Salesforce Earnings: Salesforce Declares a Dividend

Salesforce continues to perform well in what remains a tight demand environment, with upside versus our expectations on both the top and bottom lines for its fiscal fourth quarter. Guidance was mixed, with revenue slightly worse than we expected while earnings per share, or EPS, was slightly better. The biggest headline is the capital allocation strategy evolution, with the buyback program expanded by another $10 billion and the establishment of $0.40 quarterly dividend. Management was enthusiastic in its discussion of everything AI, which we think will be an area of strength for Salesforce, with the Einstein 1 Platform already generating revenue. Based on continued quarterly upside and new guidance, we are raising our midterm profitability estimates and are raising our fair value estimate to $300 per share, from $265. We see the stock as fairly valued.