Salesforce (NYSE: CRM) recently announced its fourth quarter results that continued to surpass market expectations. It is focused on improving its profitability, and like other tech players, announced layoffs. But the better than anticipated results and the strong outlook sent its stock soaring 16% in the after-hours trading session.

Salesforce’s Financials

Salesforce’s revenues for the fourth quarter grew 17% to $8.38 billion, above analyst estimates of $7.99 billion. Adjusted earnings of $1.68 per share was also better than the market’s forecast of $1.36 per share.

By segment, Subscription and support revenues grew 14% to $7.79 billion, Professional services and other revenues grew 19% to $0.6 billion.

Revenues for the full year grew 22% to $31.4 billion with Subscription and support revenues growing 17.7% to $29.02 billion and Professional services and other revenues increasing 27% to $2.33 billion. Adjusted earnings was $5.24 per share.

Salesforce provided a strong outlook. For the first quarter, Salesforce forecast revenues of $8.16-$8.18 billion and an EPS of $1.60-$1.61. The market was looking for revenue of $8.09 billion and an EPS of $1.30. Salesforce expects to end the current fiscal year with revenues of $34.5-$34.7 billion and an EPS of $7.12-$7.14. The market was looking for revenues of $34.09 billion for the year with an EPS of $5.83.

Salesforce’s AI Focus

Recently, Salesforce announced Einstein Gpt, the world’s first generative AI CRM technology that will provide AI-created content across all sales, service, marketing, commerce, and IT interactions, at hyperscale. Einstein GPT will allow Salesforce to integrate its proprietary AI models with generative AI technology from an ecosystem of partners and real-time data from Salesforce Data Cloud. It will ingest, harmonize, and unify all of the company’s customer data, allowing customers to either connect the data to OpenAI’s advanced AI models or choose their own external model and use natural-language prompts directly within their Salesforce CRM to generate content that continuously adapts to changing information and needs. For instance, Einstein GPT will write out personalized emails for salespeople to send to customers, generate specific responses for customer service professionals to help them quickly answer customer questions, generate targeted content for marketers to increase campaign response rates, and auto-generate code for developers.

Salesforce also announced the launch of a $250 million Generative AI Fund from Salesforce Ventures that will invest in high-potential startups to foster the development of responsible, trusted, and generative AI.

Salesforce’s stock is trading at $175.51 with a market capitalization of $175.55 billion. It had touched a 52-week high of $222.16 in March last year. The stock fell to a 52-week low of $126.34 in December last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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