Worries about the broader economy sent the stock market broadly lower on Wednesday. Although the Dow Jones Industrial Average (^DJI 0.59%) eked out a small gain, the Nasdaq Composite (^IXIC -2.77%) and S&P 500 (^GSPC -1.39%) lost ground on the first day of the new month, continuing their downward momentum from February.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.02%

+5

S&P 500

(0.47%)

(19)

Nasdaq

(0.66%)

(76)

Data source: Yahoo! Finance.

The software-as-a-service (SaaS) stock complex got hit hard in 2022, with key companies falling out of favor as concerns about the sustainability of their growth weighed on share prices. Yet, from a long-term perspective, many SaaS stocks still seem to have promising business models. Favorable news from Salesforce.com (CRM -1.88%) and Okta (OKTA -4.18%) sent their share price higher in after-hours trading late Wednesday, and this has some investors hoping for a longer-term turnaround for the sector more broadly.

Salesforce looks to lift the Dow

Shares of Salesforce.com were up 15% in after-hours trading. The $25 per-share move higher could equate to nearly 200 points of upward pressure on the Dow Jones Industrials come Thursday morning.

Salesforce said all the right things in its fiscal fourth-quarter financial report for the period ending Jan. 31. Sales of $8.38 billion were up 14% year over year, closing a year of 18% revenue growth. Despite posting a modest loss, making allowances for extraordinary items led to Salesforce posting adjusted earnings of $1.68 per share. Other fundamental measures were also strong, with remaining performance obligations weighing in at $48.6 billion, up 11% from 12 months earlier.

Investors were pleased to see ambitious guidance for the coming 2024 fiscal year. Salesforce projected 10% growth in revenue, with a range of $34.5 billion to $34.7 million. The company anticipates adjusted earnings improving to between $7.12 and $7.14 per share, up sharply from $5.24 per share for the just-ended fiscal 2023. Moreover, Salesforce sees cash flow rising 15% to 16% year over year, which could provide even more ammunition for growth-enhancing initiatives.

Shareholders also celebrated a new $20 billion stock-repurchase program, which appears aimed at appeasing activist investors who've been lobbying for change at the customer relationship management software company. Even with the big move, though, Salesforce remains about 35% below its 2021 highs, leaving more room before the company can claim a full recovery.

Okta looks secure

Elsewhere, shares of Okta were up 14% in after-hours trading late Wednesday. The identity protection specialist reported fiscal Q4 results for the period ending Jan. 31 that confirmed its longer-term growth trends.

Okta posted a 33% rise in revenue for the quarter, with sales of $510 million. Subscription-based revenue saw similar climbs, and subscription backlog climbed 12% to $3.01 billion. Okta also reversed a year-ago adjusted net loss, posting adjusted earnings of $0.30 per share for the period. For fiscal 2023 as a whole, sales jumped 43% year over year, with adjusted losses of just $0.04 per share, much narrower than in fiscal 2022.

Investors also liked Okta's guidance. The identity protection software company anticipates revenue of $2.155 billion to $2.17 billion for fiscal 2024, which would be 16% to 17% higher than the just-ended fiscal 2023's final figures. Adjusted earnings should come in between $0.74 and $0.79 per share.

Cybersecurity has been a hot area, and Okta stock has nearly doubled from its lows just a few months ago. Yet shares are also down by two-thirds from highs in 2020 and 2021, showing the tug of war that's happening in the tech sector.