Salesforce Stock Dips Despite New Dividend & Buyback

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Salesforce, the software giant, reported strong quarterly results but faced a stock slide in late trading on Wednesday. Despite unveiling a new dividend and a $10 billion buyback program, the company’s stock failed to impress investors with its guidance for the upcoming fiscal year.

For the fourth quarter that ended on Jan. 31, Salesforce boasted $9.29 billion in revenue, marking an 11% increase from the previous year. Adjusted earnings per share stood at $2.29, surpassing the Street’s expectations. The company’s performance was reflected in its total remaining performance obligations, which reached $56.9 billion, a 17% rise year-over-year. Moreover, free cash flow grew by 27% to $3.26 billion compared to the previous year.

Looking ahead, Salesforce forecasts revenue for the April quarter to range between $9.12 billion and $9.17 billion, falling slightly short of analysts’ estimates. The guidance for the January 2025 fiscal year also showed revenue projections of $37.7 billion to $38 billion, with non-GAAP profits expected to range from $9.68 to $9.76 per share.

Despite the positive financial performance, Salesforce acknowledged challenges in its professional services business, which saw an 8% decline in the January quarter. The company indicated a reduction in headcount of approximately 8.5% during the fiscal year but anticipates a slight increase in the workforce for fiscal 2025, emphasizing investments in AI and cloud-related R&D.

In a strategic move, Salesforce introduced a quarterly dividend of 40 cents per share, payable to shareholders on April 11. The company also announced a $10 billion increase in its stock repurchase program to enhance shareholder value.

However, the market reaction was less favorable, with Salesforce shares experiencing a 3.7% decline in late trading on Wednesday. The discrepancy between the company’s robust financial performance and cautious guidance for the upcoming fiscal year contributed to the stock slide.

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Investors are closely monitoring Salesforce’s trajectory as it navigates the evolving landscape of enterprise software and cloud services. The company’s strategic initiatives, including the expansion of its dividend program and stock buyback, reflect its commitment to delivering long-term value to shareholders amidst changing market dynamics.

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Advait Gupta
Advait Gupta
Advait is our expert writer and manager for the Artificial Intelligence category. His passion for AI research and its advancements drives him to deliver in-depth articles that explore the frontiers of this rapidly evolving field. Advait's articles delve into the latest breakthroughs, trends, and ethical considerations, keeping readers at the forefront of AI knowledge.

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