Salesforce shares rise 7% after reporting strong third-quarter fiscal 2024 results
By Anonymous
Marc Benioff, CEO of Salesforce, participates in a conversation on AI and the Future at the Asia-Pacific Economic Cooperation (APEC) Leaders’ Week in San Francisco, California, on November 16, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images
Salesforce shares rose 7% in extended trading on Wednesday after the cloud software vendor reported fiscal third-quarter earnings that topped analysts’ estimates.
Earnings and Revenue Beat Expectations
The company’s fiscal third-quarter earnings report showed strong results, with an adjusted earnings per share of $2.11, surpassing the expected $2.06 per share. The revenue also surpassed expectations, coming in at $8.72 billion, exceeding the $8.72 billion forecasted by analysts.
The Financial Performance
The revenue increased by 11% from $7.84 billion a year ago. Salesforce, known for its rapid growth, has recently experienced a slowdown in growth rates, but the stock has still managed to outperform the Nasdaq, increasing by over 70% this year.
Cost Reductions Lead to Increased Profits
Salesforce’s ability to reduce spending and lower expenses has played a significant role in boosting profits. The company announced a restructuring plan earlier in the year, including a 10% reduction in its workforce and a reduction in office space, contributing to the increased profitability.
Improved Fiscal Forecast
The cloud software vendor raised its fiscal 2024 forecast for operating cash flow growth to 33% from 30%. Additionally, Salesforce estimated that revenue for the fiscal fourth quarter would increase by around 10% to between $9.18 billion and $9.23 billion, exceeding analysts’ expectations.
Strong Performance in Key Business Units
Salesforce witnessed strong revenue performance in its customer support unit with a 12% jump to $2.07 billion. Revenue in the sales software segment also rose by 12% to $1.9 billion, while platform and other revenue, including Slack, increased by 11% to $1.69 billion.
Market Reaction
Following the release of the earnings report, Salesforce shares jumped to $246.50. While this is still about 20% off their record high from two years ago, the positive financial performance has contributed to a significant increase in the company’s stock value.
Conclusion
The strong financial performance, raised fiscal forecast, and cost-cutting measures have positioned Salesforce for continued growth and profitability. CEO Marc Benioff expressed confidence in the company’s ongoing ability to deliver profitable growth, reflecting the positive outlook for Salesforce’s future prospects.
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