Brett Taylor, Co-CEO of Salesforce.com Inc. , right, and Marc Benioff, Co-CEO of Salesforce.com Inc. , bunny ears during a keynote address at the 2022 Dreamforce conference in San Francisco, California, on Tuesday, September 20, 2022.
Marlena Sloss | bloomberg | Getty Images
sales force Shares fell about 10% by midday Thursday as analysts and investors digested Wednesday night’s earnings report and the surprising news that co-CEO Brett Taylor will be leaving by the end of January 2023.
Taylor’s departure will leave founder Marc Benioff as sole CEO at the tech giant.
Salesforce beat analyst estimates for third-quarter earnings and revenue, but said it expects revenue of between $7.9 billion and $8.03 billion in the company’s fiscal fourth quarter, less than halfway short of analyst expectations of $8.02 billion in sales.
The company said it would experience up to $900 million in sales due to foreign currency effects. Operating cash flow was down 23% year over year to $313 million for the quarter.
Is “something more than aggregate pressure depressing Salesforce’s growth?” Morgan Stanley Analysts questioned the note to investors. The company lowered Salesforce’s price target from $273 to $250.
“The surprises were more negative than positive,” analysts said, citing Benioff’s future single CEO status, potential single-digit subscription revenue growth for fiscal 2024 and growing margin pressure.
Benioff, in an interview with CNBC’s Jim Cramer, called Taylor’s departure a “huge blow”.
We should set him free, let him go, and I understand that, but I don’t like it,” the billionaire said on an earnings call. Taylor was appointed Co-Chief Executive Officer and Vice President in November 2021, having previously served as President and Chief Operating Officer.
Taylor was also Chairman of the Board of Directors of Twitter before billionaire Elon Musk took the company privately. Taylor joined Salesforce in 2016 when his startup Quip was acquired by Benioff.
Salesforce shares are down about 43% year-to-date.