confidence.

💡Salesforce has had a very good run of hitting and exceeding their guidances for upcoming quarters. But, interestingly, the forecasts S&P 500 companies present to the market are getting less and less accurate.

💡When a company like Salesforce misses its revenue guidance, especially for the first time in a significant period, it can create uncertainty and potentially erode investor trust.

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