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Salesforce Shares Drop Despite Strong Earnings

Salesforce reported fiscal third-quarter earnings on Tuesday for the period ending Oct. 31, beating Wall Street expectations on revenues and sales. The shares fell over 6% in extended trading after earnings guidance for the fourth quarter fell short of expectations.

Salesforce also named current President and COO Bret Taylor to be co-CEO alongside current CEO Marc Benioff. Benioff said in a statement that Taylor would help lead the company through “the next chapter. The company’s sales were up 27% from $5.42 billion in the same period a year earlier.

Salesforce expects between $7.22 billion and $7.23 billion in revenue in its fiscal fourth quarter, raising its previous guidance and coming in on par with analyst expectations of $7.22 billion. Sales Cloud, the company’s core product that salespeople use to track leads and opportunities, reported $1.54 billion in sales, up 17% from last year.

Salesforce Service Cloud business was up over 20% from last year to $1.66 billion in sales. Salesforce closed its acquisition of enterprise chat app Slack for over $27 billion. The app contributed $276 million in sales to the company’s Platform unit, which previously reported Tableau and Mulesoft sales.The Platform and Other unit reported $1.27 billion in sales during the quarter. The company said it had re-classified sales from its Tableau and Mulesoft acquisitions into its Data unit, which reported $900 million in sales.

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