The software company can convince with its quarterly figures.
(Photo: Reuters)
san francisco SAP rival Salesforce wants to focus on a profitable business in the face of the departure of numerous executives and pressure from investors. “Improving profitability is our top priority,” said CEO Marc Benioff.
He forecast sales of between $8.16 and $8.18 billion for the current quarter. Analysts had so far assumed an average of $8.06 billion. The company also plans to increase its share buyback program to $20 billion. “This is just the beginning,” Benioff said. The company’s stock rose 16 percent in after-hours trading.
The CEO also wanted to respond to the criticism of several prominent investors. Profitability is a higher priority at Salesforce. The company has come under severe pressure in recent months from an influx of activist investors, including Third Point, Elliott Management, and Starboard Value.
At the end of the quarter, Bret Taylor, who ran Salesforce as co-CEO alongside Benioff, resigned, as did other executives. The past 90 days have been “very intense,” Amy Weaver, Salesforce’s chief financial officer, said on a conference call with analysts.
>> Read also: Activist US funds are increasing the pressure again
In the past fourth fiscal quarter, Salesforce unexpectedly increased its sales significantly by 14 percent to $8.38 billion. Earnings per share on an adjusted basis were $1.68 a share, up 32 cents from estimates. For the year as a whole (as of the end of January), sales increased by 18 percent to $31.4 billion. For the current financial year, Salesforce announced a further increase to 34.5 to 34.7 billion dollars. Analysts had so far assumed an average of 34.03 billion.
Growth at the Silicon Valley darling had slowed dramatically in recent quarters. Several investors, including Elliott Management and Starboard Value, had therefore called for changes. In order to reduce costs, Salesforce announced in January that it would close some branches and cut ten percent of its jobs, which corresponds to 7,000 jobs.
Since its inception in 1999, the San Francisco-based enterprise software company has grown rapidly and spent heavily. Salesforce has put its name on skyscrapers in San Francisco, Tokyo, London, and New York City. The Wall Street Journal also reported that actor Matthew McConaughey is paid more than $10 million a year to endorse the company. Due to the new savings program, many expenses are now up for grabs.
With agency material
More: Salesforce is laying off 1 in 10 employees