Sales, Dividend Outperform Weak Outlook

Salesforce Inc.'s annual sales projection was disappointing, but investors liked its ongoing profitability, first-ever dividend, and share buybacks. In the year ending January 2025, revenue will rise 9% to $38 billion, the San Francisco-based corporation announced Wednesday. Profit, excluding certain things, will be $9.68–$9.76 per share. Bloomberg statistics showed analysts projected $9.63 per share on $38.6 billion in sales.

The fiscal year adjusted operating margin would be 32.5%, the business claimed. That beats Wall Street's 31.4% forecast. Due to “continued cost discipline,” Citigroup Inc. analyst Tyler Radke noted before the report that the metric may be expanded even as the business spends on AI. In its continued cost-cutting effort, Salesforce laid off 700 people last month.

Since Salesforce has trimmed expenses and improved profitability over the past year, investors have focused on revenue growth, which has stalled as companies cut software investment. Salesforce, like many tech businesses, is investing on AI-powered features to boost sales of its customer relations management software

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Salesforce announced a projection for subscription and support revenue, anticipated to gain more than 10% in fiscal 2025, to show that most of the business is still expanding at double digits, said Mike Spencer, executive vice president of investor relations. “That’s even before AI,” Spencer said, adding that new capabilities would take longer to show in results.

After dropping 5% in extended trade, the shares recovered and were down 1% at 6:50 p.m. in New York. The stock finished at $299.77 and rose 83% in a year. Starting March 14, Salesforce stockholders will receive its first quarterly dividend of 40 cents per share on April 11. The corporation raised its share repurchase program by $10 billion to $30 billion.

After the results were revealed, Raymond James analyst Brian Peterson stated, “We're cognizant that the durability of growth remains a key debate for investors, but we shouldn't overlook the significant shareholder friendly actions” Salesforce has done in the previous two years.

The corporation is also changing prices and sales. According to Wayback Machine archives, it replaced certain online product packages this week with more expensive ones. The July 2023 price hike can buffet growth in 2024, warned BMO Capital Markets analyst Keith Bachman.

Quarterly revenue rose 11% to $9.29 billion in the fiscal fourth quarter. Profit per share was $2.29, discounting certain items. On average, analysts predicted $2.27 per share profit on $9.22 billion revenue. Salesforce's adjusted operating margin was 31.4%, as expected.

The Integration and Analytics segment, which includes the data cloud, Tableau, and MuleSoft, sold $1.63 billion, against analysts' $1.5 billion forecast. Marc Benioff, CEO, said data cloud is the company's fastest-growing organic product.

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