Salesforce Co-CEO Keith Block steps down; Marc Benioff will be sole CEO

Key Points
  • Keith Block became co-CEO alongside Marc Benioff less than two years ago.
  • Salesforce announced the $1.33 billion acquisition of Vlocity in addition to the departure.
  • The company also announced fiscal fourth-quarter results that beat expectations.
Salesforce Q4 earnings: $0.66 EPS vs. $0.56 estimated; Block steps down

Salesforce stock initially sank 3% in extended trading on Tuesday after the company said co-CEO Keith Block is stepping down. Marc Benioff, the other co-CEO, becomes sole CEO. The company also announced fiscal fourth-quarter results that beat expectations, along with an acquisition.

Block joined Salesforce from Oracle as president and vice chairman in 2013, he was promoted to operating chief in 2016, and he became Salesforce's co-CEO alongside Benioff in August 2018. He will stay on as an adviser for a year, Salesforce said in a statement.

"It's been my greatest honor to lead the team with Marc that has more than quadrupled Salesforce from $4 billion of revenue when I joined in 2013 to over $17 billion last year," Block was quoted as saying in the statement. "... After a fantastic run I am ready for my next chapter and will stay close to the company as an advisor. Being side-by-side with Marc has been amazing and I'm forever grateful for our friendship and proud of the trajectory the company is on."

Benioff told CNBC in a profile published in early 2019 that he elevated Block to co-CEO to enable a "divide and conquer strategy" and to give Benioff time to do the things he enjoys. For example, after promoting Block to co-CEO in August 2018, Benioff took two weeks to focus on Proposition C, a legislative effort to generate tax revenue to help San Francisco's homeless problem.

Block, for his part, said in 2018 that the title change was more about formalizing the dynamic of the relationship the two men had developed over the years.

"Our time together has been amazing," Benioff said on a conference call with analysts on Tuesday. "I am his biggest supporter. I am his close friend. I am here to help him on his journey and as he begins this new journey, we are all with you, Keith, and we're all very excited for you."

Salesforce's Marc Benioff talks Q4 earnings, Keith Block's departure

Also on Tuesday Salesforce announced fiscal fourth-quarter earnings that beat analysts' expectations.

Here's how the company did:

  • Earnings: 66 cents per share, adjusted, vs. 56 cents per share as expected by analysts polled by Refinitiv.
  • Revenue: $4.85 billion, vs. $4.75 billion as expected by analysts polled by Refinitiv.

Revenue was up 35% in the quarter, which ended on January 31, Salesforce said in a statement.

In the quarter Salesforce said it would use cloud infrastructure from competitor Microsoft, and it promoted Bret Taylor, an executive who arrived at the company in 2016 through its Quip acquisition, to operating chief. Stifel analysts led by Tom Roderick, who have a buy rating on Salesforce stock, wrote in a Friday note that they heard Salesforce signed five enterprise license agreements with Fortune 100 companies in the quarter.

With respect to guidance, Salesforce called for 70 cents to 71 cents in adjusted fiscal first-quarter earnings per share on $4.875 billion to $4.885 billion in revenue. Analysts polled by Refinitiv had expected 70 cents in adjusted earnings per share and $4.84 billion in revenue.

For the full 2021 fiscal year Salesforce sees $3.16 to $3.18 in adjusted earnings per share on $21.0 billion to $21.1 billion in revenue. Consensus estimates from analysts polled by Refinitiv were $3.11 in earnings per share on an adjusted basis and $20.93 billion in revenue.

Additionally, Salesforce said it has agreed to acquired Vlocity, a provider of cloud and mobile software built atop Salesforce, for $1.33 billion. San Francisco-based Vlocity was founded in 2014, with more than 1,000 employees, according to LinkedIn data. Salesforce's guidance includes impact from Vlocity, finance chief Mark Hawkins said on Tuesday's call. The deal will be dilutive to Salesforce's results, he said.

"We don't anticipate any major acquisitions in the short term," Benioff said.