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In the Wake of a Record Quarter, Salesforce Announces Job Cuts

By Danny Vena – Aug 27, 2020 at 6:00AM

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The tech titan is making strategic shifts to emphasize growth.

The day after the company announced record-setting results, (CRM -2.09%)advised some of its employees that they may lose their jobs, according to a report in The Wall Street Journal. As many as 1,000 of the company's 54,000 workers could be affected, though the situation is fluid. Staff impacted by the cuts will be given 60 days to apply for available jobs within the company. 

"We'll be redirecting some of our resources to fuel growth, and areas that are no longer as aligned with the business priority will be de-emphasized," Chief Financial Officer Mark Hawkins said during the conference call to discuss the results, without providing additional details. CEO Mark Benioff said back in March that there would be no layoffs for at least 90 days during the pandemic.

The Salesforce company logo outside its headquarters.

Image source: Salesforce.

The revelation comes on the heels of strong second-quarter results by the digital diva. Salesforce reported record revenue of $5.15 billion, up 29% year over year. At the same time, non-GAAP (adjusted) earnings per share (EPS) of $1.44 soared 118%. This figure excludes gains from changes in the value of its investment portfolio, an income tax benefit, and changes to its corporate structure. 

Salesforce also revealed its remaining performance obligation (RPO) -- which consists of future revenue that's under contract but not yet recognized -- swelled to $30.6 billion, an increase of 21% year over year. The current portion grew to $15.2 billion, up 26%.

This has been a big week for Salesforce. In addition to its record results and proposed layoffs, Salesforce will become one of the 30 stocks that make up the Dow Jones Industrial Average. The makeover that will also add Amgen and Honeywell to the index, while shedding ExxonMobile, Pfizer, and Raytheon Technologies

Danny Vena has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.

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