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Salesforce posts record sales but full-year profit forecast disappoints

(Reuters) — Salesforce.com on Thursday forecast full-year profit that was below market expectations, sending the shares of the online software company down 3.9% in extended trading.

The company’s latest and biggest acquisition of workspace messaging company Slack for a $27.7 billion deal in December is seen as expensive by any Wall Street analysts, even though there are long-term benefits.

“Weak FY22 EPS guidance suggests margin expansion is likely to be muted even adjusting for the acquisition of Slack,” Scott Berg, Needham & Co analyst, said.

The largest provider of customer relationship management software forecast full-year adjusted earnings per share between $3.39 and $3.41, below estimates of $3.49 per share.

While new emerging virus strains pose a new hurdle to business spending, Salesforce is also facing stiff competition from Microsoft, which is ramping up its cloud-based offerings.

Revenue in the quarter ended Jan. 31 rose to $5.82 billion from $4.85 billion a year earlier, driven by increased demand for its cloud-based software.

Analysts on average expected revenue to be $5.68 billion, according to IBES data from Refinitiv.

The company raised its fiscal 2022 revenue forecast slightly to between $25.65 billion and $25.75 billion, above analysts’ average estimate of $25.42 billion.

Excluding items, the company earned $1.04 per share, beating estimates of 75 cents.

(Reporting by Chavi Mehta in Bengaluru; Editing by Arun Koyyur)

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