Salesforce’s Shares Tumble 6% On Weaker-Than-Expected Forecast

August 31, 2016, 8:43 PM UTC
Key Speakers At 2015 The Dreamforce Conference
Photograph by David Paul Morris—Bloomberg via Getty Images

(Reuters) – Cloud software maker forecast third-quarter revenue below estimates after it reported a 25% jump in quarterly revenue as customers stepped up purchases of its web-based sales and marketing software.

The company’s shares fell 5.88% to $74.75 in extended trading.

For the third quarter, Salesforce said it expected an adjusted profit of $0.20 to $0.21 per share and revenue of $2.11 billion to $2.12 billion.

Analysts on average were expecting an adjusted profit of $0.24 per share on revenue of $2.13 billion, according to Thomson Reuters I/B/E/S.

Revenue from its biggest unit, the sales cloud business which involves software that allows companies to forecast sales opportunities, rose 12.5 percent to $754.9 million, for the second quarter.

Salesforce reported net income of $229.6 million, or 33 cents per share, in the second quarter ended July 31, compared with a loss of $852,000, or nil cents per share, a year earlier. Total revenue rose 25 percent to $2.04 billion.

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Excluding items, the company earned 24 cents per share. Analysts had expected earnings of 22 cents per share on revenue of $2.02 billion.

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