Core Viewpoint - Salesforce reported weaker-than-expected quarterly revenue and issued a subdued forecast for fiscal 2026, leading to a nearly 5% decline in stock price during pre-market trading [1][3]. Financial Performance - Salesforce's adjusted EPS was $2.78, surpassing the $2.61 estimate, but revenue was $9.99 billion, falling short of the $10.04 billion consensus [3]. - For Q1 2026, Salesforce projected revenue between $9.71 billion and $9.76 billion, missing Wall Street's expectation of $9.9 billion [4]. - The full-year revenue forecast of $40.5 billion to $40.9 billion also came in below analysts' estimates of $41.35 billion [4]. AI Platform Adoption - Salesforce's AI platform, Agentforce, has secured over 3,000 paid deals and facilitated 380,000 customer interactions since its launch in October [7]. - Despite early traction, Agentforce's revenue contribution in fiscal 2026 is expected to be modest, with a more significant impact projected for fiscal 2027 [8]. - CFO Amy Weaver indicated that the adoption cycle is still early, with customer deployments ramping up gradually [8][9]. Analyst Reactions - Following the earnings release, analysts lowered their price targets on Salesforce stock due to mixed results and weaker guidance [10]. - Bernstein analyst Mark Moerdler maintained an 'Underperform' rating and reduced the price target from $286 to $243, citing concerns over the company's maturity in a competitive market [10]. - Stifel analyst Parker Lane retained a 'Buy' rating while lowering the price target from $425 to $375, suggesting that the market overreacted to short-term guidance [11].

Core Insights - Salesforce (CRM) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.78 per share, exceeding the Zacks Consensus Estimate by 6.9% and reflecting a 21.4% increase from the previous year's earnings of $2.29 per share [1][2] - The company's fiscal fourth-quarter revenues were $9.99 billion, slightly missing the consensus mark by 0.3%, but showing a year-over-year growth of 7.5% [2][3] - Salesforce's shares declined by 5.5% in after-hours trading due to a mixed performance and a weak outlook for the upcoming fiscal periods [4] Financial Performance - Non-GAAP operating income for the fourth quarter was $3.30 billion, up 13.1% from $2.92 billion in the same quarter last year, with an operating margin expansion of 170 basis points to 33.1% [8] - The company ended the fourth quarter with cash, cash equivalents, and marketable securities totaling $14 billion, an increase from $12.76 billion at the end of the previous quarter [9] - Operating cash flow for the fourth quarter was $3.97 billion, while free cash flow reached $3.81 billion [9] Revenue Breakdown - Subscription and Support revenues, which account for 94.6% of total revenues, increased by 8% year over year to $9.45 billion [5] - Professional Services and Other revenues rose by 0.6% to $542 million [5] - Sales Cloud revenues grew by 9% to $2.13 billion, Service Cloud revenues also increased by 9% to $2.33 billion, and Marketing & Commerce Cloud revenues rose by 8% to $1.36 billion [6] Geographic Performance - Revenues from the Americas, which represent 66.6% of total revenues, grew by 8% year over year to $6.66 billion [7] - EMEA revenues increased by 7% to $2.33 billion, while Asia Pacific revenues rose by 14% to $999 million [7] Guidance and Outlook - For the first quarter of fiscal 2026, Salesforce projects total sales between $9.71 billion and $9.76 billion, indicating a growth of 6-7% year over year [12] - The company anticipates non-GAAP earnings per share in the range of $2.53-$2.55 for the first quarter, with a consensus estimate of $2.60 [13] - For fiscal 2026, Salesforce expects revenues between $40.5 billion and $40.9 billion, with a consensus estimate of $41.27 billion [13]

Financial Data and Key Metrics Changes - The company reported a record revenue of $37.9 billion for fiscal year 2025, representing a 9% year-over-year increase in both nominal and constant currency [75][26] - Q4 revenue reached $10 billion, up 8% year-over-year, with a 9% increase in constant currency [21][75] - Operating cash flow for the full year was $13.1 billion, up 28% year-over-year, marking one of the best performances among software companies [27][82] - Non-GAAP operating margin for Q4 was 33.1%, up 170 basis points year-over-year, while GAAP operating margin was 18.2%, up 70 basis points [81][27] - Remaining performance obligation (RPO) surpassed $60 billion for the first time, ending Q4 at $63.4 billion, an 11% year-over-year increase [28][83] Business Line Data and Key Metrics Changes - The Data Cloud and AI product line generated $900 million in annual recurring revenue (ARR), growing 120% year-over-year [12][79] - The company closed over 3,000 paid Agentforce deals in Q4, indicating strong customer adoption [79][21] - Sales Cloud and Service Cloud both achieved double-digit growth in Q4, with Slack included in over a third of deals over a million dollars [62][76] Market Data and Key Metrics Changes - Revenue growth in the Americas was 8% in both nominal and constant currency, while EMEA grew 6% nominally and 7% in constant currency, and APAC grew 10% nominally and 14% in constant currency [76] - The company saw strong new business growth in Latin America, Japan, and Canada, while parts of EMEA remained constrained [77] Company Strategy and Development Direction - The company is focused on a unified platform strategy that integrates Customer 360 apps, Data Cloud, and Agentforce, aiming to lead the digital labor revolution [54][15] - The management emphasized the importance of a trinity of apps, data, and agents to drive customer success and operational efficiency [116][118] - The company plans to continue investing in high-growth opportunities, particularly in Agentforce and Data Cloud, while maintaining a disciplined approach to margin expansion [91][92] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the growth potential in the digital labor market, estimating it could be worth trillions of dollars [14] - The company expects fiscal year 2026 revenue to be between $40.5 billion and $40.9 billion, reflecting a growth of approximately 7% to 8% year-over-year [87] - Management anticipates continued strong cash flow growth and margin expansion, with a non-GAAP operating margin target of 34% for fiscal year 2026 [91][92] Other Important Information - The company executed $7.8 billion in share repurchases and issued $1.5 billion in dividends during fiscal year 2025 [85] - The management transition includes Robin Washington as the new Chief Operating and Financial Officer, succeeding Brian Millham and Amy Weaver [49][73] Q&A Session Summary Question: Insights on Agentforce opportunities and pricing model - Management discussed the transition from a seat-based pricing model to a consumption-based model, highlighting the potential for expanded contract sizes and positive financial outcomes [100][104] Question: Impact of Agentforce on other products - Management confirmed that Agentforce is creating a halo effect, enhancing the performance of core products and driving new workflows and engagements [125][128] Question: Management transition and future outlook - Management expressed confidence in the new leadership structure and the strategic direction, emphasizing the importance of combining operational and financial oversight [134][135]

Core Insights - Salesforce.com reported $9.99 billion in revenue for the quarter ended January 2025, marking a year-over-year increase of 7.6% and an EPS of $2.78 compared to $2.29 a year ago, with a slight revenue miss against the Zacks Consensus Estimate of $10.02 billion, resulting in a surprise of -0.29% [1] - The company delivered an EPS surprise of +6.92%, with the consensus EPS estimate being $2.60 [1] Financial Performance Metrics - Remaining performance obligation (RPO) - Current: $30.2 billion versus the estimated $30.09 billion [4] - Remaining performance obligation (RPO) - Total: $63.4 billion compared to the average estimate of $63.06 billion [4] - Remaining performance obligation (RPO) - Noncurrent: $33.2 billion versus the average estimate of $32.47 billion [4] Geographic Revenue Breakdown - Revenue from the Americas: $6.66 billion, below the average estimate of $7.33 billion, with a year-over-year change of +7.8% [4] - Revenue from Asia Pacific: $999 million, exceeding the average estimate of $969.51 million, with a year-over-year change of +10.3% [4] - Revenue from Europe: $2.33 billion, significantly above the average estimate of $1.69 billion, with a year-over-year change of +5.9% [4] Revenue by Segment - Revenue from Professional services and other: $542 million, above the average estimate of $515.09 million, with a year-over-year change of +0.6% [4] - Revenue from Subscription and support: $9.45 billion, slightly above the average estimate of $9.44 billion, with a year-over-year change of +8% [4] - Revenue from Subscription and support - Service: $2.33 billion, slightly below the average estimate of $2.36 billion, with a year-over-year change of +7.8% [4] - Revenue from Subscription and support - Marketing and Commerce: $1.36 billion, slightly below the average estimate of $1.37 billion, with a year-over-year change of +6.5% [4] - Revenue from Subscription and support - Platform and Other: $1.92 billion, above the average estimate of $1.86 billion, with a year-over-year change of +11.5% [4] - Revenue from Subscription and support - Integration and Analytics: $1.72 billion, below the average estimate of $1.76 billion [4] Stock Performance - Salesforce.com shares have returned -15% over the past month, compared to the Zacks S&P 500 composite's -2.3% change, with a current Zacks Rank 3 (Hold) indicating potential performance in line with the broader market [3]

Core Viewpoint - Salesforce.com reported quarterly earnings of $2.78 per share, exceeding the Zacks Consensus Estimate of $2.60 per share, and showing an increase from $2.29 per share a year ago, representing an earnings surprise of 6.92% [1][2] Financial Performance - The company posted revenues of $9.99 billion for the quarter ended January 2025, which was slightly below the Zacks Consensus Estimate by 0.29%, but an increase from $9.29 billion year-over-year [2] - Over the last four quarters, Salesforce.com has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Salesforce.com shares have declined approximately 8.5% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] - The current Zacks Rank for Salesforce.com is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.59 on revenues of $9.91 billion, and for the current fiscal year, it is $11.15 on revenues of $41.27 billion [7] - The trend of estimate revisions for Salesforce.com is mixed, which could change following the recent earnings report [6] Industry Context - The Computer - Software industry, to which Salesforce.com belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]

Here's our initial take on Salesforce's (CRM 0.47%) fourth-quarter financial report.Key MetricsMetricQ4 2024Q4 2025Changevs. ExpectationsRevenue$9.2 billion$9.9 billion+7.6%MissedEarnings per share$2.29$2.78+21.4%BeatRemaining performance obligations$56.9 billion$63.4 billion+11%n/aFree cash flow$9.5 billion$12.4 billion+31%n/aStrong Quarter, but Guidance DisappointsSalesforce posted nearly 8% revenue growth and 21% growth in earnings per share in the last three months of its fiscal 2025, but the revenue nu ...

Core Insights - Salesforce reported mixed fiscal year 2025 fourth-quarter earnings, with adjusted EPS of $2.78 exceeding expectations but revenue of $9.99 billion falling slightly short of the $10.04 billion estimate [1][2] Financial Performance - Adjusted EPS for Q4 FY25 was $2.78, surpassing analysts' estimate of $2.61, and showing a year-over-year increase of 21.4% from $2.29 [3] - Q4 revenue was $9.99 billion, an 8% increase year-over-year from $9.3 billion, but below the expected $10.04 billion [3][6] - Operating cash flow reached $3.97 billion, up 16.7% from the previous year, contributing to a non-GAAP operating margin of 33%, compared to 31.4% in the prior period [3][8] - Total remaining performance obligations (RPO) stood at $63.4 billion, reflecting an 11.4% increase from $56.9 billion year-over-year [3] Business Overview - Salesforce is recognized for its Customer 360 platform, which integrates various tools for a unified customer experience across multiple business functions [4] - The company is focusing on AI innovation, particularly through its Agentforce and Data Cloud platforms, which are seen as key growth drivers [5] Strategic Initiatives - Annual recurring revenue from AI and Data Cloud sectors surged to $900 million, marking a 120% growth [7] - The integration of AI in customer interactions has shown significant results, with Agentforce facilitating 380,000 conversations and achieving an 84% resolution rate [7] - Strategic partnerships, particularly with Google Cloud, are enhancing Salesforce's AI capabilities and overall offerings [8] Future Outlook - For fiscal year 2026, Salesforce management provided revenue guidance of $40.5 billion to $40.9 billion, targeting a growth rate of 7%-8% year-over-year [9] - Projected operating cash flows are expected to grow by approximately 10% to 11%, indicating confidence in operational improvements [9] - The company anticipates adjusted EPS of $2.53 to $2.55 for Q1 FY26, with revenue estimates of $9.71 billion to $9.76 billion, which are below analysts' consensus [9]

Group 1 - Salesforce reported fiscal fourth-quarter revenue of $9.99 billion, an 8% year-over-year growth, which was slightly below analyst expectations [1] - Adjusted earnings per share for the fourth quarter were $1.75, compared to $1.74 a year earlier, but missed estimates [1] - Shares of Salesforce fell about 5% in extended trading following the earnings report, and have lost approximately 8% since the beginning of the year [3] Group 2 - For fiscal 2026, Salesforce projected full-year revenue between $40.5 billion and $40.9 billion, and adjusted EPS between $11.09 and $11.17, both below analyst consensus [2] - The analyst consensus for revenue was $41.32 billion and for EPS was $11.19 [2] - Salesforce announced that former Gilead Sciences CFO Robin Washington will join the company as chief operating and financial officer on March 21 [2]

Core Insights - Salesforce reported weaker-than-expected quarterly revenue and issued a forecast that fell short of analysts' estimates, leading to a 6% decline in stock price during extended trading [1] Financial Performance - Revenue increased by 7.6% year-over-year for the quarter ending January 31, totaling $9.99 billion, while net income rose to $1.71 billion or $1.75 per share compared to $1.45 billion or $1.47 per share a year earlier [1][5] - Revenue from customer service products was $2.33 billion, up about 8%, but below the $2.37 billion consensus [2] - In the sales category, revenue was $2.13 billion, also up 8%, but trailing the $2.17 billion consensus [2] Future Guidance - For the fiscal first quarter, the company projected adjusted earnings per share of $2.53 to $2.55, with revenue expected between $9.71 billion and $9.76 billion, while analysts had anticipated $2.61 per share and $9.9 billion in revenue [3] - For the 2026 fiscal year, Salesforce targets adjusted earnings per share of $11.09 to $11.17 on revenue of $40.5 billion to $40.9 billion, implying a growth rate of 7.4% [4] Product Development - The company introduced its second-generation Agentforce AI technology, which has been involved in over 3,000 paid deals and 380,000 conversations, with human intervention in only 2% of cases [2][3]

Financial Performance - Fourth quarter revenue was $10.0 billion, an increase of 8% Y/Y, and subscription & support revenue was $9.5 billion, also up 8% Y/Y [6] - FY25 revenue totaled $37.9 billion, reflecting a 9% increase Y/Y, with subscription & support revenue growing 10% Y/Y [6] - Total revenue for the fiscal year ended January 31, 2025, was $37,895 million, up from $34,857 million in 2024, reflecting a year-over-year increase of 8.8% [29] - Total revenues for the three months ended January 31, 2025, were $9,993 million, a 7.6% increase from $9,287 million in the same period of 2024 [20] - Subscription and support revenues reached $9,451 million for the three months ended January 31, 2025, up from $8,748 million, representing a growth of 8.0% [20] - Revenue from the Americas for the three months ended January 31, 2025, was $6,660 million, up from $6,176 million in 2024, reflecting an increase of 7.8% [29] - Total revenue growth in constant currency for the three months ended January 31, 2025, was 9% compared to the same period in 2024 [30] Profitability - Net income for the fiscal year ended January 31, 2025, was $6,197 million, compared to $4,136 million in 2024, reflecting a year-over-year increase of 49.8% [20] - Net income for the three months ended January 31, 2025, was $1,708 million, an increase from $1,446 million in the same period of 2024, representing a growth of 18.1% [24] - GAAP net income for the fiscal year 2025 was $6,197 million, up from $4,136 million in fiscal year 2024, indicating a 49.9% increase [34] - Non-GAAP diluted net income per share for Q1 2025 was $2.78, compared to $2.29 in Q1 2024, reflecting a growth of 21.4% [34] Cash Flow - Operating cash flow for FY25 was $13.1 billion, up 28% Y/Y, and free cash flow was $12.4 billion, up 31% Y/Y [6] - Cash provided by operating activities for the fiscal year ended January 31, 2025, was $13,092 million, an increase from $10,234 million in 2024, representing a growth of 28.0% [24] - Free cash flow for Q1 2025 was $3,816 million, an increase from $3,256 million in Q1 2024, showing a growth of 17.2% [35] Shareholder Returns - The company returned $9.3 billion to shareholders in FY25 through share repurchases and dividends [6] Performance Obligations - Total remaining performance obligation reached $63.4 billion, up 11% year-over-year (Y/Y) [5] - Current remaining performance obligation is $30.2 billion, up 9% Y/Y [6] - Remaining performance obligation (RPO) as of January 31, 2025, was $63.4 billion, compared to $53.1 billion as of October 31, 2024, indicating a growth of 19.5% [26] - Unearned revenue at the end of the period was $20,743 million, up from $19,003 million at the beginning of the period, showing an increase of 9.2% [27] Operating Expenses - Salesforce's total operating expenses for the fiscal year ended January 31, 2025, were $22,047 million, up from $21,305 million in 2024, indicating a growth of 3.5% [20] - Research and development expenses for the fiscal year ended January 31, 2025, were $5,493 million, an increase of 12% from $4,906 million in 2024 [20] - The company reported a net cash used in investing activities of $2,936 million for the three months ended January 31, 2025, compared to $468 million in the same period of 2024 [24] Margins - GAAP operating margin for FY25 was 19.0%, with non-GAAP operating margin at 33.0% [6] - Non-GAAP operating margin for the fiscal year 2025 was 33.0%, compared to 30.5% in fiscal year 2024, representing an improvement of 2.5 percentage points [31] - GAAP operating margin for Q1 2025 was 18.2%, up from 17.5% in Q1 2024, reflecting a 0.7 percentage point increase [31] Stock-Based Compensation - The company’s stock-based compensation expense for the fiscal year ended January 31, 2025, was $3,183 million, up from $2,787 million in 2024, indicating a rise of 14.2% [24] - Stock-based compensation expense for the fiscal year 2025 totaled $3,181 million, compared to $2,764 million in fiscal year 2024, an increase of 15.1% [32] Guidance - The company initiated revenue guidance for FY26 of $40.5 billion to $40.9 billion, representing a 7% to 8% increase Y/Y [8] Assets and Equity - Total current assets as of January 31, 2025, were $29,727 million, slightly up from $29,074 million in 2024 [23] - The company’s total assets increased to $102,928 million as of January 31, 2025, compared to $99,823 million in 2024 [23] - The total stockholders' equity rose to $61,173 million as of January 31, 2025, from $59,646 million in 2024 [23] Other Information - Constant currency information is used to assess underlying business performance, excluding foreign currency fluctuations, with revenue growth rates converted to USD at the weighted average exchange rate for the quarter [41] - The Company defines free cash flow as GAAP net cash from operating activities minus capital expenditures, providing a clearer view of cash generation [42] - The projected non-GAAP tax rates for fiscal 2024 and 2025 are 23.5% and 22.0%, respectively, with a consistent rate of 22.0% projected for fiscal 2026 [40] - The Company evaluates its long-term tax rate based on factors such as its expected tax structure and geographic earnings mix, which may change due to acquisitions or strategic shifts [40]