Salesforce expected to face investors' concerns at Dreamforce conference

Sep. 19, 2022 2:58 PM ETSalesforce, Inc. (CRM)By: Rex Crum, SA News Editor3 Comments

Salesforce To Purchase Popular Messaging Platform Slack For 27 Billion

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Salesforce's (NYSE:CRM) annual Dreamforce conference kicks off Tuesday in San Francisco, and the company is looking to make a splash with the gathering during a time of what has been some uncharacteristic uncertainty at the cloud-based software giant.

For starters, it will be the first full Dreamforce conference since 2019. Salesforce (CRM) canceled Dreamforce as an in-person event in 2020, and only held a modified, mostly outdoor event in 2021 due to the COVID-19 pandemic. This year, more than 10,000 attendees are expected to come to Dreamforce to hear from Salesforce brass such as co-Chief Executive Marc Benioff, as well as former Vice President Al Gore, and U2 singer Bono.

Oh, and the Red Hot Chili Peppers will perform, too.

But, with Salesforce (CRM) recently trimming its revenue forecast, and its shares down by more than 25% over the past six months, there's a good likelihood that more attention will be given than usual to what Benioff & Co. say about the state of their business market, as opposed to just cheerleading for the company.

Brent Thill, of Jefferies, said it should come as no surprise to hear Salesforce (CRM) talk about "innovation updates", such as its ongoing integration of messaging platform company Slack. But, Thill also said he expects the company to provide comments on a challenging market for demand in "front office" apps for businesses.

Thill noted how Salesforce (CRM) management recently cited its business seeing the effect of "more measured buying behavior" that has resulted in sales cycles being stretched out longer than anticipated, as well as more layers of approval being implemented by its customers before some deals can go through.

As such, Thill said he doesn't expect Salesforce (CRM) to provide any forecasts for its 2024 sales at a company analyst meeting set to be held during Dreamforce.

At Morgan Stanley, analyst Keith Weiss said Salesforce (CRM) is currently "traveling down the long road of re-building investor confidence" as it prepares to take the Dreamforce stage. Weiss said that the company "faces elevated investor skepticism" around the durability of its organic revenue growth, and what to expect about the size of its margin expansion in the near future.

Weiss said that while there will be a good amount of information from Salesforce (CRM) about its product updates, "the most impactful data points likely comes from partner feedback on the state of demand and competitive dynamics."

Salesforce (CRM) shares remained near their breakeven line late Monday. Earlier in the day, Raymond James analyst Brian Peterson weighed in on the Salesforce (CRM) situation by reiterating his strong buy rating on the company's stock, and that it should provide an update on "key growth opportunities, multi-cloud adoption and increased emphasis on [profit] margins."

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