- Salesforce’s performance in the fiscal fourth quarter exceeded expectations, although its revenue guidance for fiscal 2025 fell short.
- The company, known for its business software, commenced offering its products on Amazon’s cloud marketplace in the same quarter.
Marc Benioff, the co-founder and CEO of Salesforce, participated in a panel discussion at the World Economic Forum in Davos, Switzerland, on January 18, 2024.
Salesforce’s stock initially dropped by up to 6% but later rebounded by 1% during after-hours trading on Wednesday following a conservative revenue outlook for the upcoming fiscal year. Additionally, the company announced the initiation of a dividend at 40 cents per share.
Here is a breakdown of Salesforce’s performance compared to estimates from LSEG (formerly Refinitiv):
- Earnings per share: \(2.29 adjusted versus an expected \)2.26
- Revenue: \(9.29 billion compared to an anticipated \)9.22 billion
According to a statement, Salesforce experienced a 10.8% year-over-year revenue growth in the quarter ending on January 31. However, revenue from professional services saw a decline of 9%. The company reported a net income of \(1.45 billion, equivalent to \)1.47 per share, in contrast to a loss of $98 million, or 10 cents per share.
Amy Weaver, Salesforce’s CFO, noted on an analyst conference call, “Over the past two quarters, I’m pleased to report that we have observed improved bookings growth.”
In the same quarter, Salesforce announced the acquisition of sales commission software startup Spiff under undisclosed terms and commenced selling its products on the Amazon Web Services Marketplace.
Salesforce projected adjusted earnings of \(2.37 to \)2.39 per share for the fiscal first quarter, with a revenue range of \(9.12 billion to \)9.17 billion. Analysts surveyed by LSEG had predicted adjusted earnings per share of \(2.20 on \)9.15 billion in revenue.
Looking ahead to the new fiscal year 2025, Salesforce anticipates adjusted earnings of \(9.68 to \)9.76 per share and revenue between \(37.7 billion and \)38.0 billion. The revenue forecast suggests a growth rate of 8.6% at the midpoint. Analysts had estimated earnings of \(9.57 per share and revenue of \)38.62 billion.
Weaver mentioned that the full-year guidance considers foreign-exchange challenges and the ongoing weakness in professional services. She also highlighted a more cautious purchasing environment that emerged in the 2023 fiscal year.
Although there is strong demand for artificial intelligence products, Brian Millham, Salesforce’s president and COO, stated that the guidance does not heavily incorporate this category’s impact. He also noted that a price hike announced the previous year would not be a significant factor.
Millham expressed confidence that internal AI adoption would contribute to margin expansion over time.
Apart from the after-hours movement, Salesforce shares have climbed approximately 14% year-to-date, outperforming the S&P 500 index, which has seen a 6% increase during the same period.
The dividend declared by Salesforce will be disbursed on April 11 to shareholders as of the market close on March 14.
