Salesforce Q4 earnings: ‘CRM is getting its act together’

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Written on Mar 1, 2023

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Salesforce issues strong guidance for its full financial year.
Jefferies' Brent Thill discussed its earnings print on CNBC.
Salesforce stock is now up 45% versus the start of 2023.

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Salesforce Inc (NYSE: CRM) is trading up more than 15% in extended hours after reporting strong results for its fiscal fourth quarter.

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Salesforce stock up on upbeat guidance

Shares are cheering the company’s guidance for faster earnings growth ahead as well.

Salesforce is now calling for $7.12 to $7.14 a share of profit this year on up to $34.7 billion in revenue. In comparison, analysts had anticipated $5.87 a share and $33.89 billion, respectively. Reacting to its quarterly results, Jefferies’ Brent Thill said on CNBC’s “Closing Bell: Overtime”:

Salesforce has the most opportunity short-term because they’ve been run so inefficiently. The initial margin guide now in the high 20s is what investors wanted. So, overall, I think Salesforce is getting its act together on the cost side.

Thill currently recommends buying Salesforce stock and sees upside in it to $230 – up another 20% from here.

CRM has attracted five activist investors

Also on Wednesday, activist investor Elliott Management confirmed that it will nominate a few directors at the company’s upcoming annual meeting. According to Thill:

It looks like activists are having a positive impact on how Salesforce is positioning their expense structure. CEO Marc Benioff doesn’t have to get them off their back, he has to embrace them.

CRM’s current quarter outlook also topped Street expectations. Last month, the cloud company said it will lower its global headcount by 10% as Invezz reported HERE. The Jefferies analyst added:

If you’re a value investor, Salesforce is a great story. This still is a great product, it’s a great company. [But] there’s incredible amount of expense to cut.

Notable figures in Salesforce’s Q4 results

Lost $98 million versus the year-ago $28 million
Per-share loss also went up from 3 cents to 10 cents
Adjusted EPS printed at $1.68 as per the press release
Revenue jumped 14% year-on-year to $8.38 billion
Consensus was $1.36 a share on $7.99 billion revenue

The California-based company, on Tuesday, increased its stock buyback authorisation from $10 billion to $20 billion as well. Salesforce stock is up 45% for the year at writing.