Salesforce.com’s shares have been slipping since the company’s Nov. 19 forecast of a smaller-than-expected 21 percent revenue increase from $5.37 billion to $6.5 billion for the next full year.
Many companies would be pleased with that rate of top-line growth, but for investors in the world’s biggest maker of cloud-based sales software, it’s a different story. They’ve been content to overlook Salesforce’s continued bottom line losses—as long as the blockbuster revenue increases continue. The problem is that for the past couple of years, revenue growth has been slowing.
Revenue was up 29 percent year-over-year to nearly $1.4 billion in the quarter ended Oct. 31. The third quarter of last year, in comparison, saw revenue growth of 36 percent year-over-year.
And that’s despite a spate of acquisitions in the past couple of years that analysts have seen as a major factor in maintaining revenue growth. The relatively gloomy sales outlook, therefore, raises the question for Salesforce: What long-term value did the company get from the $3.2 billion it spent in precious cash on high-priced acquisitions in the past two years?