Salesforce Inc (NYSE:CRM) stock rose 6.59% (As on November 30, 11:56:00 AM UTC-4, Source: Google Finance) after the company reported better-than-expected third-quarter result and issued upbeat forecast, fueling hopes that a downturn in client spending on technology may be abating. All through the year Salesforce tried to boost margins through cost cuts, including deep headcount reductions in January. The firm has also prioritized building out its artificial intelligence offerings like Einstein Copilot, a conversational AI assistant launched in September that can summarize video calls and generate sales language in emails. The company’s biggest business unit, which provides customer support, saw sales increase by 12% from a year earlier, to $2.07 billion. Meanwhile, revenue from the sales software segment also rose 12%, to $1.9 billion. The platform and other revenue segment, which includes Slack, increased 11%, to $1.7 billion. Salesforce also reported current remaining performance obligations of $23.9 billion, up 14% from a year ago and above its own forecast of 11% growth.
In addition to its AI investments, Salesforce recently revealed that it would be adding more than 3,000 new workers, split more or less evenly among its sales, engineering and Data Cloud product teams.
CRM in the third quarter of FY 24 has reported the adjusted earnings per share of $2.11, beating the analysts’ estimates for the adjusted earnings per share of $2.06. The company had reported the adjusted revenue growth of 11 percent to $8.72 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $8.71 billion.
Salesforce also issued fourth quarter adjusted earnings guidance of $2.25 to $2.26 per share, compared to an estimate of $2.17. For the fourth quarter, Salesforce said it’s expecting revenue of $9.18 billion to $9.23 billion, which would represent growth of around 10% at the midpoint. The midpoint of that forecast is bang in line with Wall Street’s call for $9.21 billion in fourth-quarter sales.
For its 2024 fiscal year, Salesforce now expects to report adjusted earnings per share of $8.18 to $8.19, up from a prior forecast of $8.04 to $8.06. Bloomberg consensus estimates had seen the figure at $8.06. Full-year adjusted operating margin expectations were also improved to 30.5% from 30% previously. Although the company is still waiting for AI to make a splash, it’s raising its fiscal 2024 forecast for operating cash flow growth to 33%, up from its previous call for a 30% increase. In addition, the company upped its full-year revenue guidance to a range of $34.75 billion to $34.8 billion. Previously, it had called for $34.7 billion at the bottom of its range.