Salesforce sees a 25% operating margin in fiscal 2026

According to reports, the US enterprise software company Salesforce shares on Wednesday announced a new long-term profit target, indicating that the company is committed to improving operational efficiency. Affected by the news, the stock rose nearly 3% in after-hours trading on the U.S. stock market that day.


During the new crown epidemic, with the rise of the home office boom, major enterprises have increased the utilization rate of cloud computing software, making many cloud computing software companies including Salesforce usher in a highlight moment during the epidemic. But with rising U.S. prices triggering higher interest rates, investors are starting to dump the stocks.


Therefore, the management of cloud computing companies has emphasized cost-saving plans and advanced the profit time to attract the interest of the capital market. Salesforce has also said it will recruit more carefully.

The company's CFO, Amy Weaver, also further disclosed new targets for fiscal 2026 at the investor's open house. She revealed that Salesforce plans to adjust its operating margin to 25%, compared with a fiscal 2023 operating margin target of just 20% disclosed a year ago. In the quarter that ended July 31, the company posted an operating profit of 19.9%.


Salesforce said it plans to adjust sales and marketing spending to keep it below 35% of revenue by 2026 by increasing self-service, partner alliances, and improving the efficiency of its sales force. In terms of marketing, the company wants to rely on proprietary marketing channels. Sales and marketing expenses accounted for more than 44% of Salesforce's revenue in the July quarter on a GAAP basis.


In addition, Salesforce plans to control general and administrative expenses, in part by assessing real estate assets in the hybrid workplace.


Weaver reiterated a revenue target of $50 billion for fiscal 2026 announced a year ago , but said that figure now takes into account a $2 billion currency loss during the year.


Shares of Salesforce closed at $147.63 on the New York Stock Exchange on Wednesday, down 1.45% from the previous session and hitting a new 52-week low. Weaver said the company has started to buy back its own stock through its first share repurchase program.

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