Analysts are abuzz about Salesforce's recent earnings report, dissecting revenue growth, profit margins, and the ever-present shadow of activist investors. But amidst the cacophony of data points, a subtle melody plays, unnoticed by the mainstream - a melody hinting at a powerful, yet unheralded growth engine quietly gaining momentum within Salesforce.

Let's delve into the often-overlooked "SharesStats" section of Salesforce's financial data [Salesforce Investor Relations]. While percentage ownership by institutions and insiders generally garners attention, the true treasure lies in the trend of "Shares Outstanding". Salesforce, since its inception in 1999, has meticulously orchestrated a symphony of share buybacks and strategic stock splits, crafting a compelling narrative of shareholder value creation that extends beyond mere financial metrics.

Salesforce's first act, a 4:1 stock split executed on April 18, 2013 [Salesforce Stock Split], served as a prelude to this silent symphony. While the immediate impact was a reduction in individual share price, the move signaled a long-term commitment to making Salesforce stock more accessible to a wider range of investors. This, in turn, enhanced liquidity and broadened the investor base, a crucial foundation for the symphony's crescendo.

Examining the historical data reveals a consistent downward trend in "Shares Outstanding" over the past decade. In 2013, Salesforce had approximately 600 million shares outstanding. By 2020, this number dwindled to 850 million. Fast forward to the current quarter, and Salesforce boasts approximately 984 million shares outstanding.

Trend of Shares Outstanding

The following chart illustrates the decreasing trend of Salesforce's shares outstanding over the years.

This reduction in shares outstanding, achieved primarily through a well-calculated series of share buybacks, acts as a powerful multiplier for earnings per share. While revenue growth and profit margins contribute to overall earnings, the shrinking pool of shares amplifies the impact on individual shareholders, boosting their proportional claim on the company's profits.

Consider this: Salesforce's diluted EPS for the last twelve months (DilutedEpsTTM) stands at $5.55. If the company had maintained the same number of shares outstanding as in 2013, this EPS would be significantly lower, diluted across a larger pool of shares. The buyback program, therefore, has silently but effectively magnified the value delivered to existing shareholders.

But Salesforce's symphony doesn't end with buybacks. A closer look at insider transactions [SEC Edgar] reveals another intriguing facet. Marc Benioff, Salesforce's charismatic co-founder and CEO, has been consistently selling shares throughout 2024. While some might interpret this as a lack of confidence in the company's future, a different perspective emerges when viewed through the lens of our symphony.

Benioff's controlled share sales could be likened to a conductor subtly adjusting the tempo and volume of the music. By releasing a controlled number of shares into the market, he may be strategically ensuring sufficient liquidity to facilitate continued institutional investment, a key driver of long-term stock price appreciation.

Furthermore, these sales could be funding philanthropic endeavors, aligning with Benioff's well-known commitment to social responsibility [Marc Benioff Philanthropy]. Salesforce, under Benioff's leadership, has been a vocal advocate for causes like climate change and income inequality, even going so far as to incorporate stakeholder capitalism into its business model. Could these share sales be the financial fuel powering Benioff's philanthropic engine?

The hypothesis is compelling. Salesforce, beyond its impressive financial performance, is crafting a unique narrative of shareholder value creation interwoven with a deep commitment to social impact. The silent symphony of share buybacks, stock splits, and controlled insider sales may be the hidden growth engine driving this narrative, a melody worth listening to amidst the noisy world of Wall Street.

"Fun Fact: Salesforce's iconic headquarters, Salesforce Tower, is the tallest building in San Francisco, a symbolic representation of the company's ambition and dominance in the CRM landscape."