Core Insights - Salesforce reported weaker-than-expected earnings for the fourth quarter, leading to a 4% decline in its share price [1] - The company is experiencing solid momentum in its business, particularly with the integration of AI as a growth lever [1] Financial Performance - The earnings report for the fourth quarter did not meet market expectations, resulting in a negative market reaction [1] Growth Potential - AI is identified as a significant growth opportunity for Salesforce, indicating potential for future revenue increases [1]

Investment Rating - The investment rating for Salesforce (CRM) is "Buy" (maintained) [1] Core Insights - In FY25Q4, Salesforce reported a revenue of $9.99 billion, a year-over-year increase of 7.6%, exceeding consensus expectations by 0.3%. Subscription revenue was $9.45 billion, up 8.0% year-over-year, but slightly below expectations by 0.7%. Net profit reached $1.71 billion, a year-over-year increase of 18.1%, surpassing expectations by 8.2%. The non-GAAP operating margin was 33.1%, an increase of 1.7 percentage points year-over-year [3][4][5] - The company's Remaining Performance Obligations (RPO) reached a record high of $63.4 billion, growing 11.4% year-over-year, exceeding expectations by 2.3%. The current RPO (cRPO) was $3.2 billion, up 6.4% year-over-year, also surpassing expectations by 1.4% [5] - Salesforce continues to strengthen its AI capabilities, with over 3,000 paid customers for AgentForce and more than 400 orders exceeding $1 million. The company signed a cloud computing partnership with Alphabet, allowing its customers to run CRM software on Google Cloud [4][6] Financial Performance - For FY2025, Salesforce's revenue is projected to be $37.895 billion, with a year-over-year growth of 8.7%. The non-GAAP net profit is expected to be $9.93 billion, reflecting a year-over-year increase of 22.8% [10][12] - The company has lowered its guidance for Q1 and the full year of FY26, expecting Q1 revenue between $9.71 billion and $9.76 billion, a year-over-year growth of 6%-7%, below market expectations of $9.91 billion. The full-year revenue forecast is $40.5 billion to $40.9 billion, a year-over-year increase of 7%-8%, also below market expectations of $41.5 billion [6][7] Valuation Metrics - The projected non-GAAP net profits for FY26, FY27, and FY28 are $10.678 billion, $11.904 billion, and $12.809 billion, respectively, with year-over-year growth rates of 7.5%, 11.5%, and 7.6%. The corresponding price-to-earnings (P/E) ratios are 27.5, 24.7, and 23.0 [7][10][12]

Investment Rating - The investment rating for Salesforce (CRM) is "Buy" (maintained) [1] Core Insights - In FY25Q4, Salesforce reported a revenue of $9.99 billion, a year-over-year increase of 7.6%, exceeding consensus expectations by 0.3%. Subscription revenue reached $9.45 billion, growing 8.0% year-over-year, but fell short of expectations by 0.7%. Net profit for the quarter was $1.71 billion, up 18.1% year-over-year, surpassing expectations by 8.2%. The non-GAAP operating margin was 33.1%, an increase of 1.7 percentage points year-over-year [3][4] - The company's Remaining Performance Obligations (RPO) reached a record high of $63.4 billion, growing 11.4% year-over-year, exceeding expectations by 2.3%. The current RPO (cRPO) segment was $3.2 billion, up 6.4% year-over-year, also surpassing expectations by 1.4% [5] - Salesforce continues to strengthen its AI capabilities, with over 3,000 paid customers for AgentForce and more than 400 orders exceeding $1 million. The company signed a cloud computing partnership with Alphabet, allowing its customers to run CRM software on Google Cloud, marking a shift from reliance on Amazon's cloud services [4][6] Financial Performance Summary - For FY2025, Salesforce's revenue is projected at $37.895 billion, with a year-over-year growth of 8.7%. The non-GAAP net profit is expected to be $9.93 billion, reflecting a 22.8% increase year-over-year. The gross margin is forecasted at 77.2% [10][12] - The company has revised its guidance for Q1 and the full year of FY26, expecting Q1 revenue between $9.71 billion and $9.76 billion, a year-over-year growth of 6%-7%, below market expectations of $9.91 billion. The full-year revenue forecast is $40.5 billion to $40.9 billion, a growth of 7%-8%, also below market expectations of $41.5 billion [6][7] Investment Recommendations - The report anticipates non-GAAP net profits for FY26, FY27, and FY28 to be $10.68 billion, $11.90 billion, and $12.81 billion, respectively, with year-over-year growth rates of 7.5%, 11.5%, and 7.6%. The corresponding price-to-earnings (P/E) ratios are projected to be 27.5, 24.7, and 23.0 [7][10]

Group 1 - Salesforce's stock has declined over 20% from its December high, driven by bearish sentiment following disappointing Q4 FY2025 earnings results [1] - The company not only missed its Q4 revenue consensus but also provided a negative outlook, contributing to the decline in stock price [1]

Core Viewpoint - The performance of Salesforce.com's international operations is critical for understanding its financial resilience and growth potential, especially given its extensive global presence [1][2]. Group 1: International Revenue Performance - Salesforce.com reported total revenue of $9.99 billion for the quarter, reflecting a 7.6% increase [4]. - Asia Pacific contributed $999 million, or 10.00% of total revenue, exceeding analyst expectations by +3.04% [5]. - Europe generated $2.33 billion, accounting for 23.36% of total revenue, surpassing projections by +38.29% [6]. Group 2: Future Revenue Predictions - Analysts anticipate total revenue of $9.74 billion for the current fiscal quarter, a 6.6% increase year-over-year, with expected contributions of 10.3% from Asia Pacific and 22.1% from Europe [7]. - For the full year, total revenue is projected to reach $40.82 billion, up 7.7% from the previous year, with Asia Pacific and Europe expected to contribute 10.2% and 21.9% respectively [8]. Group 3: Market Dependency and Trends - Salesforce.com's reliance on international markets presents both opportunities and challenges, making the monitoring of overseas revenue trends essential for predicting future performance [9]. - Analysts are closely tracking these trends in the context of increasing global interdependencies and geopolitical tensions [10].

Core Insights - Investors often avoid stocks around earnings announcements due to high volatility, but post-earnings, opportunities arise as volatility decreases [1][2] Group 1: eBay Inc. (NASDAQ: EBAY) - eBay's stock experienced a decline of up to 9.5% following its latest quarterly earnings, leading to concerns about performance expectations [3][5] - Analysts from Benchmark reiterated a Buy rating and raised their valuation target for eBay from $65 to $75 per share, indicating a potential upside of 20% [4][5] - Institutional investors, such as Ameriprise Financial, increased their holdings in eBay by 12.4%, bringing their total position to $1.8 billion, reflecting bullish sentiment [6] Group 2: Snowflake Inc. (NYSE: SNOW) - Snowflake's 12-month stock price forecast is set at $202.92, suggesting a 14.8% upside, supported by a moderate Buy rating from analysts [7][8] - The increasing reliance on cloud-based services as the global economy digitizes justifies the premium valuation of Snowflake's stock [9] - UBS Asset Management Americas raised their holdings in Snowflake by 16.4%, increasing their net position to $347.9 million, indicating positive investor sentiment [10] Group 3: Salesforce Inc. (NYSE: CRM) - Salesforce's stock forecast indicates a potential upside of 22.74%, with a target price of $365.32, supported by a moderate Buy rating from analysts [11] - Analysts from Canaccord Genuity Group have set a new valuation target of $400 per share for Salesforce, suggesting a 36% upside from current trading levels [12] - A 2.5% decline in Salesforce's short interest over the past month indicates a shift in sentiment towards bullishness, aligning with positive fundamental and technical factors [13]

Investment Rating - The report maintains a "Buy" rating for Salesforce, with a target price adjusted to $388.00 from a previous $410.00, based on a 21x FY26E EV/EBITDA multiple [1][14]. Core Insights - Salesforce reported a total revenue of $10 billion for 4QFY25, reflecting a 9% year-over-year growth in constant currency, aligning with Bloomberg consensus expectations. Non-GAAP net income increased by 20% year-over-year to $2.7 billion, exceeding consensus by 6% due to improved operational efficiency [1][2]. - For FY26E, management forecasts total revenue between $40.5 billion and $40.9 billion, indicating a 7-8% year-over-year growth in constant currency, slightly below the consensus estimate of $41.5 billion. This has raised investor concerns as strong momentum in Data Cloud and Agentforce is expected to be offset by weakness in Marketing and Commerce Cloud [1][2][3]. Financial Performance - In 4QFY25, cRPO grew by 9% year-over-year (11% in constant currency), consistent with management's guidance. Revenue growth across segments included Sales/Service/Platform and others at 8%, Marketing and Commerce at 7%, and Integration and Cloud Analytics at 12% [2]. - Data Cloud and AI solutions showed robust performance, with annual recurring revenue (ARR) for Data Cloud and AI reaching $900 million, a 120% year-over-year increase. Agentforce has gained over 3,000 paying customers since its launch in October 2024 [3][4]. Operational Efficiency - Salesforce utilized Agentforce to enhance efficiency, achieving an 84% resolution rate across over 380,000 interactions. Non-GAAP operating margin rose by 1.6 percentage points year-over-year to 33.1% in 4QFY25, with expectations for a further increase to 34.0% in FY26E due to operational improvements [4][5]. Revenue and Profitability Forecast - Revenue projections for FY26E are set at $40.9 billion, with a growth rate of 8.0% year-over-year. Adjusted net income is expected to reach $10.99 billion, reflecting a 10.7% growth rate [5][12]. - The report indicates a decline in the projected revenue and operating income for FY27E and FY28E by 0.2% and 0.5%, respectively, compared to previous estimates [12][13]. Valuation Metrics - The target price of $388.00 reflects a valuation discount relative to the industry average EV/EBITDA of 23x, as Salesforce's growth enters a more mature phase [14][16].

3 Mar 2025 CMB International Global Markets | Equity Research | Company Update Salesforce (CRM US) Conservative guidance weighs on sentiment; strong Data Cloud & AI momentum Salesforce reported 4QFY25 results: total revenue grew by 9% YoY in constant currency to US$10.0bn, in line with Bloomberg consensus estimate; non-GAAP net income was up by 20% YoY to US$2.7bn, 6% ahead of consensus estimate thanks to enhanced operating efficiency. For FY26E, management guided total revenue of US$40.5-40.9bn (+7-8% YoY ...

Core Viewpoint - Salesforce reported solid results for its fiscal 2025 fourth quarter and is focusing on agentic AI as a key growth driver, despite a challenging start to 2025 for its stock [1][2] Group 1: Financial Performance - Salesforce's revenue increased by 8% year over year to $10 billion, aligning with its guidance range [6] - Adjusted earnings per share (EPS) rose by 21% to $2.78, with free cash flow generated during the quarter amounting to $3.8 billion [7] - Current remaining performance obligations (cRPOs) grew by 10% year over year to $30.2 billion, indicating a positive revenue outlook [7] Group 2: Agentic AI and Product Development - The company introduced Agentforce, an agentic AI solution, which has gained traction with 5,000 deals closed, including 3,000 paid deals [2][3] - Agentforce offers various out-of-the-box AI agents for tasks in customer service, HR, and technical support, and allows customers to create custom agents using low-code and no-code tools [3][4] - The product is consumption-based, costing $2 per interaction, aimed at enhancing productivity and efficiency [4] Group 3: Partnerships and Ecosystem - Salesforce's partnership network has been instrumental, with half of Agentforce sales and 70% of activations coming from this ecosystem [5] - The company has 127,000 system-integrated employees trained on Agentforce and over 1,000 technology partners involved in building and selling agents [5] Group 4: Future Guidance - For fiscal 2026, Salesforce forecasts revenue growth of 7% to 8%, projecting total revenue between $40.5 billion and $40.9 billion [8] - The company anticipates subscription and support revenue to grow by about 8.5% and expects fiscal Q1 revenue growth of 6% to 7% year over year [8][9] Group 5: Valuation and Market Position - Salesforce trades at a forward price-to-sales multiple of under 7 and a forward price-to-earnings (P/E) ratio under 27, with a price/earnings-to-growth (PEG) ratio of 0.5, indicating potential undervaluation [10] - The valuation is considered attractive if Agentforce can accelerate revenue growth, with conservative guidance suggesting a good chance of exceeding expectations throughout the year [11]

Core Insights - Salesforce, Inc. (NYSE: CRM) is recognized as a strong company with wide moats, solid fundamentals, and reliable growth characteristics that support its status as a compounder [1] Group 1 - The company is characterized by its wide economic moats, indicating a strong competitive advantage [1] - Solid fundamentals are highlighted, suggesting a stable financial position and operational efficiency [1] - The company demonstrates very reliable growth, which is essential for long-term investment potential [1]