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Salesforce (CRM) is trading modestly higher after wrapping up FY24 on a decent note. CRM beat on EPS in Q4 (Jan), but it was its smallest upside of any quarter the past five years. CRM guided higher for Q1 (Apr) EPS and FY25, but full year revenue guidance was a bit light. In addition to earnings, CRM said it will start paying a dividend for the first time in its history. CRM initiated a quarterly dividend of $0.40/sh and increased its share repurchase program by $10 bln.

• CRM said that sales growth was primarily driven by resilient sales and service performance as well as strength in MuleSoft and Tableau. From a geographic perspective, the Americas revenue grew 9% (vs +10% in Q3), EMEA grew 11% CC and APAC grew 19% CC. CRM saw strong new business growth in LatAm, India and Canada, while parts of EMEA remain constrained. India continues to be a bright spot, growing new business at 35% yr/yr.
• From an industry perspective, public sector and travel transportation/hospitality performed well, while retail and consumer goods and high tech were generally more measured. Importantly, CRM has been focused on selling multi-cloud deals. Momentum continued on that front in Q4 with 8 of its top 10 deals including 6+ clouds, and more than half of its top 100 wins included 6+ clouds.
• In terms of why FY25 revenue guidance was a bit light, CRM explained that it expects a $100 mln FX headwind. It also expects its professional services business to remain under pressure, which should be a headwind to revenue. Also, CRM expects to continue to see a measured buying environment, which began back in FY23. CRM explained that this takes time for that to flow through its subscription revenue stream due to the rules about revenue recognition.
• While CRM expects a continued measured buying environment, there was a silver lining in its outlook. Over the past two quarters, CRM has seen improved bookings growth. Margins are another bright spot as Q4 non-GAAP operating margin rose 220 bps to 31.4%. For all of FY24, that metric jumped to 30.5% from 22.5% in FY23. And for FY25, CRM expects non-GAAP operating margin of 32.5%.

Overall, investors seem to be taking CRM's results in stride as they were pretty much as expected. The small EPS upside was offset by upside guidance for Q1 and FY25. Also, we think investors are really focusing in on CRM's comments about seeing improved bookings growth the past couple of quarters. In recent quarters, CRM has been talking about higher deal scrutiny, so that language was comforting to hear. The dividend initiation was a nice bonus, the yield is still tiny at 0.5%, but that was good to see and maybe it's a sign of CRM's confidence moving forward.