CRM Stock Appears on Earnings Pace, Outlook and New Buyback Under Pressure from Activist Investors

Shares in Selling power (CRM) emerged on fourth-quarter earnings that beat views while revenue forecasts beat expectations. Salesforce announced a larger CRM stock buyback amid growing pressure from activist investors.


The enterprise software maker announced its fourth-quarter results after the market close on Wednesday.

For the quarter ended Jan. 31, Salesforce earnings rose 100% to $1.68 per share on an adjusted basis amid cost reductions and one-time items. San Francisco-based Salesforce said revenue rose 14% to $8.38 billion, boosted by improved results from the MuleSoft business.

Salesforce Inventory: Improved Margins

CRM stock analysts had expected Salesforce to report earnings of $1.37 per share on sales of $8 billion. A year earlier, Salesforce reported earnings of 84 cents per share on sales of $7.33 billion.

“Margin improvement will be aided by better-than-expected growth over the next 12 to 24 months, as well as increased focus on sales and marketing and general and administrative efficiency,” said Keith Bachman, analyst at BMO Capital Markets, in a report.

He added, “Salesforce discussed margins above 30% as early as the April quarter of fiscal 2025, then higher longer-term aspirations. We think that ultimately aligned with investor expectations, but more ahead of schedule and has enough potential to generate continued interest in the CRM stock story.”

Salesforce stock jumped 15% to near 192.52 in early trading in the stock market today.

New CRM stock buyback

Salesforce also announced a new $20 billion buyback for CRM shares. The company approved a $10 billion takeover in 2022, before activist investors surfaced. These activist investors include Elliott Management, Starboard Value, Third Point, ValueAct Capital and Inclusive Capital. The group lobbied management to improve its profit margins and free cash flow.

For the current April quarter, Salesforce said it expects revenue of $8.17 billion, beating estimates of $8.04 billion. For fiscal year 2024, Salesforce projects revenue of $34.6 billion, beating estimates of $33.89 billion.

Prior to the Salesforce earnings release, CRM stock was up about 24% in 2023. The stock is down nearly 48% in 2022.

Potential proxy battle ahead?

Analysts say a potential proxy battle with activist investors looms ahead of the company’s annual meeting of shareholders.

Salesforce sells software under a subscription model. Its software helps businesses organize and manage sales operations and customer relationships. The company has expanded into marketing, customer services and e-commerce.

CRM stocks have a relative strength rating of 61 out of the best possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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