Shares of Salesforce (CRM) gained in after-hours trading after the software firm reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at $2.41, which missed analysts’ consensus estimate of $2.44 per share. However, sales increased by 8.3% year-over-year, with revenue hitting $9.44 billion. This beat analysts’ expectations of $9.35 billion.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
According to CEO Marc Benioff, Salesforce’s AI system, Agentforce, is driving significant innovation by integrating autonomous AI agents into the Salesforce Platform. In addition, CFO Amy Weaver noted that the company achieved a GAAP operating margin of 20.0%, an increase of 280 basis points compared to the same period last year, and a non-GAAP operating margin of 33.1%, which was up 190 basis points year-over-year.
Furthermore, Salesforce returned $1.6 billion to shareholders during the third quarter. Dividends made up $400 million, while buybacks made up the remaining $1.2 billion. The firm has regularly repurchased its shares each quarter since October 2022 (as demonstrated in the image below).
2025 Outlook
Looking forward, management has provided the following guidance for FY 2025:
- Q4 revenue between $9.9 billion and $10.1 billion versus estimates of $10.05 billion
- Q4 earnings of $2.57 to $2.62 per share compared to expectations of $2.65
- FY25 revenue between $37.8 billion to $38 billion versus estimates of $37.86 billion
- FY25 non-GAAP operating margin of 32.9% compared to expectations of 32.8%
- FY25 earnings of $9.98 to $10.03 per share compared to forecasts of $10.11
As you can see, guidance was mostly worse than expected, but shares still rallied in after-hours. A potential reason for this could be that FY25 revenue and operating margins were raised compared to the company’s previous guidance. This indicates that investors probably placed more weight on these figures. In addition, investors are likely enthusiastic about the firm’s Agentforce AI system.
Is CRM a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CRM stock based on 27 Buys, seven Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 33% rally in its share price over the past year, the average CRM price target of $363.90 per share implies 9.46% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
