"Software Stocks Slump After Disappointing Earnings"

Boston Brand Media brings you the latest news in Software shares plummet after a string of disappointing earnings releases. This downturn reflects investor concerns over revenue growth and profitability within the software sector, highlighting challenges faced by companies in meeting market expectations amidst evolving industry dynamics.

Main Highlights

1. Salesforce's stock experienced a major decline due to disappointing revenue results and a bleak outlook, marking its most significant drop since 2004.
2. Several other enterprise technology firms also provided concerning statements about their performance.
3. Veeva CEO Peter Gassner highlighted that artificial intelligence is viewed as a competing priority in the industry.

‍Salesforce executives have informed investors that deals are shrinking or delayed deals, while  Dell’s margin is shrinking and  Okta faces macroeconomic challenges. Additionally,  Veeva’s CEO noted on the company's earnings call that generative artificial intelligence is now a competing priority for customers.

Collectively, these developments made for a tough week in the software and enterprise tech sector. Salesforce shares plummeted nearly 20% on Thursday, marking the largest drop since 2004, following disappointing revenue and guidance. CEO Marc Benioff attributed this decline to the rapid growth experienced during the Covid era, as companies hurried to adopt remote work solutions, leading to the need for subsequent technology integration and rationalization.

During Salesforce's earnings call, CEO Marc Benioff highlighted how enterprise software companies have adjusted post-pandemic, with many reporting similar challenges. This sentiment was echoed by software makers  MongoDB, SentinelOne, UiPath, and Veeva, all of whom revised down their full-year revenue forecasts. The WisdomTree Cloud Computing Fund, which tracks cloud stocks, experienced its sharpest decline since January, dropping 5% for the week. Similarly, stocks like Paycom, GitLab, Confluent, Snowflake and ServiceNow all lost at least 10% of their value.

Boston Brand Media looked into the.Dell, which sells PCs and data center hardware, increased its full-year forecast but cautioned about narrowing gross margins due to higher input costs and a growing portion of AI servers in its product mix. Despite hitting fresh highs, Dell's shares slid 13% for the week. Okta's stock fell almost 9%, attributed to weaker-than-expected subscription backlog and economic conditions affecting customer acquisitions and expansions.

UiPath and cybersecurity software vendor SentinelOne also faced challenges, with UiPath experiencing a slump in business in late March and April, and SentinelOne witnessing changing buying habits among customers. Veeva CEO Peter Gassner highlighted disruption in large enterprises as they navigate plans for AI, impacting the company's stock value, which dropped almost 15%.

However, not all news was negative, as  Zscaler’s stock surged 8.5% after beating expectations for the quarter and raising its full-year forecast. CEO Jay Chaudhry expressed optimism about continued demand for the company's platform for cyber and data protection.

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Source: CNBC