Salesforce (CRM) -) shares surged after it posted better-than-expected fiscal third-quarter earnings, as well as a stronger full-year profit estimate, amid what it described as improving demand for its cloud-focused client software offerings.
Earnings for the three months ended in October rose 51% from the year-earlier period to $2.11 a share, just ahead of Wall Street forecasts of $2.06 a share. Revenue rose 11.2% to $8.72 billion, just ahead of analysts' estimates of an $8.715 billion top line.
Looking into the final months of its fiscal year, Salesforce pegged revenue in the region of $34.75 billion to $34.8 billion, an 11% improvement from the year-earlier level and largely in line with its forecasts. Current-quarter revenue had been forecast between $9.18 billion to $9.23 billion.
Full-year profit, Salesforce said, will likely improve to between $8.18 and $8.19 per share, up 13 cents at the higher end of its prior forecast, with adjusted operating margins expanding to between 30% and 33%.
Salesforce CEO Benioff: 'A lot of opportunities'
"We don't want to, in any way, give you indications that we see this environment going behind us. That said, we see a lot of green shoots. There's just a lot of opportunities," Salesforce Chief Executive Marc Benioff told investors on a conference call late Wednesday.
"I don't think we're willing to say 'hey, we've turned the corner'; we want to but we're not sure because for a lot of customers (are still) somewhat measured in their buying environments," he added. "But I would say people are a lot less measured than they were is one way to put it. There's definitely a reduction in the measured environment."
Salesforce shares, a Dow component, at last check were trading 8.3% higher at $249.42. In 2023 through the close of trading on Wednesday, the stock was up 74%.
"We continue to see long-term drivers for Salesforce as the market-share leader in front-office digital transformation with opportunity to benefit from AI given the scope of the company's application portfolio and customer data," said KeyBanc Capital Markets analyst Michael Turits. He carries an overweight rating with an improved $290 price target on Salesforce stock.
"Management said it was not calling a turn in the environment but said it saw "green shoots" at the top of the funnel and in growth in large deal sizes," he added. "Management did indicate ongoing headwinds in professional services (consistent with weaker service [revenue] from partners this quarter), self-service, and in-period revenues."
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