Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Feb, 25 | CRM | Buy | USD 305.88 | USD 321.36 | USD 333.41 | 36 days | Closed |
13.00%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Salesforce, Inc. provides customer relationship management technology services that connect companies and customers together in the United States, Europe, and the Asia Pacific. The company offers Agentforce, which enables customers to build, deploy, and manage enterprise-grade, autonomous AI agents at scale, enabling humans and agents to work together; Agentforce Sales, an integrated platform that brings together the power of humans with AI agents to help sales teams for selling, managing, and automating entire sales processes; Agentforce Service, which enables companies in every industry to bring all of their customer, employee, IT, and field service needs onto one integrated AI-powered platform; Data 360, a data engine that gives AI agents their context and serves as the foundation for how customers unify service offerings, making their data actionable for both humans and agents; Informatica, an AI-powered data management platform that enables customers to discover, integrate, govern, and deliver trusted data at scale across hybrid and multi-cloud environments; and Slack, a conversational interface for the agentic enterprise where people and agents work together, connecting knowledge, actions, and data in real time. It also provides marketing platforms; commerce services, which empower shopping experiences across various customer touchpoints; integration and analytics solutions; Salesforce Starter, a suite for small and medium-sized businesses that brings sales, service, marketing, and commerce together; and a field service solution that enables companies to connect service agents, dispatchers, and mobile employees through one centralized platform to schedule and dispatch work, as well as track and manage jobs. It serves financial services, healthcare and life sciences, manufacturing, automotive, and government sectors. Salesforce, Inc. was incorporated in 1999 and is headquartered in San Francisco, California.
Improved Profitability: The company achieved a GAAP operating margin of 20.0% (up 280 basis points Y/Y) and a non-GAAP operating margin of 33.1% (up 190 basis points Y/Y). Additionally, operating cash flow increased by 29% Y/Y, reaching $1.98 billion, and free cash flow grew by 30% Y/Y to $1.78 billion.
Strong Revenue Growth: Salesforce reported total revenue of $9.44 billion, marking an 8% Y/Y increase in both reported and constant currency terms. Subscription and support revenue grew by 9% Y/Y, indicating consistent demand for its core business offerings.
Foreign Exchange (FX) Headwinds: Salesforce expects $100 million in FX-related revenue losses for the full fiscal year FY25, with a $25 million Y/Y FX impact projected for Q4 FY25, potentially dampening top-line growth.
Losses on Strategic Investments: The company incurred $(0.17) per share in GAAP losses and $(0.18) per share in non-GAAP losses due to declines in strategic investments, negatively impacting overall net income per share.
Key investment risks for Salesforce include foreign exchange volatility impacting revenue, potential slowdowns in subscription growth, execution risks in AI-driven initiatives like Agentforce, and losses from strategic investments affecting profitability.
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 305.88 | 266.12 | 321.36 | 333.41 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Salesforce Reports Strong Third Quarter Performance
Salesforce delivered a robust financial performance in the third quarter, reporting revenue of $9.44 billion, reflecting an 8% year-over-year (Y/Y) growth both as reported and in constant currency (CC). Subscription and support revenue accounted for $8.88 billion, increasing 9% Y/Y in both reported and CC terms. The company’s GAAP diluted net income per share stood at $1.58, while non-GAAP diluted net income per share was $2.41, both impacted by losses on strategic investments amounting to $(0.17) and $(0.18), respectively.
Operating Margins and Cash Flow Growth
Salesforce continued its disciplined focus on profitability, achieving a GAAP operating margin of 20.0% and a non-GAAP operating margin of 33.1%, reflecting increases of 280 and 190 basis points Y/Y, respectively. Operating cash flow reached $1.98 billion, representing a 29% Y/Y growth, while free cash flow stood at $1.78 billion, increasing by 30% Y/Y. The company remains committed to returning capital to shareholders, with $1.2 billion allocated to share repurchases and $0.4 billion distributed as dividend payments, totaling $1.6 billion in cash returned during the quarter.
Remaining Performance Obligations and Future Outlook
The company’s current remaining performance obligation (cRPO) grew by 10% Y/Y, reaching $26.4 billion, highlighting strong forward-looking revenue visibility. Salesforce continues to experience sustained demand for its solutions, positioning itself for continued expansion in the enterprise software market.
Fourth Quarter and Full-Year FY25 Guidance
Salesforce has initiated its fourth-quarter FY25 revenue guidance in the range of $9.90 billion to $10.10 billion, reflecting an expected Y/Y growth of 7% to 9%. Additionally, the company raised the lower end of its full-year FY25 revenue guidance, now projecting revenue between $37.8 billion and $38.0 billion, representing 8% to 9% Y/Y growth. Subscription and support revenue is anticipated to grow slightly below 10% Y/Y and approximately 10% in CC.
Profitability and Cash Flow Expectations for FY25
The company has revised its full-year FY25 operating margin guidance upward, projecting a GAAP operating margin of 19.8% and a non-GAAP operating margin of 32.9%. Furthermore, Salesforce raised its full-year FY25 operating cash flow growth outlook to a range of 24% to 26% Y/Y. The guidance also includes expected foreign exchange impacts, with a projected $100 million negative impact on total revenue for FY25.
Strategic Vision and Leadership Commentary
Chair and CEO Marc Benioff emphasized Salesforce’s leadership in AI-driven enterprise transformation, particularly through Agentforce, an AI-powered system integrated into the Salesforce Platform. He highlighted the rise of autonomous AI agents as a revolutionary force reshaping industries and global labor markets. President and CFO Amy Weaver reiterated the company’s commitment to profitable growth, citing the firm’s expanding margins and sustained shareholder returns, which now exceed $20 billion in total capital returned to investors.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Salesforce, Inc (NYSE: CRM) at the closing market price of USD 305.88, as on February 25, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Software - Application
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CRM Salesforce.com Inc |
-3.15 1.68% | 183.84 | 23.99 | 14.14 | 4.16 | 2.58 | 3.85 | 12.75 |
| SAPGF SAP SE |
4.64 2.71% | 176.00 | 76.28 | 22.88 | 5.61 | 3.84 | 5.59 | 26.18 |
| SAP SAP SE ADR |
2.80 1.62% | 175.19 | 75.80 | 22.37 | 5.62 | 3.75 | 5.51 | 25.79 |
| INTU Intuit Inc |
-8.07 2.03% | 390.25 | 55.56 | 32.68 | 11.28 | 10.07 | 11.62 | 40.11 |
| NOW ServiceNow Inc |
-1.82 1.98% | 90.19 | 90.12 | 54.95 | 16.85 | 19.81 | 16.58 | 100.69 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on February 26, 2025. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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