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Salesforce shares soared 16% in extended trading on Wednesday after the cloud software maker beat Wall Street estimates on profit and issued a better-than-expected forecast.

Here’s how the company did:

  • Earnings: $1.68 per share, adjusted, vs. $1.36 per share as expected by analysts, according to Refinitiv.
  • Revenue: $8.38 billion vs. $7.99 billion as expected by analysts, according to Refinitiv.

Salesforce’s revenue grew 14% year over year in the fiscal fourth quarter, which ended on Jan. 31, consistent with the previous quarter, according to a statement.

The company reported a loss of $98 million, or 10 cents per share, compared with a loss of $28 million in the year-ago quarter.

In January, Marc Benioff, Salesforce’s co-founder and CEO, said the company would cut 10% of its workforce, representing over 7,000 people, and that its restructuring strategy led to $828 million in costs during the quarter.

Marc Benioff, co-founder and CEO of Salesforce, speaks at the World Economic Forum in Davos, Switzerland, on Jan. 18, 2023.
Stefan Wermuth | Bloomberg | Getty Images

Profitability has become a higher priority at Salesforce, which in recent months has been getting pressured by an influx of activist investors, including Third Point, Elliott Management and Starboard Value. The company announced the addition of ValueAct Capital CEO Mason Morfit to its board. At the end of the quarter ,Bret Taylor, who ran Salesforce as co-CEO alongside Benioff, stepped down.

The past 90 days have been “very intense,” Amy Weaver, Salesforce’s finance chief, said on a conference call with analysts.

The adjusted operating margin, at 29.2%, was the highest in the company’s history. At its investor day in September, Salesforce laid out an operating margin goal of 25% for fiscal 2026.

“Six months ago in September at our Dreamforce Investor Day we shared with you our comprehensive transformation plan, the new day for profitable growth,” Benioff said on the conference call. “But things have changed as we entered our fourth quarter. We recognized that we needed to radically accelerate the transformation plan time frame. We needed to press the hyper-space button and bring the two-year goals forward quickly and exceed them now.”

Benioff said Salesforce has disbanded its board committee on mergers and acquisitions and is working with Bain on a review of the business.

For the fiscal first quarter, the company called for adjusted earnings in the range of $1.60 to $1.61 per share and revenue of $8.16 billion to $8.18 billion. Analysts surveyed by Refinitiv had been looking for $1.32 in adjusted earnings per share and $8.05 billion in revenue.

Salesforce sees adjusted earnings per share for the full 2024 fiscal year of $7.12 to $7.14 and revenue of $34.5 billion to $34.7 billion. Analysts polled by Refinitiv had expected $5.84 in adjusted earnings per share and $34.03 billion in revenue. It called for a 27% adjusted operating margin in the 2024 fiscal year, and 30% in the first quarter of 2025.

The guidance assumes there will be no improvement in the longer sales cycles, additional requirements around spending and compression of deals that the company has observed in the past three quarters, Weaver said. In the fiscal fourth quarter, Salesforce ran into weakness in the financial services and technology industries, said Brian Millham, the operating chief.

Salesforce said it’s expanding its share buyback program to $20 billion after announcing its first repurchasing commitment, with up to $10 billion allocated for that purpose, in August.

Salesforce shares have risen 26% so far this year, excluding Wednesday’s after-hours move, outperforming the S&P 500, which has gained 3% over the same period.

WATCH: Proxy battle likely in store for Salesforce

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