Salesforce (CRM) shares are surging after the software company beat analyst estimates for earnings and offered a better-than-expected forecast, and said it plans to step up stock buybacks amid pressure from activist investors.
Salesforce revenue jumped 14% to $8.4 billion, beating expectations of 9.2% growth. Profits came in at $1.68 per share, much higher than estimates of $1.36 per share. In January, CEO Marc Benioff said it was cutting 10% of its workforce or about 7,000 employees.
The software company said it expects 2024 fiscal year earnings of up to $7.14 per share and revenue of $34.7 billion. Analysts had been anticipating earnings of $5.84 per share and revenue of $34 billion.
The company also reported that its operating margin will be about 27% in fiscal 2024 through January. That blew away analyst estimates for margins of 22.4% after those steep job cuts. Salesforce also increased its stock buyback program to $20 billion.
At least five activist investors, including Elliott Capital Management and Starboard Value, have disclosed stakes in Salesforce in recent months. The new outlook from Salesforce management suggests that profitability is now a top priority after years of focusing on growth.
Salesforce shares are up 42% year-to-date and down 10% over the past year.