Salesforce shares rise after earnings beat on revenue, fourth-quarter guidance
Marc Benioff, chief executive officer of Salesforce, speaks during the World Economic Forum in Davos, Switzerland, Jan. 18, 2024.
Halil Sagirkaya | Anadolu | Getty Images
Salesforce shares were up 9% on Tuesday after the company’s fiscal third-quarter earnings report showed revenue and fiscal fourth-quarter guidance that exceeded analysts’ expectations.
Here’s how the company did compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $2.41 adjusted vs. $2.44 expected
- Revenue: $9.44 billion vs. $9.34 billion expected
The company’s revenue grew 8% year over year during the fiscal third quarter, which ended Oct. 31. Its net income was $1.5 billion in the quarter, up 25% from $1.2 billion a year ago.
Salesforce said it is expecting fiscal fourth-quarter sales of between $9.90 billion and $10.10 billion. Analysts were projecting $10.05 billion in fourth-quarter sales.
The company said it expects earnings per share of between $2.57 and $2.62 in the fourth quarter, compared with analysts’ expectations of $2.65.
Salesforce also raised the low end of its revenue guidance, expecting a range of $37.8 billion to $38 billion for its fiscal 2025. That’s up slightly from $37.7 billion to $38 billion previously. The new range puts the midpoint for Salesforce’s fiscal 2025 revenue guidance at $37.9 billion, ahead of analysts’ expectations of $37.86 billion.
“We delivered another quarter of exceptional financial performance across revenue, margin, cash flow, and cRPO,” Salesforce CEO Marc Benioff said in a statement. “Agentforce, our complete AI system for enterprises built into the Salesforce Platform, is at the heart of a groundbreaking transformation.”
In a call with analysts, Benioff boasted about Salesforce’s latest artificial intelligence push, including the company’s AI-powered chatbots dubbed Agentforce, which investors are closely monitoring for growth. Salesforce’s Agentforce product is an example of so-called AI agent technology. Several companies have said they believe that these advanced chatbots represent the next logical step from ChatGPT and other related tools powered by large language models.
“We’re delivering these incredible Agentforce capabilities as well,” Benioff said. “This is a bold leap in the future of work, where AI agents let humans unite to transform all of our customer interactions.”
Benioff also revealed that he ruptured his achilles tendon on a recent birthday scuba-diving trip to Fakarava, an atoll in French Polynesia. Benioff expressed disappointment that the hospital that treated him couldn’t schedule his follow-up appointments using AI agents.
“That is the message to our customers, which is how are you going to give some of your people a break, let them get back to their strategic work, let them focus on what really matters,” Benioff said.
The company in August announced that Amy Weaver would step down from her role as chief financial officer but remain in the position until the company appoints a successor, after which she will become an advisor. That same month, activist investor Starboard Value revealed that it boosted its position in Salesforce by roughly 40% in the second quarter following the firm issuing a letter earlier in the year saying that Salesforce was continuing to move “in the right direction” in regard to improving its profit margin.
Starboard Value released a presentation in October in which it noted that Salesforce “can continue to become more efficient and more profitable.”
Watch: Salesforce has been short-term overbought, says Bespoke’s Paul Hickey
Cheng Xin | Getty Images
Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.
Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 82 cents adjusted vs. 76 cents expected
- Revenue: $742 million vs. $730 million expected
Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”
Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.
CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.
“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.
Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.
For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.
Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.
This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.
Okta shares have gained about 4% this year.
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