Salesforce (CRM) is scheduled to release its second-quarter fiscal 2025 findings on August 28. According to the Wall Street Analysts Consensus Estimate, the company's second-quarter non-GAAP EPS is expected to be $2.35, representing a 10.9% year-over-year rise.
The bottom-line estimate may seem optimistic, but the actual situation is more complex, particularly in light of the (more than) 35 percent increase that Salesforce has regularly produced over the previous six quarters.
Salesforce Struggles To Grow
Salesforce, once a shining example of double-digit revenue growth, is currently experiencing a discernible slowdown. Compared to the 20%+ growth it consistently reported until fiscal 2022, the company barely made it into minimal double-digit rise territory in the first period of fiscal 2025. This is not merely a passing trend; it points to more serious issues facing Salesforce and the industry as a whole.
Several factors are combined to cause this slowdown. Due to geopolitical unrest and economic uncertainty, businesses are becoming more frugal with their IT spending. Budgets are getting tighter, big investments are delayed, and transactions are being scrutinized more. Salesforce has admitted to taking a while to negotiate deals and choosing to work on smaller and simpler projects than they once did.
Salesforce Revenue Outlook
Salesforce's growth in revenue has been most negatively impacted by this change in consumer behavior. According to its Professional Services division, the company's interest in multi-year evolution deals is declining. Projects are sometimes pushed back or canceled, which hurts revenue growth.
Furthermore, Salesforce has changed its focus from rapid growth to improving margins. This shift has resulted in significant reductions in expenses, such as layoffs, which have momentarily increased profitability. However, these budget cuts have been made at the price of vital expenditures in marketing and sales, which are crucial sectors for fostering future expansion.
The top line is not the only thing at risk from the drop in revenue growth. It's probably going to cause a domino effect, slowing down Salesforce's earnings growth as well.
CRM Stock Forecast Technical Analysis
In the daily CRM stock price chart, an extended corrective momentum is visible where the current price hovers below a critical resistance.
The failed double top pattern is a crucial price director for this stock, which represents a weaker selling pressure. Instead of a bearish continuation, the price formed a bottom at the 232.11 level and showed an immediate buying pressure. Moreover, the dynamic 20 day Exponential Moving Average is below the current price, working as a major support.
Based on the daily market outlook, investors should monitor how the Salesforce stock price reacts at the current resistance level. A bullish continuation with a daily candle above the 265.50 level could validate the bullish breakout, opening the room for reaching the 311.10 resistance level.
The alternative trading approach is to find a bearish exhaustion at the current resistance level with a daily candle below the 20 day EMA. In that case, the downside possibility would open, aiming to reach the 220.00 area.
