Salesforce Stock (CRM) Set To Open At New All-Time-High as Earnings Reveal Revenue Beat

Salesforce's stock (NYSE: CRM) is a notable pre-market gainer, up 12.9% as strong financial results for the third quarter of fiscal year 2025, delivered significant growth in both revenue and profit margins.

The company's focus on expanding its artificial intelligence capabilities through platforms like Agentforce has bolstered its strategic position in the market, and CRM now appears set to open the day at new 52 week highs. The indicative price in the pre-market of $374.31 also reflects a significant increase on the current all time high of $348.86.

Back to the third quarter numbers, Salesforce achieved a revenue of $9.44 billion, marking an 8% increase year over year. This was a beat on the $9.35 billion expected by markets. Subscription and support revenue saw a 9% rise, contributing significantly to the overall growth. Notably, the company reported a non-GAAP operating margin of 33.1%, representing an increase of 190 basis points from the previous year. More importantly, Salesforce's GAAP operating margin reached 20% for the first time in its history.

The earnings per share (EPS) on a non-GAAP basis stood at $2.41, despite a $0.18 charge associated with strategic investment adjustments. Salesforce's operating cash flow amounted to $2 billion, a growth of 29% compared to the same quarter the previous year. Free cash flow also showed a substantial increase, reaching $1.8 billion, which is a 30% rise year over year.

Salesforce’s remaining performance obligation (RPO), a key indicator of future revenue, was $53.1 billion, reflecting a growth of 10% year over year. The current RPO also improved slightly more than 10% to $26.4 billion. The company returned $1.6 billion to shareholders through share repurchases and dividends during Q3.

Looking ahead, Salesforce has provided a fiscal year 2025 revenue guidance between $37.8 billion and $38 billion, anticipating an 8% to 9% growth. The full-year non-GAAP operating margin is expected to reach 32.9%, which is a 240 basis point improvement. Additionally, the operating cash flow growth is predicted to be approximately 24% to 26%.

For the fourth quarter, Salesforce projects revenue between $9.9 billion and $10.1 billion, an expected year-over-year increase of 7% to 9%. The guidance for non-GAAP EPS in Q4 ranges from $2.57 to $2.62.

Salesforce also made notable progress with its AI-driven platform, Agentforce, which closed over 200 deals in just one week. However, challenges persist, such as constrained growth in the US and parts of Europe, Middle East, and Africa (EMEA), along with potential deceleration in revenue growth for software applications like MuleSoft and Tableau.

The company continues to focus on integrating multiple Salesforce products within its platforms to enhance AI capabilities, a strategy led by CEO Marc Benioff. Salesforce also plans to hire 1,400 account executives globally to support its growth objectives.