Salesforce Q4 Earnings Beat: Will Dim Outlook Drag Down the Stock?

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]