Salesforce, formerly a growth giant renowned for its steady double-digit revenue growth, is currently facing a significant slowdown in sales growth. After consistently achieving over 20 percent annual growth until fiscal year 2022, the company's revenue rise in the first fiscal quarter of 2025 barely reached the low double digits.
Salesforce (CRM) is expected to release its fiscal 2025 third-quarter results on December 3, and investors are keen to see how the stock performs after that.
CRM Q3 Earnings Projection
The company anticipates its overall sales for the third quarter of the fiscal year to be between $9.31 billion and $9.36 billion, with a midpoint of $9.335 billion. Analysts' Consensus Estimate for earnings is $9.34 billion, a rise of 7.1% over the reported amount from the same quarter last year.
For the third fiscal quarter, CRM expects non-GAAP profits per share to fall between $2.42 and $2.44. At $2.43 per share, the average consensus sign for non-GAAP revenue has not changed, indicating a 15.2% increase over the same quarter last year.
CRM Bull Cases
Salesforce's tactical emphasis on cloud services and digital transformation seems to be positioning the company to report resilient third-quarter fiscal results. Salesforce's dedication to matching its range of goods with consumer demands probably increased its quarterly revenues, especially as businesses worldwide undergo digital transformations.
Salesforce has greatly benefited from the rising demand for cloud solutions powered by generative AI. By integrating generative AI technologies into all of its products, Salesforce increases customer loyalty and fortifies its position as a leader in the customer relationship administration market. This forward-thinking strategy might have greatly aided its revenue increase during that period.
One of the main pillars of Salesforce's growth plan is its capacity to strengthen ties with top brands across sectors and broaden its presence in important geographic areas. It is probable that the company's growing presence in the public industry gave it an additional boost and opened up new growth prospects in the third quarter.
Factors To Watch During Q3 Earnings
Salesforce's third-quarter fiscal revenue growth might have been impacted by a drop in software investing by small and medium-sized enterprises amid the global geopolitical unrest and macroeconomic volatility brought on by the pandemic. In addition to forex challenges, Oracle and Microsoft's fierce competition is another issue.
Nonetheless, Salesforce's earnings in the third quarter probably increased because of its continuing restructuring decisions, which included staff reduction. Due primarily to an increased gross margin and the advantages of cost reorganizing initiatives, such as staff reductions and office space reductions, the company's first fiscal quarter non-GAAP operating profit margin increased 210 basis points to 33.7%.
CRM Bear Cases
The downturn isn't just a temporary setback; it highlights more serious issues with Salesforce and the market. Geopolitical unrest and economic uncertainty are forcing companies to reduce their IT spending and postpone or reduce significant investments. Salesforce's capacity to maintain its previous growth rates has thus been severely hampered.
Additionally, Salesforce has changed its focus from hostile revenue growth to improving margins. This strategic change has increased short-term profitability through actions like staff reductions and operational expense cuts, but it has come at a price. Salesforce's long-term capacity to gain market share and spur innovation may be impacted by the reduction in investments in crucial growth areas, especially sales and marketing.
CRM Stock Forecast Technical Analysis
In the daily chart of CRM stock price, the overall market momentum is bullish, where the current price struggles to overcome the 346.64 resistance level. Although the bullish continuation is potent, a downside recovery might come after validating the double-top pattern.
In the broader context, the 200-day SMA and 50-day EMA are below the current price suggesting an ongoing buying pressure. Moreover, the high volume line since June 2024 is at 254.69 level, which is below dynamic lines.
On the other hand, the current Salesforce stock price is over-extended from near-term levels, suggesting that a downside correction is pending. In that case, a valid bearish daily candle below the 316.30 support level could lower the price below the trendline support and grab sell-side liquidities.
On the flip side, the 310.00 to 290.00 zone could be a bullish zone, depending on how the price reacts in this area. Also any immediate bullish pressure from the 316.30 support level might resume the existing trend any time. In both cases, the 380.00 would be a psychological barrier before moving beyond the 400.00 level.
