Salesforce CEO Marc Benioff appears at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2025.Salesforce reported weaker-than-expected quarterly revenue on Wednesday and issued a forecast that fell short of analysts' estimates. The stock slid 6% in extended trading.Here's how the company did in relation to LSEG consensus:Earnings per share: $2.78 adjusted vs. $2.61 expectedRevenue: $9.99 billion vs. $10.04 billion expectedRevenue increased 7.6% from a year ago in the quarter that ended Jan. 31, ac ...

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]

Core Insights - FlatForce LLC has launched a subscription-based Salesforce consulting service aimed at small and medium-sized businesses, transforming access to enterprise-grade CRM solutions [1][5] - The service offers unlimited customization requests for a flat monthly fee, moving away from traditional time-and-materials billing [1][4] - The company emphasizes a fully asynchronous approach, allowing clients to submit requests without the need for meetings or calls, thus enhancing efficiency [2][4] Company Model - The subscription model includes two tiers: an Admin plan and a Developer plan, catering to varying levels of customization needs [4] - The month-to-month subscription requires no long-term contracts and includes a pause-anytime option, addressing the flexibility required by smaller organizations [2][3] - FlatForce's approach allows clients to manage a backlog of requests, with one active request being handled at a time, ensuring dedicated service while serving multiple clients [3][4] Market Positioning - The company aims to bridge the gap for startups and SMBs that cannot afford dedicated Salesforce resources, making expert support accessible and affordable [2][5] - FlatForce positions itself as a partner for businesses undergoing digital transformation, focusing on delivering measurable business impact through automation and CRM solutions [5][6] - The company's core values include simplicity, transparency, and a customer-centric approach, aiming to remove complexity and hidden costs in Salesforce consulting [6]

Core Viewpoint - Salesforce Inc is set to report its fourth-quarter earnings, with Wall Street expecting an EPS of $2.61 and revenues of $10.04 billion, while the stock has shown a 2.76% increase over the past year but a 6.64% decline year-to-date [1] Stock Performance - Salesforce stock is currently priced at $308.35, indicating it is in bearish territory as it trades below its five-day, 20-day, and 50-day exponential moving averages (EMA), suggesting a strong downward trend [2] - The stock's eight-day simple moving average (SMA) is $316.35, the 20-day SMA is $328.28, and the 50-day SMA is $332.95, all reinforcing the bearish setup and short-term weakness [2] Technical Indicators - The stock remains above its 200-day SMA of $289.55, which provides a longer-term bullish signal [3] - Momentum indicators show a negative trend, with the Moving Average Convergence Divergence (MACD) at -6.90 indicating negative momentum, and the Relative Strength Index (RSI) at 34.92 suggesting the stock is nearing oversold conditions [3] Analyst Ratings - The consensus analyst rating for Salesforce stock is currently a Buy, with a price target of $378.03, indicating a potential upside of 26.57% according to recent ratings from Citigroup, Citizens Capital, and BMO Capital [5] - At the time of publication, Salesforce stock was trading at $308.12 [5]

Group 1 - Google Cloud secured a $2.5 billion, seven-year deal with Salesforce CRM, allowing Salesforce customers to run key software like Agentforce AI and Data Cloud on Google Cloud [2] - The partnership aims to counter Microsoft's dominance in enterprise AI and cloud, with clients like Wayfair and Accenture set to move Salesforce apps to Google Cloud [2] - Salesforce will integrate Google's Gemini AI into its services, highlighting its strategic focus on enhancing AI capabilities [3] Group 2 - Salesforce is included as a top 10 pick in the Outlook 2025 due to its involvement in funding major events like the Olympics and the NFL on Netflix [3] - Recent market conditions indicate a potential reversal pattern for Salesforce, with a new 60+ day low price observed [7] - The stock's recent low of 303.61 is close to a previous gap low of 303.07, suggesting 293 as a logical risk point [7]

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Company Overview - Salesforce, Inc. (NYSE: CRM) was previously viewed neutrally due to a lack of strong products to compete with the disruptive nature of Generative AI [1] - The perspective on Salesforce changed in October, indicating a potential shift in its market position or product offerings [1] Analyst Background - The analyst has 10 years of experience in investment banking and a background in IT, specifically as the Director of Keylogin InfoTech, providing a unique perspective on technology investments [1] - The analyst emphasizes a moderate approach to investing, focusing on capital preservation and informed decision-making based on personal experience and analytics [1] Investment Themes - The analyst covers various themes including automated supply chains, Generative AI, telecommunications capital expenditures, the deflationary nature of software, and semiconductors [1] - There is a noted interest in "techbio" sectors, indicating a focus on the intersection of technology and biotechnology [1]

Core Viewpoint - Salesforce, Inc. is expected to report strong fourth-quarter fiscal 2025 earnings driven by digital transformation, cloud adoption, and AI integration despite some macroeconomic challenges [1][2]. Group 1: Revenue Drivers - The ongoing digital transformation and the rise of AI-powered automation are significantly boosting demand for Salesforce's products, particularly its AI-driven solutions like Einstein Analytics [3][5]. - Salesforce's diversified cloud portfolio across various applications such as sales, marketing, and customer service has helped stabilize revenue even amid economic uncertainties [4]. - The Subscription and Support segment is projected to generate approximately $9.5 billion in the fourth quarter, reflecting an 8.6% year-over-year growth, indicating strong customer retention and demand resilience [11]. Group 2: Growth Strategies - Salesforce's commitment to innovation in AI, automation, and data analytics positions it well to capitalize on the rapidly growing global AI-driven cloud market [6]. - The company's international expansion strategy has allowed it to tap into increasing demand for digital transformation solutions in global markets, particularly in Europe and Asia-Pacific [7][8]. Group 3: Challenges - Despite strong long-term growth potential, Salesforce faces challenges from macroeconomic pressures, particularly as small and mid-sized enterprises tighten IT budgets [9]. - The company has noted elongated deal cycles, which may lead to smaller deal sizes and delayed revenue recognition in the fourth quarter [10]. Group 4: Profitability Focus - Salesforce's focus on cost efficiency through strategic workforce reductions and operational efficiencies has contributed to margin expansion and profitability growth [12][13].

Core Viewpoint - Artificial Intelligence (AI) is positioned as a transformative technology with significant long-term investment potential, contingent on making informed investment choices Group 1: Nvidia - Nvidia is identified as a leading player in AI infrastructure, benefiting from increased spending on graphic processing units (GPUs) essential for AI model training and inference [2][4] - Major tech companies, including Microsoft, Amazon, Alphabet, and Meta Platforms, are significantly investing in AI infrastructure, with Microsoft planning to spend approximately $80 billion, Amazon $100 billion, Alphabet $75 billion, and Meta up to $65 billion by 2025 [3] - Nvidia holds a dominant 90% market share in the mass-merchant GPU market, supported by its CUDA software platform, which is superior to competitors [4] - The stock is considered attractively valued, trading at a forward P/E ratio of 25 times 2025 estimates and a PEG of 0.5, indicating potential undervaluation [5] Group 2: Alphabet - Alphabet's Google Cloud is a key player in the AI space, with Q4 revenue increasing by 30% to $12 billion and operating income surging 142% to $2.1 billion [7] - The company is expanding capital expenditures to address capacity constraints and has developed custom AI chips (TPUs) to enhance cost efficiency and performance [8] - Alphabet's Gemini 2.0 AI model is now publicly available, enhancing its search capabilities and potentially driving future ad revenue growth [9] - The stock is trading at a forward P/E of 18 times, indicating it is relatively inexpensive [10] Group 3: Salesforce - Salesforce is focusing on agentic AI, which allows AI agents to perform tasks autonomously, enhancing the capabilities of generative AI [11] - The company launched its Agentforce solution, which offers customizable AI agents for various tasks, and has seen strong demand with over 1,000 deals in place shortly after launch [12][13] - The consumption-based pricing model for Agentforce is set at $2 per conversation, presenting a scalable revenue opportunity [13] - Salesforce's stock is trading at a forward P/E of under 26 times with a PEG below 0.6, reflecting an attractive valuation given its growth potential [14]

Core Insights - Salesforce (CRM) is anticipated to report its fourth-quarter results, with analysts optimistic about AI-driven growth opportunities [1][5] - A significant majority of analysts have issued "buy" ratings, with a consensus price target suggesting nearly 30% upside from the current price [1] - The company is projected to achieve revenue of $10.05 billion, reflecting an 8% year-over-year increase, and adjusted earnings per share of $2.62, up from $2.29 a year ago [2] Analyst Ratings and Expectations - Of the 25 analysts covering Salesforce, 20 have a "buy" or equivalent rating, while 5 have a "hold" rating [1] - Deutsche Bank analysts maintain a "buy" rating with a $400 price target, citing early momentum in the Agentforce AI suite [2] - Oppenheimer analysts view the departure of COO Brian Millham as a negative surprise but expect new CFO Robin Washington to enhance operational efficiency [4] Company Developments - Salesforce announced that Robin Washington, former CFO of Gilead Sciences, will join as the new chief operating and financial officer on March 21 [3] - The company has faced a challenging start to 2025, with shares down approximately 7% year-to-date after a strong performance in 2024 [5]