Outcomes of Salesforce (CRM) This autumn 2023

Marc Benioff, co-founder and CEO of Salesforce, speaking at the World Economic Forum in Davos, Switzerland on January 18, 2023.

Stefan Wermuth | Bloomberg | Getty Images

Foreclosure Shares rose 16% in extended trading on Wednesday after the cloud software maker topped Wall Street’s earnings estimates and issued a better-than-expected guidance.

Here’s how the company did it:

  • Merits: $1.68 per share, adjusted, versus $1.36 per share as expected by analysts, according to Refinitiv.
  • Revenue: $8.38 billion versus $7.99 billion expected by analysts, according to Refinitiv.

Salesforce’s revenue grew 14% year over year in the fourth quarter of its fiscal year ended Jan. 31, in line with the previous quarter, according to a statement.

The company reported a loss of $98 million, or 10 cents a share, compared to a loss of $28 million in the year-ago quarter.

In January, Salesforce co-founder and CEO Marc Benioff said the company would be shedding 10% of its workforce, equivalent to over 7,000 employees, and that its restructuring strategy resulted in a cost of $828 million during the quarter.

Profitability has become a higher priority at Salesforce, which has been pressured in recent months by an influx of activist investors including Third Point, Elliott Management, and Starboard Value. The Company announced the addition of Mason Morfit, CEO of ValueAct Capital, to its Board of Directors. At the end of the quarter, Bret Taylor, who ran Salesforce as co-CEO alongside Benioff, resigned.

The past 90 days have been “very intense,” Salesforce chief financial officer Amy Weaver said in a conference call with analysts.

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Adjusted operating margin was the highest in company history at 29.2%. At its Investor Day in September, Salesforce set a 25% operating margin target for fiscal 2026.

“Six months ago in September, we shared our comprehensive transformation plan with you at our Dreamforce Investor Day, the new day for profitable growth,” Benioff said on the conference call. “But things changed at the start of our fourth quarter. We realized that we needed to radically accelerate the timeline of the transformation plan. We had to hit the hyperspace button and quickly bring the two-year goals forward and now surpass them.”

Benioff said Salesforce has dissolved its board mergers and acquisitions committee and is working with Bain on a deal review.

For the fiscal first quarter, the company reported adjusted earnings in the range of $1.60 to $1.61 per share and revenue of $8.16 to $8.18 billion. Analysts polled by Refinitiv had been expecting adjusted earnings per share of $1.32 and revenue of $8.05 billion.

Salesforce expects full-year 2024 adjusted earnings per share of $7.12 to $7.14 on revenue of $34.5 to $34.7 billion. Analysts polled by Refinitiv had expected adjusted earnings per share of $5.84 and revenue of $34.03 billion. It called for an adjusted operating margin of 27% in fiscal 2024 and 30% in the first quarter of 2025.

The forecast assumes there will be no improvement in the longer sales cycles, additional spending requirements and deal compression seen by the company over the past three quarters, Weaver said. In the fiscal fourth quarter, Salesforce struggled in the financial services and technology industries, said Brian Millham, chief operating officer.

Salesforce said it is expanding its stock buyback program to $20 billion after announcing its first buyback commitment of up to $10 billion for that purpose in August.

Salesforce stock is up 26% so far this year, excluding Wednesday’s after-hours move, outperforming the S&P 500, which is up 3% over the same period.

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