Salesforce (CRM) Stock Slumps 8% as Company Announces Exit of co-CEO Bret Taylor

Software company Salesforce Inc (NYSE: CRM) saw its shares close down 8% following news on the co-CEO departure and its earnings report for the third quarter of fiscal 2023. In addition to the decline, the company is currently down 0.51% to $146.25 in after-hours trading. Per the earnings report, the cloud-based software company exceeded expectations, with $7.84 billion in revenue. Meanwhile, analysts predicted revenue to come in at $7.82 billion. Earnings per share (EPS) also did better than the $1.21 expected at $1.40.

Chair & co-CEO Marc Benioff boasted of the company’s solid performance for the quarter as revenue popped 14% YoY. He further showed gratitude to the company’s customers for their commitment, adding that this is time for customers to connect with their customers in “a whole new way.”

Salesforce co-CEO Bret Taylor noted that customers are going after “the power of Customer 360 to gain faster time to value and reduce costs. The executive emphasized the company’s quarterly growth. He referred to Salesforce’s transformational deals and multi-cloud expansions. The company’s president and chief financial officer, Amy Weaver, committed:

“We delivered another double-digit top and bottom line growth. In this time of economic uncertainty, we remain committed to profitable growth and consistent operating margin expansion.”

Co-CEO Brent Taylor to Depart Salesforce

The highlight of the earnings call was the surprise announcement of the departure of Salesforce co-CEO Bret Taylor. Taylor is leaving the company after a year of being promoted from the position of president and CFO. At the time of promotion, Benioff described the outgoing executive as a phenomenal industry leader who has been instrumental in creating incredible success for our customers and driving innovation throughout our company.”

On the exit, co-CEO Benioff said he is not okay with Brent leaving Salesforce, but the company has to let him be free. He continued:

“And Bret, you know that you’re always going to be our brother. We love you deeply, you have a home here, we’re gonna try to get you back somehow. Don’t think you’re gonna somehow get out of this alive because you’re not.”

Indeed, Benioff had a soft spot for Taylor, considering his journey from 2016 when he joined Salesforce till he climbed the ladder to the post of a co-CEO. The departing executive also expressed gratitude for the six years with the cloud-based software company. He spoke about his decision to return to being an entrepreneur, adding that it is the right time to leave.

The earnings report and the co-CEO leaving Salesforce have gotten Morgan Stanley analysts’ attention. The analysts questioned if there is “something more than macro pressuring Salesforce’s growth?” Hence, they lowered their price target on the company from $273 to $250, saying the surprises were more negative than positive.