Here’s what Wall Street experts are saying about Salesforce ahead of earnings

Salesforce is expected to report Q4 earnings per share of $1.36 on revenue of $7.99B

Salesforce (CRM) is scheduled to report results of its fourth fiscal quarter after the market close on Wednesday, March 1, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its third quarter earnings report, Salesforce reaffirmed 2023 revenue guidance of $30.9B-$31B. Consensus, which was $31B at the time, has since dropped to $30.96B. Salesforce also raised its fiscal year 2023 adjusted earnings per share view to $4.92-$4.94 from $4.71-$4.73. Consensus for EPS, which was $4.73 at the time, has risen to $4.93. The company also provided fourth quarter adjusted EPS guidance of $1.35-$1.37 on revenue of $7.93B-$8.03B. Consensus for earnings, which was at $1.34 at the time, has increased to $1.36, and consensus for revenue, which was at $8.02B, has dipped to $7.99B.

CO-CEO RESIGNATION: Along with Q3 earnings, Salesforce announced that Bret Taylor would step down as Vice Chair and Co-CEO of Salesforce, effective January 31, 2023. At that point, Marc Benioff became Chair and CEO of the company.

RESTRUCTURING: In a January regulatory filing, the company stated, "On January 4, 2023, Salesforce announced a restructuring plan intended to reduce operating costs, improve operating margins, and continue advancing the company’s ongoing commitment to profitable growth. The Plan includes a reduction of the company’s current workforce by approximately 10 percent and select real estate exits and office space reductions within certain markets. Decisions regarding the elimination of positions are subject to local law and consultation requirements in certain countries, as well as the company’s business needs. The company estimates that it will incur approximately $1.4B to $2.1B in charges in connection with the plan, of which approximately $800M to $1B is expected to be incurred in the fourth quarter of fiscal 2023. These charges consist primarily of $1B to $1.4B in charges related to employee transition, severance payments, employee benefits, and share-based compensation; and $450M to $650M in exit charges associated with the office space reductions. Of the aggregate amount of charges that the Company estimates it will incur in connection with the plan, the company expects that approximately $1.2B to $1.7B will be in future cash expenditures. The actions associated with the employee restructuring under the Plan are expected to be substantially complete by the end of the company’s fiscal 2024, subject to local law and consultation requirements. The actions associated with the real estate restructuring under the Plan are expected to be fully complete in fiscal 2026.”

ACTIVIST INVESTORS: In January, the Wall Street Journal reported activist investor Elliott Management made a multi-billion-dollar investment in Salesforce. "Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built," Jesse Cohn, managing partner at Elliott, said at the time. "We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.” The move followed the acquisition of an undisclosed stake by Starboard in October.

Additionally in January, CNBC reported Jeff Ubben’s Inclusive Capital had taken stake in the company. Following the report, Salesforce announced appointments to the company’s board of directors, effective March 1: Arnold Donald, former president and CEO of Carnival Corporation (CCL); Sachin Mehra, CFO of Mastercard (MA) and Mason Morfit, CEO and chief investment officer of ValueAct Capital. In addition, Sanford Robertson and Alan Hassenfeld notified the company that they did not intend to stand for re-election.

In February, the Wall Street Journal reported that Third Point has built a stake in Salesforce and in March, CNBC reported Elliott has nominated a director slate for the company’s board.

PARTNERSHIPS, FEATURES: In December, Sprout Social (SPT) announced a new integration with Tableau making it easier to incorporate social data from Sprout Social into Tableau for a cohesive view of business-wide insights. Meanwhile in January, Walmart (WMT) entered a partnership with Salesforce Commerce Cloud enabling retailers to offer their customers pickup and delivery services via Walmart’s store fulfillment technologies.

ANALYST VIEWS: In February, Cowen raised the firm’s price target on Salesforce to $170 from $160 and kept an Outperform rating on the shares. The analyst said the firm’s commercial partner survey showed solid 4Q performance. Cowen said enterprise checks were however weaker, signaling elevated pressure on net expansion rates and cross-sell activity. Activism, increased profit focus, and elevating demand headwinds create varying elements for the stock but the sector has been reacting well to stronger margin outlooks post headcount cuts, the analyst said.

Meanwhile, BMO Capital analyst Keith Bachman raised the firm’s price target on Salesforce to $185 from $172 and kept an Outperform rating on the shares ahead of its earnings. The company’s continued margin performance can be a key catalyst to drive the stock higher as growth stabilizes in a high-single-digit range, the analyst said. The firm also maintains that Salesforce’s scale provides brand, sales, and cost advantages versus other SaaS vendors.

Keywords: earnings, quarterly earnings, earnings report, Q4, guidance, outlook, activist, partnership, restructuring