Salesforce stock dipped 6 percent in extended trading, despite announcing solid results for its third quarter of fiscal 2022 ended October 31, 2021. It also announced the appointment of Bret Taylor as the company’s co-CEO – a move that some expect to signal the start of a transition of leadership.
The company reported total third quarter revenue of $6.86bn, an increase of 27 percent year on year. Subscription and support revenues for the quarter were $6.38bn, an increase of 2 percent year on year.
Marc Benioff, chair and co-CEO at Salesforce, said: “We delivered another phenomenal quarter, fuelling strong revenue growth, margin and cash flow. Salesforce is more relevant and strategic than ever as every company accelerates their digital transformation journey. Just as we’ve helped our customers navigate the pandemic, we’re now guiding them toward greater growth, customer success, health and safety, and trust. With the tremendous strength of our Customer 360 platform and Slack, we’re on track to reach $50bn revenue in FY26.”
Amy Weaver, president and CFO at Salesforce, added: “Our disciplined approach continues to deliver record levels of operating margin this year. During the third quarter, we again executed against the strong demand environment in front of us. Slack saw another strong quarter, and we are pleased with Slack’s representation in our largest deals. In this new world, Slack and our Customer 360 have never been more relevant.”
However, despite exceeding Wall Street expectations on earnings and sales for Q3, Salesforce’s guidance for the fourth quarter missed Wall Street expectations; shares fell over 6 percent in extended trading after the company revealed earnings per share for Q4 would be between 72 and 73 cents, lower than many analysts predicted.
There was nothing in the statement about Taylor’s appointment to suggest that Benioff would be taking a less active role in steering Salesforce but it would not be surprising to see the founder and former sole-CEO transition to the role of chairman, or similar, in the near future. On Taylor’s appointment, Benioff said: “Bret is a phenomenal industry leader who has been instrumental in creating incredible success for our customers and driving innovation throughout our company. He has been my trusted friend for years and I couldn’t be happier to welcome him as Co-CEO. Together, Bret and I will lead Salesforce through our next chapter, while living our shared values of trust, customer success, innovation and equality for all.”
Taylor was instrumental in Salesforce’s acquisition of Slack for a whopping $27.7bn in 2020 and has superseded many long-serving Salesforce executives during his rapid rise to the top job. He joined Salesforce in 2016 following the acquisition of Quip, where he was CEO, and he also serves on the board at Twitter – having been appointed independent chairman of the board just a few days ago.
Commenting on his appointment to co-CEO, he said: “Partnering with Marc to lead the company he co-founded 22 years ago is an enormous privilege. I’m thankful for our Salesforce employees, our Trailblazers, our customers, and all of our stakeholders who help us make our company and our world a better place.”
