Salesforce Skyrocks – The CRM Leader Posts Strong Forecast
Struggling with mass layoffs, leadership changes, and a lack of growth, Salesforce has fortunately found some resolution with its most recent earnings report. In their fourth fiscal quarter ending on January 31st, Salesforce surpassed both earnings and revenue estimates, with 14% year-over-year sales growth. This comes after a weak third quarter, when thousands of job cuts and corporate restructuring cost the software firm over $800 million. Regardless, the shocking news sent Salesforce stock to bounce over 15% in after-market trading, however, the stock is still down almost 40% from its November 2021 high.
With pressures from shareholders and activist investors, Salesforce and CEO Marc Benioff became determined to increase their profitability. In the fourth quarter, Salesforce’s operating margin was less than a percentage point under 30%, with positive guidance including a long-term goal to keep their margins steadily hovering between 25% and 29%. As Salesforce primarily receives revenue from selling software to other companies, it has had trouble throughout the past several quarters with companies decreasing their costs amidst a high-interest rate environment. In a bid combat last year’s loss, Salesforce has set a two-year path to transform its businesses into profit-making machines, and it seems investors approve, with their stock up nearly 44% in 2023.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.