What happened

Shares of Salesforce (CRM 1.27%) rose by as much as 17% this week, according to data from S&P Global Market Intelligence. The enterprise software giant posted strong earnings and revenue for its fiscal 2023 fourth quarter, which won praise from Wall Street analysts and the company's activist investors. Shares are now up almost 40% year to date, but are still down by 10% over the past 12 months.

So what

In the fiscal fourth quarter, which ended Jan. 31, Salesforce's revenue grew by 17% year over year on a constant-currency basis to $8.38 billion. This significantly beat Wall Street's consensus expectation of $7.99 billion. Earnings were also strong, at $1.68 per share, 23% above analysts' consensus estimate. These results were the chief reason why Salesforce's stock popped this week, as investors became more optimistic about the company's prospects this year.

Salesforce also put out guidance for 10% revenue growth and GAAP operating margins of 11% in its fiscal 2024. This was ahead of the company's previous margin guidance, which was applauded by the group of activist investors who have been circling the stock. These five large investors -- led by Elliott Management -- said the accelerated margin expansion was "consistent" with their recommendations, indicating that, for the time being, they wouldn't try to get more aggressive and shake things up at the software giant.

Now what

The financial results at Salesforce looked strong, but there is still major uncertainty with the company's management team, specifically CEO Marc Benioff. The company is reportedly paying actor Matthew McConaughey -- a friend of Benioff -- $10 million a year to be a part of its creative team, but it is unclear what sort of creativity an enterprise software company needs that McConaughey could provide. Benioff has also been reproached for his decision to take a 10-day vacation and digital detox in French Polynesia in the period leading up to the company's January announcement that it was laying off 8,000 people. 

With activist investors circling the company, there is potential for them to demand a shakeup in the executive suite if more Benioff missteps come to light. Over the long term, this might be good for shareholders, but it would create disruption in the short run.

With a market cap of $186 billion, Salesforce trades at around 5.4 times its sales guidance for this fiscal year. That is not crazy expensive if you believe the company can continue growing revenue at a double-digit percentage rate and expand its profit margins. But with the uncertainty in the executive suite, investors should not expect only smooth sailing ahead.