Benioff more than delivers with Salesforce's fourth-quarter beat and sky-high guidance

Published Wed, Mar 1 20238:12 PM ESTUpdated Wed, Mar 1 20238:17 PM EST

Club holding Salesforce (CRM)'s fiscal fourth-quarter results crushed expectations across the board Wednesday, while its forward guidance made clear CEO Mark Benioff is uniquely positioned to deliver profitability at the enterprise software pioneer. Revenue grew 14% year-over-year, or 17% on a constant currency basis, to $8.38 billion, exceeding analysts' forecasts of $7.99 billion, according to estimates compiled by Refinitiv. Non-GAAP earnings-per-share (EPS) of $1.68, beat the $1.36-per-share EPS predicted by analysts, Refinitiv data showed. Operating margins came in at 4.3% on a GAAP basis, and 29.2% on non-GAAP basis, compared with expectations of 2% and 22.2%, respectively. Operating cash flow surged nearly 41% from the previous year, to $2.79 billion, beating estimates of $2.5 billion. Free cash flow of $2.57 billion outpaced the $2.32 billion forecasted by analysts. Shares of Salesforce climbed more than 15% in afterhours trading Wednesday, to around $193 apiece. Bottom line Salesforce's stellar fiscal year 2023 fourth-quarter results come as management has been under mounting pressure from a slate of activist investors, including Elliott Management , to improve profitability and rein in costs. Benioff and his team more than delivered. During a post-earnings conference call with analysts and investors Wednesday, Benioff did not directly address the role these activists may have played in shaping management's recent strategy. But in an interview with Jim Cramer earlier in the day, he said he was receptive to their ideas to make Salesforce more profitable. "We can learn from everybody. We do learn from everybody," he said. Not only did profit margins come in significantly above expectations on both a GAAP (Generally Accepted Accounting Principles) and non-GAAP basis, sales came in much stronger than expected, too — demonstrating the software giant can still deliver double-digit revenue growth, despite its large size. Management's full fiscal year 2024 revenue guide amounts to just over 10% growth, compared with fiscal year 2023. Salesforce also reported strong cash flow, while the board of directors doubled the company's share repurchase authorization to $20 billion from $10 billion. With $4 billion already returned to shareholders in fiscal 2023, the team has $16 billion left in the tank. Notably, the authorization increase will allow management to fully offset the dilutive impact of share-based compensation for the entirety of fiscal 2024. Benioff told Jim Wednesday, "Our profitability is our highest priority." That claim was evidenced by the outstanding guidance the company provided. The sales and earnings forecasts exceeded expectations for both the first quarter and full fiscal year 2024. Moreover, the team i