Salesforce Reports Strong Q4; Cautious Outlook Ahead

Salesforce's Q4 results show positive EPS growth and revenue. Despite an overall downtrend in stock price this year, the push into AI technology offers growth potential. Investors remain cautious about the future performance.

Date: 03-03-2025

AI Rating: 6

Salesforce has reported solid results for its fiscal 2025 fourth quarter: Revenue Growth: The company's revenue increased by 8% year over year to $10 billion, which aligns with its guidance expectations of between $9.9 billion and $10.1 billion. Additionally, subscription and support revenue also rose by 8%, reflecting strong sales performance. Adjusted Earnings Per Share (EPS): The adjusted EPS climbed 21% to $2.78, indicating improved profitability and efficiency in operations. Free Cash Flow (FCF): Salesforce generated $3.8 billion in free cash flow during the quarter, highlighting robust cash generation capabilities. Current Remaining Performance Obligations (cRPO): The cRPO saw a positive increase of 10% year over year, rising to $30.2 billion, suggesting a healthy revenue outlook. The company has conservative guidance for fiscal 2026, projecting revenue growth between 7% to 8% and adjusted EPS between $11.09 and $11.17, which may be taken negatively by investors despite being conservative. Overall, though the stock has faced a 10% drop at the start of 2025, its advancements into agentic AI via its Agentforce offering could position it well for future growth, pending market reception. Given the valuation metrics, such as a forward price-to-earnings ratio under 27 and a PEG ratio below 1, the current stock price may be perceived as attractive if the growth potential from its AI initiatives materializes.

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