Salesforce earnings: A look at the company's long-term goals

Upon topping fourth-quarter earnings and revenue estimates, Salesforce (CRM) plans to pay a quarterly dividend of $0.40 per share. The cloud software company reported adjusted earnings per share of $2.29 — compared to expectations of $2.27 — and revenue of $9.29 billion — edging past expectations of $9.22 billion.

Yahoo Finance Executive Editor Brian Sozzi monitors Salesforce's stock while examining its guidance, long-term strategies, and CEO Marc Benioff's comments from the company's earnings call.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Salesforce joining the likes of Meta, the latest tech giant to declare a dividend. It is a sign, obviously, of management's confidence in the business. Yahoo Finance's executive editor, Brian Sozzi, has the analysis on this.

And we're looking at gains right now, Brian-- just about 1%.

- Volatile trading, Seana, I should say. Initially, Salesforce shares ticked lower last night after earnings ahead of that Marc Benioff earnings call. We're seeing that reverse a little bit more here in the morning.

I have more on this now on the Yahoo Finance blog. I encourage everybody to go to our home page, check it out, and hear some thoughts on this one. But why we're seeing this volatility? Let me just check this off real quick. Really, you go into that earnings call, really well received by Benioff last night, talking about some weakness in the consumer parts of the business for Salesforce-related products.

Revenue guidance slightly below consensus-- about 1% to 2% depending on what numbers you're using. And then billings performance or the billings guidance a little bit below where some folks had their estimates.

But I wanted to take you through these things really quick because I think that is missing the bigger story here in why you're seeing that reversal in some of the stock-- in the stock.

Let's look at a five-year chart over at Salesforce. I think that will help fill this out a little bit more here. Giant big board. if you look at the early part of 2023, you can see Salesforce shares really were at the lows, at levels many investors that have bet alongside Marc Benioff have never even seen before.

But from 2023, this stock has been up in really a straight line as Benioff has clamped down on costs, driven a lot of margin expansion. And, importantly, those stories that have driven Salesforce shares higher over really the past year, that continued in the earnings call. So take a listen to what Benioff said about where Salesforce is today, where it has come, and ultimately where it's going.

- Look, it was over a year ago we said Salesforce had to transform and you-- many of you-- came to me, came to our whole team, and you said, look, we're going to transform the whole company. We did it together. We could not have done it without you.

We said we would restructure our business for the short and long term. We did that. We said we would place a laser focus on increasing productivity and operational excellence from across the board. We've done that. We said we were going to double down on innovation to make our core products even better. We've done that.

- I've got to spend a lot of time with Benioff really over the past year and a half, and I've watched him transform the company. Yet again, it's not me being Pollyannaish-- Pollyanna-ish. It's watching transformation in real time, and I think the Street underestimated how serious Marc and his team were and even CFO Amy Weaver or about cutting expenses at this company and running a more shareholder-friendly entity after a lot of investors attacked them.

But here's another checklist that I want to bring up for you as you guide this or guide yourself through this Salesforce earnings report. New buyback, very important. Another big tech company-- a little bit older big tech company in the vein of Meta-- initiating a dividend for the first time, 40 cent per share dividend for Salesforce. Also announcing a new $10 billion stock buyback plan. Those are very shareholder-friendly actions by the team over at Salesforce.

Secondarily, the company is innovating fiercely in AI. Marc teed up another event next week where they are likely to unveil a host of new AI products. Historically, the market has liked these announcements from Salesforce, especially now they have an idea on the pricing for these products, which Salesforce released late last year.

And then, as I mentioned, overall here, guys, it has been a true, I would say, cultural and business model reset for Salesforce. They aligned 200 basis points more in operating margin expansion for the next 12 months. That's in addition to everything they drove in terms of margin expansion in the past year. The Street likes that. I think that's why you're seeing reversal.

But I've been writing or reporting on this story in real-time guys. I'm going to go back on the Yahoo Finance Live market blog and get some more thoughts out there. It's just a big day for Salesforce. Why not?

- All right, Soz, I appreciate the breakdown there on Salesforce. We're going to continue the elements of that conversation as well later on in the show. Fred Havemeyer, who is the Macquarie head of US AI and software research going to have that conversation with us. Soz, appreciate it.