SALESFORCE raised its annual profit forecast, signalling that demand for business software is holding up in the face of macroeconomic instability. The shares rose about 6 per cent in extended trading.

Fiscal-year earnings, excluding some items, will be US$4.74 to US$4.76 a share, an increase of 12 US cents a share from the company's previous forecast. Revenue will be as much as US$31.8 billion, San Francisco-based Salesforce said Tuesday (May 31) in a statement. Analysts, on average, estimated annual profit of US$4.68 a share, according to data compiled by Bloomberg.

Salesforce, the leader in cloud-based customer management software, maintained hiring and high revenue growth through the pandemic, and expanded its products for business productivity with the US$27.7 billion purchase of the messaging platform Slack. Last month, however, the company joined tech sector peers in slowing down hiring and travel to control expenses, according to a report from Insider.

In the fiscal first quarter, revenue increased 24 per cent to US$7.41 billion, beating analysts' projections. Current remaining performance obligation - or, contracted sales which have yet to close, which is watched by analysts as a metric of near-term demand - grew 21 per cent to US$21.5 billion. Profit, excluding some items, was 98 US cents a share, compared with analysts' average estimate of 95 US cents.

"Our financial results once again demonstrate the strength and durability of our business model," co-chief executive officer Bret Taylor said in the statement. "Salesforce has become even more strategic and relevant to our customers as we are providing them with the agility and resilience they need to drive growth and efficiency in these uncertain economic times."

The shares climbed as high as US$170.89 in extended trading after closing at US$160.24 in New York. The stock has declined 37 per cent this year amid a broad technology rout that has particularly hit software vendors. This downturn left the company undervalued, wrote Mark Murphy, an analyst at JPMorgan, in a research note ahead of earnings.

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Salesforce's 24 per cent constant currency growth in its current remaining performance obligation is a positive development because it remained high even in the face of rising interest rates and inflation, said Anurag Rana, an analyst at Bloomberg Intelligence. "This is the power of Salesforce, where you have a very well diversified revenue stream," Rana said in an interview. BLOOMBERG