Looking back, Marc Benioff saw a year of transformation.
The co-founder and chief executive of Salesforce, the giant producer of customer-relations-management software, was describing a rugged 2023.
"It's exactly a year ago, as you remember, or maybe I'd like to forget, exactly how crazy that year got, and it was a really unusual year," he told analysts, according to a transcript of the company's third-quarter earnings calls in November.
"But we knew we had to change," he added. "We knew there had to be transformation. We knew there were things that had to get done."
Salesforce did have quite a year in 2023. In January, the company announced it was dismissing about 10%, or roughly 7,500, of its staffers and closing some offices.
During good times, Salesforce wasn't afraid to spend a few bucks, as the company paid about $50 billion in total to acquire MuleSoft, Tableau, and Slack between 2018 and 2021.
But as Benioff said in a Jan. 4, 2023, letter to employees, "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that."
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Salesforce's Benioff: 'huge year of transformation'
Time marched on, and over the course of the year, things picked up for San Francisco's largest employer, which beat Wall Street's third-quarter-earnings expectations.
"We knew we had to focus on increasing profitability, productivity, operational excellence across the board," Benioff told analysts. "We knew that."
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"But I'll tell you, it's more than just a great year," he continued. "It's also a huge year of transformation."
Benioff said that "morale is super high, so cohesive, brought back so many boomerangs," which is his term for former employees who have been brought back to the fold.
"We've really been focused on building this, No. 1, [artificial-intelligence] CRM, rebuilding our product strategy, really focused on, No. 2, is getting these sales executives be able to tell these stories of AI success," he said.
Benioff said that Einstein, the AI capabilities within the Salesforce CRM platform, is doing one trillion transactions a week.
"That's amazing," he said. "But more amazing is that 17% of the Fortune 100 are now Einstein GPT Copilot customers."
"I've been throughout the United States," Benioff continued. "And I just continue to see these same trends, which is customers are investing for the future, and they're investing and inspired by AI to give them more productivity."
Late last month, the Wall Street Journal reported that Salesforce would lay off about 700 employees, roughly 1% of its global workforce.
However, the report added that Salesforce still has 1,000 jobs open across the company, implying that the move could be more of a routine adjusting of the workforce, the Journal reported, citing a source.
Salesforce is scheduled to report fourth-quarter earnings on Feb. 28.
Salesforce analysts adjust price targets
Analysts surveyed by FactSet expect the company to report earnings of $2.27 a share on revenue of $9.2 billion. A year earlier, Salesforce earned $1.68 a share on revenue of $8.4 billion.
With the earnings report a week away, some analysts are adjusting their price targets for the company.
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Stifel raised the firm's price target on Salesforce to $330 from $300 while affirming a buy rating on the shares.
The price-target boost followed checks with four partners that pointed toward strength in the data cloud, industry clouds, and early Einstein adoptions, as well as partners expecting recent momentum to continue when looking ahead to the fiscal year 2025.
Barclays raised the firm's price target on Salesforce to $325 from $300 while reiterating an overweight rating on the shares.
Analyst Raimo Lenschow said he preferred "to stay conservative with names where we can see a clearer story. CRM really stands out for us this quarter with a favorable setup.”
The analyst said he liked Salesforce in the period leading up to the earnings report.
"Salesforce remains one of the few names in our coverage universe that has not seen an outsized valuation move and still trades at only reasonable multiple levels," Lenschow said.
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