Salesforce forecasts below-estimate revenue amid weak cloud demand

Salesforce expanded its stock buyback program by $10 billion and announced a new dividend, but its lower-than-expected annual revenue forecast pushed shares down 4% in after hours trading.

The company’s downbeat forecast signals a likely slowdown in cloud and tech spending as clients grapple with high interest rates and rising inflation, compelling them to keep a lid on costs.

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

Warnings of a slow economy prompted Salesforce to cut about 700 employees, or roughly 1% of its global workforce, last month, adding to the slew of layoffs across the tech and media industry.

However, Salesforce beat revenue estimates for fourth-quarter revenue as it benefited from higher cloud spending, joining other cloud giants like Amazon.com and Microsoft.

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

In early 2023, Salesforce had become a target for activist investors to push for changes resulting in cost cuts, increased share buybacks and a dismantled mergers and acquisition committee.

Salesforce expects adjusted profit between $9.68 to $9.76 per share for the full-year, compared with estimates of $9.57 per share. Reuters