Salesforce’s Fiscal 2024 Third Quarter: Strong Sales Growth and Margin Expansion

by time news

Salesforce’s fiscal 2024 third-quarter results demonstrate the company’s continued success in achieving a balance between sales growth and improved margins. The cloud software company exceeded expectations with revenue increasing 11% year-over-year to $8.72 billion, and non-GAAP earnings-per-share growing 51% from last year. The company’s non-GAAP operating margin also expanded to 31.2%, beating estimates.

In addition, operating cash flow increased 390% from the previous year to $1.53 billion, while free cash flow outpaced analyst forecasts by reaching $1.36 billion. The solid quarterly performance led to an over 8% increase in the company’s stock in after-hours trading, potentially pushing it to a new 52-week high.

Salesforce’s successful quarter was driven by strong adoption of its cloud offerings, with nine of its top 10 deals in the quarter including six or more clouds. Geographically, sales increased in the Americas, EMEA, and the Asia Pacific region. The company also saw robust growth in deals valued at over $1 million, surpassing management’s expectations.

A significant factor in the company’s strong performance was the Data Cloud, which experienced revenue growth acceleration to 22% and added 1,000 new customers in the quarter. Salesforce’s artificial intelligence-powered tools, including Einstein GPT Copilot, are driving interest in the Data Cloud, enabling customers to unlock data across various systems and make data-driven decisions.

Despite an uptick in headcount, Salesforce managed to achieve an 850-basis-point improvement in non-GAAP margins over the past year, demonstrating the company’s disciplined approach across all areas of its business. Free cash flow soared 1,088% to $1.37 billion, providing the company with flexibility to continue its share repurchase program to offset dilution from stock-based compensation.

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Looking ahead, Salesforce provided strong guidance for its fiscal 2024 fourth quarter, expecting revenue in the range of $9.18 billion to $9.23 billion, with non-GAAP EPS of $2.25 to $2.26. For the full fiscal year, the company nudged up its revenue outlook to $34.75 billion to $34.8 billion and increased its non-GAAP operating margin outlook to 30.5%.

The company’s robust quarterly performance and promising guidance have positioned Salesforce for continued growth and margin gains in the future. With the stock’s sub-30 price-to-earnings multiple, Salesforce remains a compelling investment opportunity as it is expected to sustain revenue growth and achieve a 20% EPS growth rate over the next several years.

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