- Saleforce realeased a sizable beat for Q4 on top and bottom lines late Wednesday.
- CRM stock has surged more than 15% on the news.
- Salesforce stock is trading at its highest price in 11 months.
- CEO Marc Benioff raised Q1 guidance above consensus.
Salesforce (CRM) stock blasted off 15.3% in Thursday's premarket to $193 after the equity market swooned for the software giant's raised guidance during its earnings call late Wednesday. Saleforce projected $8.17 billion in first quarter guidance or about $140 million ahead of Wall Street's forecast. In addition, Salesforce said it would earn $1.60 per share at the bottom end of the range, while analysts had projected $1.32 per share.
Salesforce stock news: Drought is over for CRM
For the fourth quarter, Salesforce produced $1.68 in adjusted earnings per share (EPS) on revenue of $8.38 billion. Both figures were landslide wins for shareholders. Wall Street's more pessimistic consensus going into earnings was revenue of $7.99 billion and adjusted EPS of $1.36.
Besides beating consensus for revenue by $390 million, Salesforece trounced the year-ago figure by more than 14%. It seems the recent negativity surrounding CEO Marc Benioff's firm was misguided, though it still perplexes most that actor Mathew McConaughey. Adjusted EPS was exactly 100% larger YoY.
Though Benioff recently cut Saleforce's workforce by 10%, those savings have yet to be realized. Subscription revenue, the vast majority of sales, rose 14% YoY, while professional services gained 19%.
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The good news comes just in time as hedge fund Elliot Management put forward several board director nominations on Wednesday morning. The Wall Street Journal reported in January that Elliot had created a multi-billion-dollar position in CRM stock and had joined other activist investors in negotiations with the current board. Marc Benioff tried to get out in front of the activists in January by appointing ValueAct CEO Jason Morfitt to the board.
For the full year ahead, CRM managment guided for $34.6 billion in revenue, $2.60 in GAAP EPS and $7.13 in adjusted EPS. Benioff said customer revenue attrition is at its lowest level in the 24-year history of the company.
"Non-GAAP operating margin for fiscal '23 was 22.5%, significantly above our forecast, an improvement of almost four points YoY," said Marc Benioff. "And for the full year, we delivered $31.4 billion in revenue, up 18% YoY or 22% in constant currency. It's one of the best performances of any enterprise software company our size, and it's amazing that Salesforce is now over $30 billion in revenue."
Fiscal 2024 guidance (Calendar 2023) / Source: Salesforce
Salesforce stock forecast
CRM stock is trading at its highest level in 11 months. In fact, the premarket on Thursday saw Salesforce stock overtake the August 8, 2022, high of $194.37. If CRM stock remains above there in the regular session on Thursday, then bulls might plough into the stock enough that the March 2022 resistance level of $222 starts to look achievable. This is incredible for many as not that long ago CRM stock traded below $130.
For now the $193 to $194 range should hopefully work as support. A break there, however, would send CRM down to the February high around $179. At the moment, CRM stock is only supplying a Relative Strength Index (RSI) reading of 56, so it is nowhere near overbought and could definitely move much further in a rally.
CRM daily chart
