SalesforceCRM continues its metamorphosis towards financial fortitude by smashing Q2 projections and escalating its profit forecast.
Salesforce’s Q2 Triumph
Empowered by swelling subscription and support revenue, Salesforce reaped $9.32 billion in Q2 sales, marking an 8% YoY growth and outshining the $9.22 billion estimate by 1%. The company’s Q2 EPS of $2.56 surged by 21% from the previous quarter and outperformed the projected $2.35 earnings per share by 9%.
A standout metric was Salesforce’s Q2 operating cash flow, reaching $892 million with a 10% YoY rise, accompanied by a 20% spike in free cash flow to $755 million.
AI Advancements
Salesforce touted the proliferation of artificial intelligence throughout its product array, revealing a surge in new bookings for its AI offerings which more than doubled to 1,500 deals in Q2, including partnerships with major brands such as Alliant Energy.
Guidance & Path of Growth
In its current fiscal year of 2025, Salesforce maintains a sales forecast of $37.7 billion-$38 billion, aligning with the Zacks Consensus of $37.85 billion, indicating an 8% growth trajectory. Looking ahead, Zacks expects Salesforce’s revenue to further grow by 9% in FY26, reaching $41.23 billion.
Price Performance & Comparative Valuation
Despite facing intensified competition from Microsoft’s Dynamic 365 CRM and Oracle CRM, Salesforce’s stock has incurred a -4% dip year to date, trailing behind Microsoft and Oracle whose shares climbed by +9% and +33%, respectively.
At present levels, Salesforce’s stock trades at a forward earnings multiple of 25.9X, slightly above the S&P 500’s 23.6X. Although trading beneath Microsoft’s 31.6X earnings and above Oracle’s 22.5X, Salesforce is positioned competitively.
Key Takeaways
Currently holding a Zacks Rank #3 (Hold), Salesforce’s stock’s ascension hinges on the post-Q2 earnings estimate trends, likely to be favorable after the company raised its profit projection. With a promising growth path, potential buyers could emerge for Salesforce amidst exaggerated apprehensions regarding the Microsoft and Oracle competition.
